What is the difference between positive cash flow, negative gearing and positive gearing?
Good question because these terms are very different. To me positive cash flow means: that after all expenses of owning and managing your rental property have been met, you will have a cash surplus from your properties BEFORE any tax refunds are taken into consideration. At worst, you will be looking for a break-even situation. Because Land Tax is an expense that only certain investors with larger property holdings incur, I do NOT allow for Land Tax in my positive cash flow calculations. Most people are into negative gearing (whether they know it or not!). As their property portfolio grows, many negatively geared investors eventually reach a point where they can no longer obtain finance to buy another property. With each property they buy, they need to put in more of their income. Negative gearing is where the investor needs to contribute money out of their regular income to support their investments. Since they also need to meet their living and lifestyle expenses out of that regular
