5 reasons why positive gearing is beneficial

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Positive gearing is a hot topic right now, with more and more investors looking to get their hands on properties that have the potential for positive gearing – just as their disposable incomes are getting proportionately smaller with the increasing cost of living.

While every property and every buyer are unique, and there’s no one right way to achieve a good outcome for an investment, there’s a distinct trend right now in positive cashflow property.

Buyers, particularly those looking to expand their existing portfolios, are increasingly focused on positive gearing their next investment property – and there are a number of good reasons why.


It gives you extra income

By nature, the total income received from a positively geared property exceeds your expenses in owning it – including loan repayments, management fees, utilities, rates and body corporate fees – all of the costs payable by you.

That means after all your expenses every month you’re actually left with some extra cash. It’s not hard to see why investors are swinging towards positive gearing, especially when you can usually expect to be many thousands of dollars out of pocket at the end of the financial year with a negatively geared property.

Every time you buy a negatively geared property, you’re potentially taking food off your plate. Most of the time, these properties will pay off in the future, but it can amount to a long term of sacrificing elements of your lifestyle that you enjoy.



Positive gearing helps you get ahead and grow your property portfolio, without losing disposable income and affecting your quality of life. Whichever way you do it, it’s hard to say no to an investment option that doesn’t actually cost you anything.


It’s not as risky

 You usually have to make sacrifices when you’re in property investment. But it doesn’t have to work that way: positively geared properties are a much safer option, and demand none of your money than traditional negatively geared investments.

When an investor’s individual circumstances, the property markets, or the global and local financial climates change, investors can find themselves at a crossroads, deciding whether or not they can afford to keep their property.

Oftentimes they’ll need to sell, simply because they don’t have a way to find a way to find the costs required to support it. But because positively geared properties don’t actually cost extra every payday, you’re much less likely to have to let them go, even in dire circumstances.


It balances out your portfolio

Traditional negatively geared investment properties cost a lot just to keep them. The more you own, the more you’re out of pocket every month, and the more risk that you’re taking on. If you’ve got quite a lot of shortfall, you run the risk of not being able to service all your mortgages when something goes wrong with your income or the market.

Positively geared properties can be used to balance out your portfolio, covering some of expense of the negatively geared properties with the income they generate.

If you prefer, you can keep your entire portfolio negatively geared for the taxation benefits, but still reduce your out of pocket expenses by a fraction to improve your cash flow. They can also help to increase the overall stability of your portfolio by improving your serviceability and equity.



Positively geared properties improves your lender attractiveness

 When you own multiple negatively geared properties, there often comes a point where lenders will consider you too risky to loan to because you simply don’t have the serviceability.

Even when you’re certain you could manage the extra expense, you’ll often miss a few investment opportunities because you can’t get another loan, and you’ll have to wait until your equity or income improves to jump on another property.

Positively geared properties put extra money into your pocket every month, but they also look great on paper. You’re increasing both your income and your assets by owning them, and they go a long way to increasing your attractiveness to potential lenders by helping you to rank better on several measures including serviceability.

Even a modest improvement in your overall financial situation can dramatically increase your chances of success, giving you the leverage you need to grow your portfolio and reap the future benefits of getting ahead faster.


Positively geared properties can also generate good capital growth

 In the past, positive gearing wasn’t considered a good option for generating good capital gains, most often because positively geared properties were bought in regional areas.

But because of the shift in supply and demand we’re now seeing in both regional and metropolitan areas, positively geared properties are improving their reputation for capital growth and prosperous property investment.

Brisbane residents will understand the impact that recent housing shortages have had on the property market, and may already know how easy it is to reap the benefits of positive gearing.

Positive gearing can revolutionise property investment. Brisbane investors will already know its long history of steady increases in both property values and rental rates – and the same values holding steady throughout financial crises and natural disasters.

One of the best ways for investors to reach the coveted positive gearing status is investing in dual living. Investors into Brisbane have never had a better opportunity to improve their financial health.


Contact Property Queensland to find out more about how investing in a dual key property could change your life with positive gearing.


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