Positive Geared Property: How a Smart Investment Can Transform Your Portfolio

In the world of real estate investment, the allure of properties that not only pay for themselves but also generate additional income—known as positive-geared properties—is undeniable. These properties stand as a beacon for investors seeking financial stability and growth.

But what exactly makes positive geared properties so transformative for your investment portfolio? When you are considering investment options, and weighing choices between positive gearing, and cash flow, you are also considering the effects for term growth and capital appreciation. For savvy investors with a plan, you don’t have to choose between short-term gains and long-term growth, you can find investment options that satisfy both. Positive geared properties can be a cornerstone of a solid investment portfolio that brings cash flow as well as wealth creation.

Let’s dive into the mechanics of positive gearing and how it can unlock unparalleled financial benefits.

Understanding Positive Geared Properties

Positive-geared properties are real estate investments where the rental income received surpasses all associated expenses, including mortgage repayments, maintenance, and management fees. This surplus cash flow means the property is not just self-sustaining but also contributes profit to the investor’s pocket, making it an attractive option for those looking to enhance their investment strategy.

In other blogs and news, we often write about how the current property market in Australia has created negative gearing for property investors, with rental yields averaging 3.7% over the last year. A majority of investors, 57%, have reported that their portfolios are negatively geared, so they are paying more for mortgages and maintenance of the properties than they are earning.

Read more: Australian Property Investors Are ‘Copping It’

Immediate Cash Flow Advantage

The primary appeal of positive geared properties lies in their ability to generate immediate, ongoing cash flow. This direct stream of income can significantly impact your financial freedom, offering the flexibility to reinvest, save, or spend the extra earnings. Unlike investments that solely rely on future capital growth, positive-geared properties provide tangible returns now, making them an ideal choice for investors seeking regular income.

In our discussions on the delicate interplay between cash flow and capital growth, we’ve emphasised the critical role cash flow plays in a successful wealth creation strategy, which is why we offer investments that bring guaranteed returns and cash flow:

– Immediate 8% Return During Construction. From the moment you invest with us, your money isn’t just sitting idle. You start earning a guaranteed 8% return right from Day ONE, setting a solid foundation for your investment journey.

– Strategically Timed Project Launches. As we navigate a thriving tourism market, our partner developments scheduled to open in April (The Cruise), August (Cemagi Townhouses) and November (The Luc) are poised for exceptional performance. Anticipated to generate 15-20% returns in their inaugural year, these projects leverage peak tourism times for maximum profitability.

– Fractional Property Investment. Our fractional investment model democratises property investment, allowing you to enter the market with as little as $41,000. This innovative approach ensures that even fractional investors enjoy the same lucrative returns as those making whole property purchases, truly embodying our commitment to inclusive investment opportunities.

“These avenues represent just a glimpse into how we prioritise cash flow within our investment strategies, offering both immediate returns and the promise of long-term wealth creation,” says Mark Reed, GPFG International Sales Manager.

Risk Mitigation

Properties that yield positive cash flow often carry lower risk, assuming thorough research and strategic planning are in place. Consistent occupancy rates drive cash flow, and although there may be seasonal fluctuations in vacation hotspots or student accommodation areas, investors can typically predict their annual income with a degree of certainty. Moreover, properties that are cash flow positive continue to generate rental income, offering financial stability even when property values fluctuate.

Portfolio Growth and Diversification with Cash Flow Positive Properties

The cash flow from positive geared properties can be a powerful tool for portfolio expansion and diversification. By leveraging the additional income, investors can potentially finance further property purchases or diversify into other asset classes, increasing the potential for capital appreciation across their investment portfolio.

Room for Leverage and Reinvestment

The steady income generated by positive cash flow properties offers an opportunity for reinvestment, facilitating portfolio expansion or the purchase of more properties through the power of compounding growth.

Mark explains, “Leveraging equity for cash flow is a strategy we often emphasise. By tapping into your equity, you’re not just receiving cash; you’re also positioning yourself to reduce debts and improve your financial standing, which in turn, opens up more opportunities for property investment.”

Tax Considerations of Positive-Geared Properties

While positive gearing offers immediate financial benefits, it’s important to consider the tax implications. The additional income may contribute to your taxable income; however, with strategic planning and the advice of financial professionals, you can maximise the benefits of your investment while managing tax efficiently.

Read more from our partners at DuoTax: Everything You Need to Know About Positive Gearing

The Path to Financial Freedom

The ultimate goal of many investors is achieving financial freedom, and positive geared properties can play a crucial role in this journey. By generating a steady, reliable income, these properties can help accelerate your path to financial independence, allowing you to live the lifestyle you choose without financial constraints.

Properties generating positive cash flow serve as a solid base for accumulating wealth. The steady flow of income they provide not only meets ongoing expenses but often results in a financial surplus. This extra money can be strategically reinvested or utilised to enhance your financial well-being, setting the stage for sustained growth and financial security.

Mark remarks, “At the core of our client services is the goal of wealth building and ensuring a secure retirement through positive cash flow. This income represents more than immediate financial relief. Initially, it might be used to settle bills or reduce mortgage payments, but the true value lies in its potential to improve your financial future. Planning how to leverage this consistent income can significantly enhance your financial health over time.”

Positive Geared Property Investments with GPFG

Positive-geared properties represent more than just an investment strategy; they embody a path to financial stability, growth, and freedom. By prioritising investments that offer immediate cash flow, investors can enjoy the benefits of a transformed portfolio: reduced financial risk, enhanced growth potential, and a solid foundation for achieving long-term financial goals.

“We want to be very clear with our investors that cash flow positive properties can be not only beneficial for passive income in the short term but also a valuable asset to enrich portfolios in the long term as well,” says Mark.

We offer a selection of properties, all with options for fractional and full ownership, to meet your budget and investment goals:

– Cemagi Townhouse by Canggu Properti – Fractional ownership starts from AUD $116,00. Completion date: Q3 2024

– The Luc Luxury Villas – managed by TUI Blue – fractional ownership starts from AUD $71,000. Completion date: Q4 2024.

– Berawa Living #2 by Canggu Properti – Fractional ownership starts from AUD $70,000. Completion date: Q2 2025

– Beraban Luxury Lofts – Fractional Ownership starts from $AUD 41,000. Completion date: Q3 2025

In the dynamic landscape of real estate investment, positive gearing stands out as a powerful tool for those ready to take control of their financial future. Ask our team for more information or book a call with us today!

If you like this guide, you may also like:

– Fractional Real Estate Ownership: Everything You Need to Know

– Fractional Real Estate Investing: Our Guide To Unlocking the Full Potential of Fractional Investment

– Equity Release: What Does It Mean?