Model cash flow conservatively

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Most investors rush into property with tactics, not strategy, and pay for it in mistakes that are costly to buy, hold, and unwind. This guide lays out a clear, repeatable framework so you can make property decisions that compound for decades. Start by defining a single objective: long-term growth drives wealth; yield only supports holding costs. Next, build the finance structure first, smart loan splits, offsets, IO vs P&I, no cross-collateralisation, so your cash flow and future capacity are protected. Then buy only investment-grade assets: scarce, land-heavy homes in established, supply-constrained suburbs with deep owner-occupier demand and long growth histories.

Model cash flow conservatively (30% expense allowance, 6.5% rates +1% stress) to avoid both over- and under-investing. Choose the city with the best 10-year prospects, then narrow to the top suburbs. Don’t trade quality for a cheaper price point. Manage risk on purpose: maintain buffers, insure properly, avoid excess leverage, preserve capacity, and diversify gradually. Review every 3–5 years for equity, borrowing power, cash-flow optimisations (including value-add), and asset quality, then scale only when foundations are strong.

Follow this process, and the property becomes a disciplined wealth engine. Ignore it, and you’ll battle avoidable costs, fragile cash flow, and disappointing results.

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