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From: Toyo Spares
Greetings,
I read that I should be aiming for positively geared IP (positive gearing being where rental income exceeds outgoings - without factoring in tax deductions etc.).
I've also read the most people can only get to 3 or 4 properties before their income serviceability runs out.
If the IP are positively geared, why would this be so ?
If the reality is that most IP are negatively geared then it makes more sense.
i.e. bank valuations are conservative with respect to actual market value of property and also rental income. If I borrow 100% of purchase price + costs (presumably using equity in my primary residence) then, after X number of properties the equity in my primary residence would be used up and or my DSR exceeded.
Assuming other bases are covered - i.e. rental/property insurance, income protection insurance etc.
What am I missing ?
Greetings,
I read that I should be aiming for positively geared IP (positive gearing being where rental income exceeds outgoings - without factoring in tax deductions etc.).
I've also read the most people can only get to 3 or 4 properties before their income serviceability runs out.
If the IP are positively geared, why would this be so ?
If the reality is that most IP are negatively geared then it makes more sense.
i.e. bank valuations are conservative with respect to actual market value of property and also rental income. If I borrow 100% of purchase price + costs (presumably using equity in my primary residence) then, after X number of properties the equity in my primary residence would be used up and or my DSR exceeded.
Assuming other bases are covered - i.e. rental/property insurance, income protection insurance etc.
What am I missing ?
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