One thing that all successful positive cash flow property investors will tell you is that investing in the residential property market is a markedly different business than it is when buying your own home.

There are altogether different reasons why people choose to buy a property for themselves and buying a house or houses with the intention of creating a positive cash flow investment portfolio.

Investing in a residential property should be seen as purely an investment activity with the whole concept or idea being that you want to make a profit or regular income by spending a lot less on the property than you earn from it.

But buying an investment property can be a risky business because you are making such a large commitment of money in the one area. This is a completely different scenario from say investing in managed funds or shares whereby the risks of losing such a large sum of money at the one time is almost too insignificant to mention.

One of the biggest mistakes that new property investors make is to choose a home based on emotion.

They see a property that they like, think of it as a wonderful place that any young couple with a family would love to live in, lose their calm attitude and rush in to buy it without real thought behind the original reasons for buying an investment property in the first place.

They become distracted with imagining what it would look like with blue curtains and a white picket fence when their only real concern or attraction should be with the property as an investment.

What happens then is that when they either rent the house out to tenants or sell it as a wrap property, they have become attached to it and that can lead to unnecessary problems. Instead of looking at the new tenants or owners with an eye of whether or not they can afford payments on the property, they are looking purely at whether or not they deem them to 'be good enough' to reside in the property.

So it really is important to keep calm and not to rush into any positive cash flow property investment without doing your homework first. The short term potential for your income and the long term potential for your capital growth should really be your primary concerns, not whether or not the neighbours are nice!

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To Your Success
Paul Zalitis
The Aussie Wrapper