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

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