Tony you've stated that your stategy to make money from this property is via the capital growth. If you've borrowed most of the property value you will be negative geared to some degree and based on your income the goverment will only help you out 30 cents in the dollar on your losses.
This is all fine as long as your expectation of capital growth is realised. If the value doesn't increase, then you're just throwing money away. (Personally I think you'll be fine over the long term).
If you've got a huge amount of unused cash, you could reduce the loan to the point where the property is positive geared. If this is the case you should also assess if there's something else you can do with that cash which might put it to better use. If there isn't a better use that you're comfortable with, then I'd suggest that you do positive gear the property (and stop loosing 70 cents in the dollar, instead you'd be paying 30 cents tax for each dollar profit you make).
If you don't have enough surplus cash and you need to borrow most of the property value, then you don't have the luxury of choosing to be postive or negative geared. You'll just need to have faith that your capital growth prediction will occur.
Hi PT_Bear,
I purchased the property for $355,000 and borrowed $319,000. I pay IO $1900 p/m. My income a month is $3600....
I have NO unused cash anywhere