Negative gearing strategies outdated: Debra Beck-Mewing

GUEST OBSERVER

The debate on negative gearing ahead of the budget and looming elections has only added to the confusion among property investors as the ultimate aim from buying property is to make money, not to lose.

It’s an outdated way of investing to focus solely on negative gearing to build a property portfolio.

To put things in perspective, Labor recently said if elected, it would restrict negative gearing deductions to only new property. The federal government opposes this, asserting that negative gearing should remain with caps being placed on its use.

All of this debate surrounding gearing and lending as the Budget looms has only highlighted the need for diversity in any property strategy. There are a lot of opportunities out there, people just need guidance.

It is important to tailor strategies on a case-by-case basis, rather than a blanket reliance on negative gearing and depreciation because any changes in circumstance, such as sudden unemployment, can turn the property into a burden.

The consulting firm says it employs a range of tactics on behalf of buyers, with opportunities including capital growth, high yield, cash-flow positive, add value, renovations, granny flats, developments and buying new or established properties in regional or capital cities.

We find this approach gives our clients the confidence to build a strong and balanced portfolio that is adaptable to changes and opportunities in the market. Regular portfolio stress checks are also important to ensure ultimate security.

In its first year, Crave has helped clients with property deals worth more than $55 million.

We just purchased a $325,000 property on behalf of a client, a corner block spanning over 790 square metres with rental return of $340 per week. They also have the opportunity to add a granny flat.

Another client recently landed a development block for $825,000, with similar properties now selling for $1 million.

Investors are also starting to look beyond local or usual purchase areas to areas that not only better suit their own financial situation but offer affordability and growth potential.

Now is the ideal time for home owners to check whether the impacts of recent government changes could increase the equity on their existing properties.

We are seeing a lot of opportunities being unlocked, with government rezoning key areas and adding infrastructure such as roads, transport and community facilities.

Debra Beck-Mewing is founder of consulting firm Crave Property Advisory and can be contacted here.