SSI - High cash flow

What is the SSI - High cash flow?

SSI stands for Strategy Suitability Index. The SSI is a set of indexes used to gauge a market's suitability to a specific property investment strategy, for example:

  • Renovate and sell (aka reno flip)
  • Buy and hold
  • High cash flow
  • Buy off the plan
  • Buy at discount
  • Low risk
  • Development

Each strategy has its own unique requirements in terms of the nature of the market for success. The SSI scores each market based on the statistics that are most important to the type of strategy.

For example, the SSI - High cash flow is highly dependent on low vacancy rates and high yields. The SSI - Reno flip on the other hand is dependent on a quick sale for success. So a low "days on market" is very important for a reno flip.

Each statistic is given a different level of importance for each strategy.

The SSI - High cash flow is a score out of 100 for the suitability of a market to an investor looking to maximise income. The higher the score is, the better the chances of finding a suitable high cash-flow property.

How does the SSI - High cash flow work?

All SSI scores are derived using a number of statistics. A High cash flow investment strategy prioritises the following statistics:

  • Yield
    • Obviously a market with a high yield is more likely to have properties that are cash-flow positive.
  • Vacancy
    • A low vacancy rate puts pressure on rents to go up.
  • Proportion of renters
    • A low supply of rental accommodation means the investor is not competing with other landlords over the pool of potential tenants. This should keep the vacancy rate low.
  • PRG
    • A recent increase in rent could indicate a change in tenant demand for this market that other investors have not realised yet.
  • DSR+
    • The DSR+ is the best overall indicator of demand exceeding supply. This places pressure on rents to go up.

Why is the SSI - High cash flow important?

If your investment strategy for your next property is to buy a cash flow positive investment, then an index to gauge suitability for a specific market for that strategy is an absolute must-have.

You can examine the SSI statistics from the SSI tab in the Suburb Analyser if you have an appropriate membership. Not all members have access to the DSR+ or SSI tabs.

A list of memberships and what privileges they come with can be seen on the Pricing page. To change your membership, use the Profile page.

Is the SSI - High cash flow reliable?

Yes, the SSI - High cash flow considers a number of statistics rather than just one. It is unlikely that all statistics or even half of them are subject to anomalies at the same time. One statistic can be out of whack, without affecting the overall score significantly.