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Hear the latest weekly insights into the property market via podcast by Rich Harvey, CEO and founder of Propertybuyer.

 
Fri 14 Jun '24 with Rich Harvey Tax Effective Property Investment Strategies
 
 
Fri 24 May '24 with Rich Harvey Granny Flats: Boost Your Yields & Faster Mortgage Repayments
 
 
Fri 3 May '24 with Rich Harvey Unpacking the Northern Beaches with Incredible Agents
 
 
Fri 29 Mar '24 with Rich Harvey How to build a $7 Million Property Portfolio from scratch
 
 
Sat 16 Mar '24 with Rich Harvey Why Invest in Melbourne?
 
 
Mon 26 Feb '24 with Rich Harvey Sydney’s Inner West – Hotspots and Outlook for 2024
 

 

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How do I gear my property portfolio?

September 18, 2014 / Written by Rich Harvey

 

By Rich Harvey, CEO, propertybuyer.com.au

To really set yourself up for a comfortable retirement through property, you need to establish a set of several investment homes to sustain you once you decide to leave the workforce. You can choose to buy in one area, or diversify and establish a wide variety of houses to bring you income. But once you buy property, how do you set up your loan payments and rent yields?

Positive gearing: Do I go for it?

Many people prefer to go with cashflow positive property, making immediate gains through rental yield and focusing on this rather than the overall value of the home. However, you pay more tax on these profits and your loan repayments may be stretched out over a longer period. It's good if you want short-term gains and often suits people just starting out in investment or want to supplement their income. If you fall within a higher income bracket, you might want to head in another direction.

When do I shift into negative gearing?

When you negatively gear property, you can still have surplus funds through tax deductions while you wait for the home to increase in value. Once you pay off a loan or sell a property, you'll find your profits are looking good. These deductions, which can be made on anything from legal fees to basic home maintenance, are very beneficial for those earning more as they can soften the blow of a higher tax bracket.

Negatively gearing several properties at once can work very well if you're looking to sell the homes in the long term, especially coupled with interest-only loans. Patience is a virtue for a reason - stay in it for the long run for the best result on a home. However, this doesn't mean you should gear every investment you make negatively - the expertise of an agent will be able to guide you on which rent yields work for this strategy.

The spice of life

The beauty of diversifying your property portfolio is you don't have to restrict yourself to one style of investment. Mixing positive cashflow properties with negatively geared properties can bring you stellar returns, but you have to make sure your investments are chosen in the right place at the right time. Knowing when and where this is can be difficult, but by engaging a buyers agent you'll have everything you need to identify what kind of growth is occurring in certain areas. By keeping their ear to the market at all times, agents know exactly where to invest and which properties will make the best returns for your situation.

The Propertybuyer
Podcast

 
Fri 14 Jun '24
with Rich Harvey
Tax Effective Property Investment Strategies
 
 
Fri 24 May '24
with Rich Harvey
Granny Flats: Boost Your Yields & Faster Mortgage Repayments
 
 
Fri 3 May '24
with Rich Harvey
Unpacking the Northern Beaches with Incredible Agents
 
 
Fri 29 Mar '24
with Rich Harvey
How to build a $7 Million Property Portfolio from scratch
 
 
Sat 16 Mar '24
with Rich Harvey
Why Invest in Melbourne?
 
 
Mon 26 Feb '24
with Rich Harvey
Sydney’s Inner West – Hotspots and Outlook for 2024
 

 

Listen to many more
podcasts on our
Podcasts page.