I have often talked about how important it is that you must ensure that when you buy your property that you must be able to generate a positive cash flow. Quite simply this is because it is the only through this positive cash flow that you are able to leverage.
It gives you the extra cash that you need to put into your mortgages allowing you to create equity much more quickly.
It's important then to buy the right property in the right area to ensure that you can generate this positive cash flow. For instance, it's not generally considered a wise decision to buy a property where houses are of low value and few people want to live in.
But there could be exceptions to this rule. The current rise in house prices close to cities and larger towns are forcing people to move out of the area and into suburbs, local councils are starting to invest money into areas that have been considered undesirable suddenly making them a much more attractive prospect for those first time buyers who perhaps could not afford to buy elsewhere.
As our rail networks develop, travelling from areas considered isolated a few short years ago is now becoming much easier for city commuters to bear. And as welfare housing is sold off, you naturally find more and more people willing to take pride in their area and homes, thus increasing the likelihood that others will come into the area to buy too.
So there is no hard and fast rule and this is why it is so important to find out whether the property you have your eye on is going to be the right one for creating positive cash flow via wrapping. We need to take in many factors including the population of the area, how much vacant land there is around and the economic vibrancy of the area amongst other things.
Many people think that they should know the area before considering purchasing a property but if you take your time to do your research properly, you will probably know more about the area than the locals!
To Your Success
The Aussie Wrapper