residential property should always be regarded as a long-term investment and to get an accurate picture of an investment's performance, I need to look at returns that have been calculated over as long a term as possible.
Borrowing to invest
- the dynamic of borrowing to invest is that it enables to increase my stake in an asset which in turn amplifies the size of its return to my self.
the higher the borrowings, therefore the higher my risk
Positively geared properties
- generates positive returns
- generally only work if the property is fully let year in year out and it dose not give the same tax advantages as negative gearing
- easy way to achieve positive gearing is to purchasing a property at the lower end of the price range and charging a rent that adequately covers the interest on borrowings plus other expenses.
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