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Thinking negative gearing is a strategy

Video Transcription

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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