Buying a Negative Geared Property
If you are looking to purchase right now and can find a property that has very little negative gearing, it is quite possible that in 18 months you could end up with a positively geared property.
The reason behind this thinking is that if we get more interest rate cuts and property rentals keep rising (as expected) an investor could well have a situation where their negatively geared property becomes positively geared.
So how would this benefit you?
Firstly, you could maintain your repayments as they are today and pay off some equity; or secondly, if your property is positively geared in 18 months, you will be able to purchase another property that is negatively geared and use the positive gearing to offset your new expenses.
So given these possible situations, if you were going to go ahead and purchase, you would want to be looking for areas of strong growth, with a good rental market, and then purchase a bargain in that area.
This all bears thinking about and planning doesn’t it?
Filed Under: Investment Strategies • Property Investment
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