Thinking negative gearing is a strategy

The more you know about the most common mistakes that investors make, the better your likelihood of building lasting wealth.

In this series of short videos, Ahmad Imam and I discuss the common mistakes I’ve seen investors make.

Today we discuss the commonly held belief that negative gearing is a strategy.

That’s not true – negative gearing is the result of how you fund a property, not a strategy in itself.

Watch today’s video as I explain why…

Some of the points we discuss are:

  • Negative or positive gearing is the result of how you fund your property, it's not an investment strategy of itself, however many investors make the mistake of thinking it is a strategy.
  • If you look for property with positive cash flow property you will have to forgo strong capital growth.
  • My strategy is to buy a high-growth property and have a finance strategy to cover your cash flow. That way you buy time as well as a property. This means that whether the government changes negative gearing laws, it shouldn't affect you.
  • Some of the questions you should ask before investing are:
    • What am I trying to achieve?
    • What is my budget?
    • What is my finance strategy?
    • What is my risk profile?
    • What ownership structure should I use?

With thanks to Michael Yardney's PropertyUpdate.com.au

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