Blog.

Australians grew up with negative gearing as pretty much the only property strategy available to them because there was no other option…

The only positive cash-flow properties were located mostly in remote outback mining towns and were a high risk proposition because they relied on the vagaries of mineral and energy prices.

In a boom you could do really well but when the inevitable bust came you were stuck with a house in the middle of nowhere that you couldn’t rent or sell…very depressing. I used to be a mineral exploration geologist so I’m speaking from personal experience.

What’s changed?

 

Well the game changer was about four years ago when the NSW government changed the law to make it legal to rent granny flats to anyone, not just your granny.

Now people used to rent out granny flats but it was illegal. You ran a big risk in doing so because if you had a row with your tenant they could dob you in to the council and that could cause you big problems. 

A couple of enterprising builders saw the potential of this change in the law and designed a house and granny flat joined together exactly like a duplex. Three or four bedrooms on one side and two bedrooms on the other.

They looked great and became very popular with renters and better still were strongly positive cashflow. 

It’s not rocket science…if you buy one block of land and get two lots of rent from it it’s always going to be strongly positive cashflow. A typical dual occupancy sells for around $520k and rents for at least $650pw. 

After ALL expenses have been paid including interest, property management fees and insurances, most investors are around $150 pw in front. That $150 percent can be used to pay off your owner occupied home much faster.

This is what they look like…

3 bedroom, 2 bath on left and 2 bedroom 1 bath on right. Double letterbox is the giveaway. This property costs around $520 k depending on location and rents for around $650pw.

The great news is that most clients end up being about $150 pw in front after paying ALL expenses. 

Negative gearing is crazy …why lose $1 in order to save 50c in tax.

Have your cake and eat it too…

Positive net income per week AND capital gains. It’s a no brainer really.

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