Expert Advice with Cam McLellan 09/12/2015
The two strategies are spoken about many times but which is the best for building wealth? A cash flow strategy aims to supplement your income and theoretically let you retire at the end. But that doesn’t mean you retire earlier than with a growth strategy. That depends on your initial available equity and the next market growth cycle’s timing.

A cash flow strategy is simple. Identify properties with a rental yield higher than your total expenses, interest repayments and holding costs. Once you reach your desired passive cash flow, you choose whether or not to keep working.

A cash flow strategy has problems. The initial capital required for deposits and costs is now too large for most Australians, making a cash flow strategy near impossible. I’m sure you’ve realised by now that I’m a capital growth property strategist. Real wealth comes from doubling your asset holdings every 7 to 10 years. You never achieve real wealth by trying to supplement your income.

The properties needed to build a cash flow portfolio are usually regional or on the outskirts of major cities. You’re lucky if regional properties double in value every 15 years, so we don’t consider them part of a capital growth strategy.

Here’s an example of how a growth strategy outperforms a cash flow strategy.

If you invest $400k in a cash flow property portfolio and assume it doubles every 15 years, your initial investment should double twice in value in 30 years (i.e. to $1.6m). While this may seem a lot in today’s money, it won’t buy much in 30 years.

If, on the other hand, you invest $400k in a growth property portfolio and assume it doubles every 7 to 10 years, your initial investment should double three to four times in 30 years. If it doubles every 10 years, it’ll reach $3.2m. If it doubles every 7 years, it’ll hit around $6.4m!

The properties I select using the criteria in this book are cash flow positive a few years following purchase. They then achieve strong long term growth. So I get the best of both worlds.

Be very clear on your desired end position when comparing and considering these two strategies. You can’t save your way to wealth with rental income or earned income.

I also want to make it clear that you should never combine these two strategies when building your portfolio. Decide on your preferred strategy and stick with it. If you’ve already started on a cash flow strategy path and you want to switch to a growth plan, I recommend you sell up and realign your portfolio to your plan.


  • You can’t achieve real wealth by trying to supplement your income.
  • Regional properties generally double every 15 years and are not suitable for a capital growth strategy.
  • Growth properties historically double every 7 to 10 years.
  • Never combine these two strategies when building your portfolio.

Cameron McLellan

Director of OpenCorp, Cam McLellan is committed to sharing his passion and property investment knowledge with everyday Australians. After thriving in the telecommunications, technology and recruitment sectors and making the BRW Fast Starters list twice and the Fast 100 list three times in 8 years, alongside accomplished OpenCorp entrepreneur and brother-in-law Allister Lewison, founded OpenCorp eight years ago.

Cam started investing in real estate at a young age and quickly mastered the art of building sustainable wealth. He has used the same wealth building strategy to develop a multi-million dollar business, sharing his knowledge and skill with ordinary Australians. Cam has personally bought, sold and developed numerous properties and has an extensive residential and commercial investment portfolio. 

Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.