Making a Positive Return: The Benefits of Positively Geared Properties

Investing in real estate is a great way to build your wealth and secure your financial future. Positively geared properties are a great option for investors looking to make a positive return on their investment. In this blog post, we'll take a look at the benefits of investing in positively geared properties and explore how they can help you build a strong portfolio.

We'll discuss the advantages of a positive cash flow, the different strategies you can use to make a positive return on your investment, and the potential pitfalls of investing in positively geared properties. By the end of this blog post, you'll have a better understanding of how positively geared properties can work for you and how to make the most of this investment option.

Understanding Positive Gearing and Its Benefits

Positive gearing is the situation where the income from an investment property (rental income) is greater than the costs associated with that property, including interest payments, tax, insurance, and other costs. This means that the investor is making a positive return on their investment.

Positive gearing can be a great way for investors to increase their wealth and financial security, as it gives them a regular income stream and a potential for capital growth. It can also be a great way to diversify a portfolio and reduce the risks associated with investing in the stock market.

For those looking to invest in property, it is important to understand the benefits of positive gearing. Positive gearing can provide a regular stream of income, as well as the potential for capital growth. This is because the rental income from the property is greater than the costs associated with the property, which means that the investor is making a positive return.

This income can be used to pay off the mortgage, or it can be reinvested back into the property to increase its value. Since the costs associated with the property are lower than the rental income, this can also lead to tax savings.

In addition to the income and potential capital growth, positive gearing also provides greater flexibility in terms of when and how an investor can draw down their profits. This can be beneficial for those who are looking to use their rental income to supplement their regular income or to fund a large purchase.

Ultimately, positive gearing can be a great way for investors to increase their wealth and financial security. It provides a regular income stream as well as the potential for capital growth, and it can also lead to tax savings. It is important for investors to understand the benefits of positive gearing before they make any decisions, and to ensure that the rental income is sufficient to cover the costs associated with the property.

The Impact of Positively Geared Properties on Your Investment Returns

Positively geared properties can have a significant impact on your investment returns. By purchasing a positively geared property, you are able to generate an income from the rent that exceeds the expenses associated with the property. This means that your investment is generating a positive return each month, which can help you to build wealth over time.

When it comes to positively geared properties, it’s important to consider the long-term implications of your investment. For example, you’ll need to think about the potential capital growth of the property, as well as the ongoing costs associated with owning a rental property, such as maintenance and repairs. It’s also important to consider the taxes you may need to pay on any rental income.

It’s important to remember that the rental income from a positively geared property is taxable, and you will need to declare any income you receive on your tax return. You may also be required to pay capital gains tax if you sell the property at a profit. It’s important to factor in these costs when you are calculating your investment returns.

You should also consider the potential risks of owning a positively geared property. The rental income you receive each month may fluctuate, and if your tenants fail to pay their rent, then you may have to cover the costs yourself. It’s also important to consider the potential for changes in the housing market, as this can affect the value of your property.

When it comes to making a positive return on your investments, it’s important to do your research and understand the different factors that can affect your returns. Taking the time to understand the benefits and risks associated with positively geared properties can help you make an informed decision when it comes to your investments.

How to Find the Right Positively Geared Property

Finding the right positively geared property can be a daunting prospect, but with a few tips it can be made easier.

Start by looking at the current rental market in the area you're interested in. Do research on rental yields and compare different areas to get a better understanding of what’s available. Make sure to look at the current rental market for the area and look at the trends over the past few years.

You should also consider the potential capital growth of the area. While positively geared properties are a great way to make a return, capital growth plays a huge role in long term success. Look at the area’s population growth, local infrastructure investments and other factors that could affect the value of the property.

Once you’ve identified some areas of interest, it’s time to look at the properties themselves. Make sure to look at the condition of the property and any potential maintenance costs. Also look at the features of the property and its proximity to amenities such as shops, public transport, schools, parks etc. as these can all affect the rental yield.

Once you’ve identified a property that seems suitable, it’s important to take a long term view of the investment. Consider how the area might change over time and how this could affect the rental yield. Consider the possibility of rent increases or decreases and how this will affect your return.

Finally, it’s important to consider the tax implications of owning a positively geared property. Make sure to research the taxation laws in the area and speak to an accountant if necessary.

Finding the right positively geared property can take time, but with a bit of research and a careful approach, you can make sure you’re making the right decision.

Strategies for Maximising Your Positively Geared Property Investment Returns

When it comes to making a positive return on your positively geared property investment, there are a number of strategies you can use to maximise your returns.

First, you should consider leveraging. This means taking out a loan to purchase an investment property that produces more rental income than the loan payments. This will allow you to use the extra income to cover other costs associated with the investment, such as maintenance and repairs. It is important to ensure that you do not over-leverage – ensure that you have a comfortable margin of safety.

Second, you should think about investing in multiple properties. This will help you diversify your income and help spread the risk of any one property underperforming. It is also important to ensure you are investing in the right areas – areas that have a good rental demand, as this will help maximise your returns.

Third, you should consider buying high-yielding properties. This means properties that produce higher rental yields than the average for the area. These can be a great way to generate a positive return on your investment. However, it is important to consider the extra costs associated with these properties, such as higher maintenance costs.

Fourth, you should look into tax deductions. There are a number of tax deductions available to investors that can help reduce their taxable income. It is important to ensure that you are taking advantage of all the deductions available to you, as this can help reduce your overall tax bill and help you maximise your returns.

Finally, you should look into tax-free investments. There are a number of investments that are exempt from income tax, such as superannuation and capital gains tax. Investing in these types of investments can help reduce the amount of tax you pay and help you maximise your returns.

By leveraging, diversifying, investing in high-yielding properties, taking advantage of tax deductions and investing in tax-free investments, you can help maximise the return on your positively geared property investments. It is important to remember to consider all of these strategies when investing, as each one can have a significant impact on your overall returns.

We understand you and we want to help

At Ello Lending, we believe that positively geared properties are a great way to generate a steady income stream. With our experienced team of mortgage brokers, we're here to help you find the right property to suit your needs and your budget. If you want to know more about positively geared properties and how to make a positive return, please don't hesitate to get in touch. We'd love to answer any questions you may have and help you on your journey to financial success.