PROPthink

We very often here this cliche “Our house is our biggest investment“. Unfortunately, that is NOT true for most of the people. Why? Because for them, the house and its mortgage are actually the biggest burden and liability. The house could give you pride and joy, it could give you good shelter and even could give you happiness, but in the investing world, for most of the case it’s still the biggest liability you ever had. It could be your “biggest purchase” but whether is it an investment or liability, it’s actually depends on you.

(Whenever I refer to “house”, it actually can be broaden to all kind of real estate property such as: house, unit, apartment, town house, villa, condominium, flat, duplex, etc. So to avoid confusion, I will use term “home” instead to refer to it) more

When it comes to home loan or mortgage, especially mortgage of your own home, we often get carried away by old & classic understanding to payoff your mortgage as soon as possible. While it is probably true for some people, if you’re into investing and actively planning your wealth creation, then this article will show you exactly the opposite. You will find out that by not paying off the mortgage, you will be significantly better off.

This will involve a very important concept of wealth creation: Control vs Ownership. By not paying off the mortgage you are not after ownership. But even without the ownership, you will realize that you have full control as if you own it. So, isn’t it better: still have the same power, but you pay less and even have more profit for your investing.

Before we go, I have to warn you that this topic is quite advanced. To benefit you have to have investor mindset and you need to be comfortable having debt. But to tell you the truth, if you’re not comfortable with debt and don’t have investing mindset, then you will have more hurdle to overcome in your journey achieving your financial freedom. more

In our journey for Property or Real Estate investing, we probably often stumble to a news on newspaper or radio that read like this:

“For the last March quarter, the median price of house in this area has increase for 4% while the median price of unit has remained steady” or something like that…

The Terms

The term ‘median’ is statistic term. If we remember our school days, there are 3 important term in statistic: mean, median and mode. While ‘mode‘ is the numbers that occur most frequently and ‘mean‘ is nothing more than average, ‘median‘ is the term for the number exactly in the middle.

For example: let list down the price of 3-bedroom-houses in a street, say:
$330,000 $350,000 $350,000 $380,000 $400,000 $410,000 $750,000

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When it comes to property investing, these 2 terms: Positive Gearing and Negative Gearing always come to the surface. People always talk about the good and bad without really know exactly how to compare both scenario – apple to apple.

Without being too technical, we will discuss and calculate all the important numbers for both method. We also provide you with free tools to calculate the number based on your own situation. But the most important thing which method is the best? It will be revealed in an instant by the numbers. Let’s get started.

Negative Gearing

Negative Gearing simply means the income from the rent cannot cover all the cost (mortgage, repair, maintenance, strata/land tax, council rate, etc). Hence, the owner of the property need to come up with the money every month to hold the property.

For example: more