Take the time to plan your real estate investment and don't rush. Find out more about your area of interest by reading real estate articles, getting information online, or contacting a reputable real estate research firm.
Find out the area's average rental income, property price growth both past trends and forecasts and what infrastructure is planned. To get more details about negative vs positive gearing you may see it here.
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Make sure you're ready to commit, as investing in property is generally a long-term strategy. You need to be aware that unlike other types of investments such as shares, you can't just sell part of it if you're short for cash at the time.
Negative or positive gearing
Negative gearing means the cost to maintain the investment – including loan repayments and fees, outweigh the income produced. This will lead to a reduction in taxable income.
On the other hand, positive gearing is where the income produced is greater than the outgoings – which can mean potentially high rental yields. Get advice on which type of gearing will produce the highest returns for your investment.
While there is a large percentage of people who rent in Australia, you need to ensure you're able to cover the mortgage repayments and other associated costs of your investment even if it's vacant for some time. It is therefore important to have a cash buffer readily available.