How to Buy Your First Positively Geared Property in Australia

If you’re a first-time investor, your main priority is to build an income, not just to own a property. That’s where positively geared property comes in. 

A positively geared investment generates more rental income than it costs to hold, putting money in your pocket from day one. Have doubts this is possible? In Australia’s property market, achieving positive cash flow can still happen, you just need the right strategy. 

What is a positively geared property?

A property is positively geared when the rental income exceeds all expenses, including: 

• Mortgage repayments 
• Property management fees 
• Maintenance and repairs 
• Insurance and council rates

Let’s take a look at an example. If your total costs are $500 per week and your rental income is $550 per week, you’re positively geared and earning $50 weekly profit. 

The reasons why positive gearing is important for first-time investors

Positive gearing has many benefits if you’re just starting out investing because it: 

• Provides immediate income instead of draining your savings 
• Reduces financial stress and holding risk 
• Helps you scale your portfolio faster 

Negatively geared properties rely on capital growth, but positive cash flow gives you more control and flexibility. 

How to positive gear in Australia – the key steps

Step 1: Choose the right location 

When looking for an investment property to positively gear, location is a big consideration. High-growth inner-city areas often come with lower rental yields, making them harder to cash flow. 

Instead, focus on: 

• Regional areas with strong rental demand 
• Outer suburbs with lower entry prices 
• Locations with infrastructure growth (transport, hospitals, universities) 

Look for areas where rental yields are typically above 5–6%. Knowing which locations actually perform. Working with a team like Phone Homes can help you identify high-yield, data-backed locations that align with your investment goals.

Step 2: Understand rental yield

Rental yield is important when assessing a property. Gross rental yield = (Annual rent ÷ Property price) × 100

As a general rule:

• Higher yield = better chance of positive cash flow
• Lower purchase price = easier to achieve positive gearing

However, you should remember that yield alone doesn’t tell the full story. You need to assess the deal from all angles, something experienced investment teams do daily when shortlisting properties for clients.

Step 3: Keep costs to a minimum

To increase your chances of positive gearing:

• Secure competitive loan rates
• Avoid overcapitalising on renovations
• Choose low-maintenance properties
• Compare property management fees

Even small savings can make a big difference to your cash flow. The right guidance matters. Phone Homes helps investors avoid costly mistakes by sourcing investment-grade properties that are designed to perform both now and long term.

Step 4: Choose property types that perform

Some property types are more likely to deliver strong rental returns:

• Dual occupancy homes
• House and granny flat combinations
• Affordable units in high-demand rental areas

Phone Homes can match you with the right property type based on your budget, goals, and risk profile. We never take a one-size-fits-all approach.

Step 5: Get your finance right

The way your loan is structured is important in deciding whether a property is positively geared. Factors like interest rates, loan type (fixed or variable), deposit size, and whether you choose interest-only or principal and interest repayments can all impact your cash flow. Getting this right can be the difference between a neutral investment and one that generates income.

Working with the right team ensures your finance strategy aligns with your investment plan, so the numbers actually stack up from the start.

Step 6: Do the numbers properly

Before you buy a property, you need to run a cash flow analysis. This should cover vacancy rates, maintenance costs, potential rate increases, and property management fees. A property that looks profitable in the beginning can quickly become a financial burden if these factors aren’t considered. 

For first-time investors, it can be confusing because you’re not sure where to buy, don’t have access to high-yield opportunities, or don’t fully understand how to structure deals. 

To overcome this overwhelm, SMSF investment services like Phone Homes can help simplify the journey and guide investors from strategy through to settlement with a done-for-you approach.

Is positive gearing still possible in Australia?

It is, but it requires a strategic approach. With rising interest rates and property prices, investors need to be more selective, data-driven, and have the right expertise on-hand. Opportunities still exist, especially in emerging markets and high-yield locations.

SMSF property investment in Australia 

Buying your first positively geared property in Australia can happen. When you work with a team that handles everything, from sourcing to negotiation to strategy, you can achieve your goals. Contact our team to learn more.