WHAT IS THE DIFFERENCE BETWEEN
NEGATIVE GEARING WITH POSITIVE CASH FLOW
This occurs when your rental income exceeds your out of pocket \
expenses, without the depreciation benefit. So the investor can claim more expenses than the income earned yet not have physically paid for more expenses than the actual amount of income accrued.
STRUCTURED GEARING
This facilitates putting in place a structure that allows for all the valuable tax deductions of negative gearing, but which provides a cash flow, such as to render the incomes and outflows neutral, or even cash flow positive, which can produce excess income if the investor chooses to receive a passive income stream.
An investor might then purchase an investment property using a 100% plus costs loan and instead of placing dollars into the property they have purchased, they might choose to purchase an income stream as produced by a Cashbond annuity. The income stream could be purchased to provide for the weekly cash flow shortfall or more, which will cover the cost of holding the asset.
This structured gearing approach is especially useful when acquiring subsequent investment properties. By using ‘Structured Gearing’, investors can produce a high level of passive income to subsidise their current and future income requirements.