Comments on: As a rule of thumb, what percentage rental return would make for a positive geared property investment?

By: Jerry M

Jerry M — Tue, 11 Aug 2009 13:11:37 +0000

As a general rule 20% of the rent income for Australian properties will be lost to maintenance, council rates, property managers and vacancies.

The % rental return required to make a property positively geared will depend on the amount you borrow as well. If you borrow 100% it will take a much higher return to make the property positively geared.

Generally you will need a 10% to 12% return to be positively geared. Note that most positively geared properties are created not found, in other words you have to renovate, wrap or be creative to make a normal property positive.

By: mwinterwolf2004

mwinterwolf2004 — Mon, 10 Aug 2009 21:05:32 +0000

First, figure all of your expenses you will have every month — mortgage (principle, interest), taxes, insurance. Then, subtract the rent you want to make on it … remember, you will have miscellaneous expenses. If you wish to buy or refinance another home, a lender will only calculate 75% of th net rental income.

Example: Mortgage (principle, interest, taxes, insurance) is $1500 a month. Rent is $1600 a month. You THINK you are making $100 a month, but in reality, you can only count 75% of it, or $75. And that won’t take care of any maintence that may occur.