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propertytalks Creative flow Frank Paul, CEO of Moneytree Partners, shares his knowledge with Mark Taylor about using the National Rental Affordability Scheme to create positive cash flow. Australian investors have the option to create positive cash flow in property investments using the National Rental Affordability Scheme (NRAS). Frank Paul is CEO of Moneytree Partners, an independently owned (non-bankaligned) financial advisory with expertise in all asset classes, including property. Here he shares his knowledge and reveals that, as with many creative options, it pays to really know how they can work for you and to understand the pitfalls. What is the NRAS? The NRAS is a creative federal and state government initiative that encourages new property development (with the obvious economic advantages that brings) while simultaneously making rental housing more affordable for people in particular income ranges. It is unique in its dual purpose, and in the right areas it will have the desired effect. How can investors use this program to create positive cash flow? By buying new properties in lower price ranges and, as a consequence, receiving more in government support than the amount sacrificed in rent. What challenges and pitfalls do investors need to know about? It's very easy to fall in love with the cash flows of NRAS on a spreadsheet – too many developers and investors have. However, it's far wiser to continue focusing on the investment market How does it work? In essence, if you, as the owner of a new property, sacrifice some of your rent (between 20 and 30 per cent), making the property more affordable to tenants, in return the government will give you approximately $10,000 per annum, indexed for 10 years. At the right price point the maths starts to look very attractive for investors. Mark Taylor, our regular property columnist, is the founder and managing director of the Keys To Success Club, a must-have resource for anyone who is serious about property. Visit: www.keystosuccessclub.com 84 and property fundamentals and use those as the main reasons to invest. If NRAS is offered on top of that, it's a bonus. Not all NRAS schemes are the same. You can exit and have tenant selection capability with some but not others. NRAS has been granted and promoted in some very poorly selected areas where rental affordability wasn't a problem to begin with, which means it is depressing rent in those places. For more expert advice about property visit www.facebook.com/expertpropertyadvice.