How to work out if your property investment is positively geared
“Hello and welcome back to daily buying tips, I’m Dean Berman from Berman Buys.
Today we’re going to talk about how to work out if your property investment is positively geared.
In short, the rent you receive covers all the expenses associated with the property.
Mortgage principal and interest repayments.
Council rates, fixed water rates, strata rates (in a strata complex), land tax.
Property management fees.
Maintenance or renovations of the property.
Once you work out these expenses.
Work out how much rent you receive a year.
By multiplying the weekly rent by 52.
I haven’t included any vacancy for simplicity.
If your rent is greater than all your expenses your property is cash flow positive.
i.e. the property holds itself.
There are other benefits you can claim with the help of a registered accountant.
These usually include depreciation and interest on the investment loan.
I generally find more affordable properties tend to be more cash flow positive.
Or properties which have been added to.
Such as a granny flat, second dwelling or extra bedrooms in an extension.”