Positive/neutral verses negative cashflow

Hi everyone

Which is better, positive or negative gearing?
Im not sure if this is correct-positive cashflow has slow growth and negative cashflow has faster growth? Is this correct?
I am looking at an 8 year old townhouse, nothing to spend on it. Immaculate condition. It would be positive cashflow with the rent covering expenses. Im just worried about it not gaining value quickly. It has gone up $30k in 3 yrs. Is this normal?

Thoughts

 

Do a search on PC. There are about a million posts already on this topic.

 

Cash flow and capital growth are not directly correlated.
Also - dont confuse cash flow, and negative gearing.
You can be positive cash flow but still negatively geared (due to non-cash deductions)(Eg depreciation).

Just because you get low cashflow does not mean you will get good capital growth.
This is a good example. Low cash flow (2.5% gross) and no CG in years.


Blacky

 

It depends. Positive makes (taxable) income, negative makes (future) capital gain (hopefully).

Generally it's true in most cases that the trade off for negative gearing is longer term higher CG.

In which 3 years? What was the starting purchase price? Which suburb? $30K in 3 years seems poor CG for say, a $300K (8 yrs ago) property.

 

What's normal? The only way you'll know is if you compare it to other types of properties in the region. Have they increased by a similar %??

 

Why on earth would you want to lose money and not profit no matter what tax incentives you get!!!!!

Profiting is hard. Losing money an idiot can do

 

Sorry Im a newbie and Im still finding my feet. Id rather ask a question on here and get everyones view than find out the hard way

 

Not really a fan of townhouses but if your budget is limited to those, then of course that's a better option than units if it's in the same location. Having said that, I do own one townhouse but that's because there are only 4 other units in the block so the strata is fairly low and no common walls.

What @Propertunity said that if you are experiencing a loss, you're hope that over time you do experience capital growth and rental increases. That's what happened for one of my IP which the original rent was $360 per week but now paying at $410 per week with capital growth experienced.

 

A large number of people misunderstand tax incentives and confuse negative gearing with losing money. Sometimes its the investor and sometimes is someone who isnt an investor who just thinks negative gearing is burning money when it may not.

 

It wasn't a personal comment..
It's more of a comment to shake you out of that "losing money is good" mind set.

If its for money laundering or some massive corporate structures that need to be at a loss for whatever reason. Go for it.

For me tax deductions simply soften the blow of a bad investment. That is unless you are expecting a profit from a different perspective eg capital growth