blog

Positive Geared Property: Master the Art of Investing in High Return Assets

positive geared property

Prophero

Love it? Share It!

positive geared property

Positive Geared Property: Master the Art of Investing in High Return Assets

If you’ve been contemplating how to quickly generate positive cash flows from positively geared property investments, you’re in the right place. We Australians have a long-standing affinity for real estate, and with a methodical approach, you can transform property ownership into a lucrative financial venture.

And for real, there are no secrets to this. Positively geared properties are easy to identify, you just need to know what to look for. Here are our top tips, but if you want to learn more, book in time with our team here. We have a team of licensed property coaches that will offer you a free 30 minute consultation with no strings attached to understand your investment goals. 

In this post, you’ll learn:

  • Why location is essential for positive geared properties
  • How to manage and maintain financial calculations for positive cash flows
  • Tax strategies including depreciation and how this impacts positive gearing
  • How to look at property investment through the lens of building a portfolio
  • Strategic renovations as a tool to generate higher cash flows in the short term

But for now, let’s dive into how you can invest in a positive geared property to generate fast cash flows.

Strong Foundations First: Location, location, location. 

Begin with a fundamental consideration – location. In the vast expanse of Australia, your choice of location is critical. Focus on areas with robust rental demand, close proximity to amenities, and potential for future appreciation. Regions with historically steady capital growth often prove to be conducive to positive cash flow in the long term.

 

Financial Calculations: Unpacking Yield and Cash Flow Dynamics

Let’s delve into the financial intricacies. Yield, expressed as a percentage of the property’s value, is a key metric. Opt for areas with rental yields surpassing the national average, signaling a higher potential for positive cash flow.

Positive cash flow occurs when rental income exceeds property-related expenditures. This includes mortgage repayments, council rates, insurance, and maintenance costs. Conduct a meticulous financial analysis – the greater the surplus, the more favorable the outcome.

We’ve put together a super simple and easy to use cash flow calculator that you can download here if you want to test the waters a little more. 

A common mistake we see many investors make when it comes to rental yield is that they fail to check the rental income before they purchase a property. You may be able to snag a great deal, but if the rental yield is low it’s a good indication the property isn’t in a high growth location. 

 

Tap into Capital Allowances and Depreciation Benefits

Navigate the tax landscape judiciously. In Australia, we have the  benefit of capital allowances and depreciation deductions. The Australian Taxation Office (ATO) permits property owners to claim deductions for the depreciation of certain assets, providing a substantial boost to cash flow. However, it’s best toseek professional tax advice to ensure compliance.

 

Exploring Dual Occupancy Properties Through Property Portfolio Management

Why settle for a single income stream when a dual occupancy property can offer two? Consider investing in duplexes or residences with additional living spaces. Reside in one section while renting out the other, effectively doubling your potential for positive cash flow.

At PropHero, we pride ourselves in locking multiple investment properties for middle class and younger buyers. Having a diverse portfolio of high growth property isn’t a pipedream – it’s a reality. Read  more about it in our blog post on managing a profitable property portfolio here

 

Adding Value: Strategic Renovations for Higher  Rent Values

Renovations can be more than aesthetic improvements; they can elevate your property’s value and rental income. You can choose to undertake renovations judiciously and within budget. However, diligent research is paramount to avoid financial missteps as renovations needs to be done with care to ensure they don’t impact your capital gains negatively. If you want to learn about negative gearing – the idea that property expenses exceed the capital return of the property – read this blog post

 

Financial Foundation: Mortgage Terms Need To Be Monitored Constantly

Selecting the right mortgage is pivotal. Interest rates, loan terms, and repayment options directly impact cash flow. Thoroughly explore available options and consider engaging a mortgage broker to facilitate an informed decision.

With the current changes in interest rates in Australia, it’s important to keep a constant eye on what’s happening and whether you’re better off going on a fixed or variable rate. We see a lot of PropHero clients that can take a step back from this though, as we ensure all investments have high levels of rental occupancy and a strong rental yield. 

 

Tenants Are Your Friends: Establishing Reliable Leases

A dependable tenant is an invaluable asset. Be sure to have a rigorous tenant screening process in place and aim for long-term lease agreements to ensure stability. Consistent communication and prompt resolution of maintenance issues foster a positive landlord-tenant relationship, contributing to a steady and reliable cash flow.

 

To wrap up

The key to transforming property investments into a reliable source of positive cash flow isn’t rocket science if you break it down to a few common property investment factors:

  1. We cannot emphasise the importance of location enough – this will make or break having a positive geared property
  2. Rental yield is an important calculation to check before you invest in a property
  3. Buying property in Australia comes with taxation benefits including depreciation which can help to positively gear a property
  4. One property may not be the answer to generating impressive cash flows – instead you may want to build and manage a property portfolio
  5. Renovations when done conservatively can be a great tactic to generating higher cash flows really quickly

And that’s it! If you want to learn more about the PropHero process and how we help our clients build high return, low risk property portfolios then book in time with our team here

Scroll to Top