Everyone wants to buy a property at some stage.
The teacher, the self made millionaire, the single mum on centrelink.
But money doesn’t grow on trees and a property that makes you money from the second you own it is to good to be true, right?
At the end of the day all the banks really care about is serviceability and risk.
Unfortunately this means that if your young, single or earning a low income and you start accumulating negatively geared properties you can be certain that after buying a few properties the banks are going to close the doors for the simple fact that your carrying to much risk on paper.
A better strategy, at least in the accumulation stage of your property portfolio, is to purchase properties, which put cash into your pocket each week.
Its important to note that a positively geared property is one which puts cash in your pocket, after all of the costs to hold and maintain the property are taken out.
Unfortunately our society tells us that properties like these are scarce or simply don’t exist. The truth is these properties are everywhere, we just don’t recognize them with our traditional property filter.
An example of a positively geared property is the dual occupancy I am building in Kallangur, a suburb 29km North of Brisbane. This particular property cost $405,000 and will rent for $600 a week, giving me approximately $150 a week in passive income, based on current interest rates.
What’s even more interesting about this property is the way the bank looks at it. On paper it increases my serviceability because it’s providing me with additional income. This property will also allow me to continue to build and purchase additional properties.
Positively geared properties are one of the simplest ways to build a portfolio of 10+ properties over a period of 5 – 10 years, for the simple fact that they don’t stop you moving forward.
You can find positively geared properties buy looking for suburbs with a high rental yield in property investment magazines, purchasing older and undervalued properties and renovating them up, building dual occupancy housing, investing in the right mining communities, buying below market value, subleasing, adding a granny flat and a range of other ways.
At the end of the day it all comes down to your personal investment strategy and tolerance to risk.
The information provided in this article is of a general nature only and in no way constitutes legal or professional advice, or specific advice in relation to any finance. In all cases we recommend you receive professional financial advice for your own personal circumstances.