Searching for a fun, self-sustaining investment to boost your income? You may want to consider positive gearing in real estate!
In a nutshell, positive gearing is when the rental income from your investment property covers all expenses and leaves some extra cash in your pocket. Sounds great, right?
Let's dive into the good and not-so-good aspects of positive gearing:
Upsides:
Tax deductions on property-related expenses.
Passive income and potential capital growth.
Self-sustaining, so your investment is safe even if your main income takes a hit.
Easier to secure loans for more property investments.
Downsides:
Higher income tax on your extra earnings.
Interest rate increases can affect your property's positive gearing.
Greater upfront cost to lower mortgage repayments.
Finding positively geared properties can be tricky.
To find such a gem of an investment, try these tips:
Look for suburbs with lower property prices.
Seek out areas with high demand for rentals.
Focus on suburbs with low vacancy rates.
But beware of these risks:
Be cautious if positive cash flow relies on depreciation.
Ensure the property has long-term growth potential.
Steer clear of high-risk investments like hotels or holiday homes.
Plan for periods of vacancy.
Consider the impact of interest rate changes.
Now, let's look at some top spots around Australia for positively geared properties:
For houses:
Blue Haven, NSW
Elizabeth North, SA
Laidley, QLD
For units:
Auburn, NSW
Lyons, ACT
Carlton, VIC
With this insider info, you're ready to embark on your positively geared real estate adventure!