Investment property refers to property acquired for the purpose of generating returns through rental income, potential resale of the property, or both. Investment properties can be either long-term or short-term investment projects.
A positively geared property (also known as a 'cash flow property') is an investment that generates more in rental income than it costs in loan repayments, strata fees and other expenses associated with ownership.
Image Source: Google
There are many different strategies for making money in real estate, and many advocates are passionate about their "right" way.
Three popular strategies are:
1. Positively geared property – The gist is to buy property that leaves money in your pocket immediately, with the rent more than covering your interest expenses and other outgoings.
Provides cashflow, which enables you to buy more. Proponents claim if you choose well the properties will also provide good capital growth.
2. Negative cashflow property -Initially leaves you out of pocket with rent failing to cover the holding costs of the property. Relies on the fact property historically doubles in value every seven to 10 years so whilst you may be out of pocket for the first few years, the increased value of the property will more than compensate for that over time.
3. Renovate and sell – The aim is to buy a property at below market value, renovate and sell within a short period of time for profit.