add share buttons

Home » Business and Management » How Does Positive Gearing Works

How Does Positive Gearing Works

Positively geared properties are those where your incomings, i.e. your rental income is greater than your outgoings. Positive cash flow before taxes is possible due to mortgage repayments, repairs, and strata fees.

Advantages of Positive Gearing

1. Cash in Hand

Having a property fully covered by rental income means that you immediately begin generating positive cash flow. You can also search the web to get more information about top negative vs positive gearing via

Image Source: Google

2. Profit without relying on capital growth

Positive cash flow means immediate income from your investment, as opposed to relying on property prices to increase to make a profit. 

3. Increased purchasing power

As a result of having a better cash flow, you can potentially use this to further build your investment portfolio or pay down an existing mortgage on your principal place of residence.

4. Relatively rare

To achieve positive gearing, creative strategies are sometimes required to make the property more desirable in the market.

These strategies sometimes involve actively renovating or adding value to the existing property, or better yet, investing in properties with strong rental yields (i.e. 5.5%) whilst interest rates are low in the current environment.