When it comes to real estate investing the term term ‘negative gearing’ is more commonly known, but ‘positive gearing’ isn’t as well known. Positive gearing is when the rental income from an investment property is greater than mortgage interest payments and expenses (rates, levies, etc) being paid on the property.
For example if a property is being rented for $1,200 a month, but the mortgage repayments and outgoings are only $1,000 per month, then the property is said to be ‘positively geared’.
This type of investment property is harder to find in a market which has strong growth, such as we have been experiencing in the Perth greater area. Currently positively geared property is easier to find in more remote areas of Western Australia where a large commercial business is in operation, like a mine site. Often here the properties are of lower value, but have high rent returns while the mine is in operation.
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