At Rethink Investing, we always have and always will, only purchase properties which are positively geared. So, what are the benefits of positive gearing and why is it our policy to only buy these properties for our clients?
More Money In Your Pocket – The properties we source for our clients are high yielding. This means that they deliver a high return on investment. For instance, the rental income derived from the properties we purchase will always be higher than the mortgage repayments and maintenance costs that our clients pay. This means actual money left over once all costs are covered – which ultimately means more money in our client’s pockets to spend, save, or to use to service more loans and grow their portfolio.
On Good Terms – Literally! Not only do the banks look at you more favourably, but positive gearing allows you to purchase more properties within different markets. Diversifying into three low cost positively geared properties is a much safer option compared to buying one high cost negatively geared property. Remember: Positively geared properties stack up without government incentives. If the government abolishes negatively geared tax benefits, a positively geared investor would likely be at less risk than those relying solely on tax incentives to cover their costs.
Less Anxiety – When you purchase a positively geared property, cash flow is usually better from day one. This means more cash buffers for unexpected costs like interest rate rises, or maintenance bills.
Passive Income – Our goal is to help our clients build a better life for themselves. We do this by sourcing exceptional properties and then helping our clients to purchase them. Because our properties are high yielding, our clients have an income which comes in each month (after mortgage and expenses are paid), without fail. By creating a self-sustaining property portfolio, you can start to build a passive income which you can one day live off.
Strong Strategy – The days of buying a property and claiming a tax loss is a dead strategy, and this is exactly what negative gearing is. There is too much risk for an individual to justify taking on a large debt in an established market with the goal to wait for a good tax return after a year of cash flow loss. This was the perfect strategy in the past when house prices were 4-5 times the average income in Sydney. Today, house prices are about 14 times the average income. Positively geared investing is the best strategy in the current economy. Remember: Without good cash flow, you have no business. Property investing has to be treated as a business. Somewhere along the line, this mindset was lost.
If you’re looking to get into the property market in 2018, or have any questions whatsoever relating to the above, call us today at 1300 965 551 or email firstname.lastname@example.org
Don’t wait months or years for negative gearing to be abolished. There’s a much better way to invest and you can do it today!
Director – Rethink Investing