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A positively geared property earns more in rent than it costs to hold. The income covers the loan, the running costs, and still leaves a surplus in your pocket each month. It sounds obvious as a goal, yet a large share of the residential investment market is built on the opposite arrangement.
Negative gearing means the property loses money on a cash flow basis, and the investor offsets that loss against their income tax while hoping capital growth eventually makes the whole thing worthwhile. It is, at heart, a bet. It works when prices rise steadily and rates stay low, and it comes under real pressure when either of those turns.
At 8.5% and above net yield, a Dominion asset is positively geared from day one. There is no waiting for growth to justify a monthly loss, because there is no monthly loss. The asset produces surplus income from the moment the first tenants move in, and that surplus holds up even as rates move around.
Positive cashflow is what lets an investor sleep at night. It removes the reliance on rising prices, it keeps the asset comfortable through a higher-rate environment, and it compounds rather than drains. Under the terms of the Keystone program, Dominion also guarantees a minimum of $140,000 net rent in year one, so the day-one position is not just a projection. It is underwritten.
Where to from here. If you would like a day-one cash flow position modelled on an actual project, get in touch and we will send the figures through.
The figures above are illustrative. Yields and any rent guarantee apply under the terms of the relevant Dominion program. This is general information, not financial advice. Investors should seek their own advice before committing.
