If you’re learning about investing, you’ve probably heard the term “positive gearing.” It sounds complicated, but it’s actually one of the simplest investment concepts to understand.
Here’s the easy version — no jargon.
1. What positive gearing actually means
Positive gearing is when your investment property makes more money than it costs you to hold.
In simple terms:
Your rent is higher than your expenses.
Your expenses include:
- Loan repayments (interest)
- Rates
- Insurance
- Maintenance
- Property management fees
If the rent coming in covers all of that — and still leaves you with money left over each week or month — your property is positively geared.
You’re basically getting paid to own an investment.
2. Why investors like positive gearing
Positive gearing keeps things simple because the property funds itself.
The benefits include:
- Cashflow in your pocket instead of out
- Less financial stress
- Easier to hold long term
- You’re not relying on tax deductions
- Great for building a property portfolio
- It’s safer during interest rate rises
Because the property is paying for itself, it’s much cheaper to keep — even if interest rates change.
For many first-time investors, this is the easiest and safest way to start.
3. Positive vs negative gearing (simple comparison)
Positive gearing is when the rent you receive is higher than your expenses, meaning the property pays for itself and even puts extra money in your pocket. It’s cashflow-positive, easier to hold long term, and gives investors more stability — especially during interest rate changes.
Negative gearing is the opposite. Your expenses are higher than the rent, so you lose money each week and rely on tax deductions to reduce the cost. It can still make sense if the property grows quickly in value, but it’s less beginner-friendly.
Neither strategy is “good” or “bad” — they just serve different goals. But for most everyday investors, positive gearing feels much safer and easier to manage when starting out.
4. How to find positively geared opportunities
Positive gearing generally comes from:
- Affordable purchase prices
- Strong rental demand
- Good rental yields (rent compared to price)
- Low vacancy areas
- Smart loan structures
- Avoiding overpriced suburbs with low rental returns
This is why many investors look at growing outer suburbs, regional hubs, and new house-and-land areas — the rents are strong compared to the purchase price.
If you get the balance right, your property can pay for itself and grow in value at the same time.
