If your capital growth is running low and you are running a bit tight on income, your property just might be the solution. Passive income is a way to keep yourself from falling into famine once you lose your job or find your financial resources under certain risks. But how can your property merely help you out with such a problem? Thus, introducing positive gearing your property investment.
There are certain ways to positive gear your property but what does it mean and how does it work comes first.
What Is Positive Gearing Your Property Investment?
Starting with a simple example to not complicate the answer to this question; let us suppose the rental income of the property you own is $100 each month, and the expenses you have to pay such as taxes, maintenance, loan repayments, etc. on that property are $70, this means your property is positively geared. Why? Because it saves you 30$ each month thus you end up earning $360 per year.
How Does Position Gearing Your Property Works?
It is not all that difficult to positive gear your property. However, it requires some property investment planning and a bit of a professional help to minimize the risks whatsoever. People who generate a low capital income and keep facing fluctuation in their employment usually use their property to create a positive cash flow so they do not face financial problems later.
It is as simple as it can be. If you already own a property then you might have to focus on the renovations and lease options of your property. It is certain that the housing demand increases over time which makes your property very eligible for renting out, however, in order to create a positive cash flow to keep the income increasing each year, you need your property to attract market first. For that, your property must be maintained, renovated, and properly displayed. Once you make your property looks appealing, you can even rent it out to dual occupants, perhaps more if you eventually earn enough to build an extension to your property.
More can be done so your rental income is increased. Look for a great real estate agent who can find good tenants so your expenses stay under control as well. The real estate agent can also help you in creating better lease options such as minimizing the time period of your property occupancy.
It all sounds like a perfect plan until your expenses increase along with your income. In order to keep a strict eye on that, you need to keep a few things on your checklist and take care of them, such as managing the property on your own to avoid any charges. If that sounds like a problem then looking for a cheaper rental manager who would charge less than the others.
Another thing that can be done to support your rental property is your insurance policy. Get a good one along with an interest-only loan. You can also get rid of your mortgage entirely and look for tenants who will cause fewer maintenance problems and stick with paying off their utility bills too.
Now that you have your investments and the expenses under control, you can positive gear your property once you feel like your job and income is at a risk. There are no such disadvantages to positive gearing your property for passive income and positive cash flow unless you have a rapid capital growth through your job. Positive gearing your property can be made much more efficient and feasible if the correct decisions and help if acquired.