Are you a property investor?
Do you prefer positive cash flow property or negative gearing for tax benefits?
Over the years the debate has raged between people who prefer positive cash flow property and those that swear by negative gearing. But using Vendor Finance beats them both hands down for both cash flow and high profits in my opinion.
Positive cash flow
Positive cash flow properties typically involve properties bought in country towns where prices are lower than in bigger cities with more facilities.
Here the capital growth is usually very slow but there is a positive return because the price of rent is a higher percentage of the purchase price.
In fact quite often these types of properties can be positively geared by a hundred dollars a week or so that is after all costs are paid on the property.
Negative Gearing
In the case of negatively geared property, a property would be purchased in an area with traditionally high growth and high demand, usually in a city. The rental return would not be enough to cover the cost of paying the mortgage and the rates and insurance.
This property is said to be negatively geared because it costs the owner money to be able to keep it.
The reason someone would buy this kind of property is for the tax benefits they will get. Negative gearing is generally suited to people with a high taxable income who get to deduct property losses from their income which reduces the amount of tax they have to pay.
The additional benefit is that the property has much better growth potential which is good for wealth creation.
Best of Both Worlds!
No matter which strategy you prefer, you need to consider the great complementary strategy of vendor finance.
There is so much more profit in this strategy and the great thing is the profit can come in a much shorter timeframe.
Vendor finance strategies allow you to build wealth quickly and support any investment strategies.
If you would like to know how to create wealth much faster by teaming up with a vendor finance expert, click here to find out how.