Positive Gearing

What is positive gearing? 

Positive gearing is when a property generates more income than you pay in expenses, leaving you with more money in your pocket at the end of the month. It’s easy to understand why positive gearing is attracting a lot of attention – done properly it can replace some or all of your income.

Who is positive gearing suitable for?

Because positive gearing has the potential to provide an income, it is particularly appealing if you are approaching retirement and/or planning to live off your investments.

Positive gearing might not be the right investment strategy for you if you’re earning a good salary and want to lower your taxation bill, or are focused on purchasing property that will provide high capital growth.

Like any investment decision, it’s important to weigh up all of your circumstances and take advice from trusted professionals before you decide whether positive gearing is suitable for you. 

How does it work? 

Positively geared property is usually found in the outer suburbs or rural areas, where purchase prices are lower and rental yields are relatively high. For positive gearing to work, the relationship between purchase price and rental yields must be right – and this is influenced by many factors, such as trends in vacancy rates, location, predicted population growth, expected development of an area, and the quality and amenity of a property.

What are the risks? 

If your strategy is to earn an income from your property, it is crucial to take all expenses into account. If you forget to include or underestimate some expenses, the income you were counting on may simply not materialise. Underestimating expenses can also lead you to overspend on purchasing a property. When choosing a property, you need an accurate and thorough estimate of expenses, so you know when to pounce and when to walk away.

Can you help me purchase a property that is suitable for positive gearing? 

Yes! We help investors like you everyday. Our expert team has in-depth knowledge of the Melbourne property market and will save you time and money by finding you the right property, in the right location, at the right price. 

Don’t risk tying up your money in an investment that doesn’t deliver. Make your free first appointment today.