Cashflowing in the early years - our advice

Read our advice on the importance of cash-flowing in the early years.

Our guide to cashflowing in the early years

This is known as cashflowing and is a common part of investment strategy in rapidly rising markets, especially in the early investment years.

But this makes cashflow highly important – you will want to optimise it, even if it is negative initially.

In the UK market at the time of writing we are entering a period of slower capital growth and yields are compressed – some regions have been in this phase for a while now. In this situation, a small increase in yield equals a big impact on profits.

You can’t do a lot about cap growth if you’re already invested, but you can have an impact on a yield.

High capital growth means frequent refinancing and repurchase.

Conversely, weak capital growth means refinancing is restricted and an investor will instead look towards:

(i) Security

(ii) Future refinancing

Yield is therefore much more important, which means active management is vital.

 

 

With thanks to BuyAssociation.