Positive Gearing

Positive Gearing

Positive Gearing occurs when you receive more in rental income from your tenants than you pay for your loan repayments.

In this situation the property is positively geared! Now let us consider the advantages and disadvantages when investing in a positively geared property.

The Advantages of Positive Gearing

Increased income – you benefit by receiving an income from the property and not having to be out of pocket. You can even use this surplus income to make additional payments into your own home mortgage and own your home sooner!

• Not as much risk – if your income circumstances change e.g., if you were to lose your job then the income will cover the costs of the investment and you are less likely to need to sell under pressure and potentially unfavourable conditions.
• Balanced portfolio – some investors may use a positively geared property to balance their portfolio, using the additional income to pay the shortfall of negatively geared investments.
• Lender Attractiveness – the additional income can increase your attractiveness to lenders for additional loans.

Cash Flow Positive Properties with Over 9.2% Nett Return

Your AIPQ property provides over 9.2% nett return on monthly repayments.

Real estate agents talk about yield from the property. AIPQ only refers to the actual return achieved from the cash outlay by the property investor, this being the deposit paid and the return you the property investor gains over the period of the program.

Please note that the tenant/buyer pays all outgoings; incl. Rates, insurance, and utilities during the tenancy period, saving you the AIPQ over AUD$9,000.00 over 2 years.

You the property investor retain all the tax deductions.