Unlock the secrets to positive gearing your next property

A positive geared investment property earns more in rental income than it costs in loan repayments and holding expenses. The difference lands in your account each month, creating a passive income stream while the property appreciates.

Most property investors in Australia focus on capital growth and accept negative gearing as part of the strategy. Positive gearing flips that equation. You still own an appreciating asset, but the rental income covers the mortgage, council rates, insurance and management fees, with surplus left over. That surplus can be used to pay down debt faster, fund your next deposit, or cover living expenses without drawing from other sources.

How Positive Gearing Works With Lower Loan Amounts

Positive gearing depends on the relationship between rental income and total holding costs. The lower your loan amount relative to the property value, the lower your monthly repayments and the more likely the property generates surplus income.

Consider a buyer who purchases a dual-income property in Ormeau for $550,000 with a 40 per cent deposit, borrowing $330,000 at current variable rates on a principal and interest loan. Monthly repayments sit around $2,200. A dual-income property with two tenancies generating $600 per week total delivers roughly $2,600 per month. After rates, insurance, and property management, the property delivers a small monthly surplus. Drop the deposit to 20 per cent and borrow $440,000, and repayments climb to around $2,900 per month, pushing the same property into negative territory.

The loan to value ratio directly controls cash flow. Lenders assess investment loan applications based on rental income at 80 per cent of market rent to account for vacancy and arrears. That buffer tightens serviceability, but it also protects you from overcommitting to a property that only stacks up on paper.

Interest Only Loans and Cash Flow Management

An interest only investment loan reduces monthly repayments by deferring principal payments for a fixed period, typically one to five years. Lower repayments increase the chance of positive cash flow in the short term, particularly on properties with strong rental yields but higher purchase prices.

Interest only loans appeal to investors focused on portfolio growth who plan to use surplus cash flow or capital gains to fund additional purchases. Repayments eventually revert to principal and interest, and the loan balance remains unchanged during the interest only period, so the strategy requires a clear plan for either refinancing, selling, or transitioning to principal repayments before the term expires.

Under current prudential settings, lenders assess interest only applications at the principal and interest repayment rate plus the serviceability buffer. That assessment protects borrowers from rate shock when the interest only period ends, but it also means the cash flow advantage during the interest only period does not always translate to higher borrowing capacity upfront.

Ormeau's Rental Yield and Dual-Income Opportunities

Ormeau sits in the northern Gold Coast growth corridor, bounded by the Pacific Motorway and close to Pimpama and Coomera employment precincts. The suburb offers a mix of established homes on larger blocks and newer estates with medium-density housing, including duplexes and townhouses that attract long-term tenants and families.

Dual-income properties perform particularly well in Ormeau. A duplex with two separate tenancies generating $300 to $350 per week each delivers higher gross rental income than a single dwelling at the same purchase price. Vacancy risk is split across two tenancies, and holding costs remain comparable to a single dwelling, improving the chance of positive cash flow even with a loan to value ratio above 60 per cent.

Ormeau's proximity to the M1, Westfield Coomera, and the proposed Coomera Town Centre supports rental demand from workers, families, and tradies. Rental yields in the suburb typically sit above the Gold Coast median, making it one of the more accessible entry points for investors targeting positive cash flow without moving to regional or remote locations.

Variable Rate vs Fixed Rate for Positive Gearing

Variable rate investment loans allow repayments to move with rate changes and typically come with offset accounts and flexible repayment options. Fixed rate products lock repayments for a set period but usually exclude offset access and restrict extra repayments.

For positive geared properties, the offset account attached to a variable rate loan lets you park surplus rental income and reduce interest charges without locking funds into the loan. That surplus remains accessible for emergencies, repairs, or the next deposit. Fixed rates provide repayment certainty, but if rental income increases or rates fall, you lose the ability to capture that benefit during the fixed term.

Split loans offer a middle path. You fix a portion of the loan to protect against rate increases and keep the remainder on a variable rate with an offset. That structure suits investors who want stable repayments on the majority of the loan but still need access to surplus cash flow and the flexibility to make extra repayments as income allows. Refinancing between fixed and variable products before the term expires usually triggers break costs, so the structure you choose at settlement should align with your expected holding period and cash flow goals.

Maximising Tax Deductions Without Negative Gearing

Positive geared properties still generate claimable expenses. Loan interest, property management fees, council rates, insurance, repairs, and depreciation remain deductible against rental income, reducing your taxable income even when the property produces a surplus.

From the 2027-28 income year, losses on established residential investment properties acquired after 12 May 2026 can only be offset against other residential property income, not salary or wages. Investors purchasing after that date lose access to traditional negative gearing unless the property qualifies as a new build. Positive geared properties avoid that issue entirely because they generate income, not losses.

Depreciation on plant and equipment, such as appliances, blinds, and air conditioning, continues to be claimable for properties purchased before 9 May 2017 and for new builds purchased after that date. Capital works deductions for structural elements, such as walls, floors, and fixed plumbing, apply to all properties built after 1987. A quantity surveyor's depreciation schedule sets out the annual deduction, which reduces taxable rental income without requiring any cash outlay.

Refinancing to Improve Cash Flow

Refinancing an existing investment loan to a lower interest rate or more suitable loan structure can shift a property from neutral or negative cash flow to positive. Rate discounts vary significantly between lenders, and the difference between a standard variable rate and a discounted investor rate can exceed 0.5 per cent per annum.

On a $400,000 loan, a 0.5 per cent rate reduction saves roughly $2,000 per year in interest, or around $165 per month. That saving flows directly to cash flow. Refinancing also provides an opportunity to release equity from appreciated properties, consolidate debt, or switch from interest only to principal and interest repayments in a controlled way that aligns with your broader property investment strategy.

Lenders assess refinance applications using the same serviceability buffer and debt-to-income limits as new lending. If your income has increased or your other debts have reduced since the original loan was written, refinancing may also unlock additional borrowing capacity for your next purchase without requiring you to sell or inject new savings.

Structuring Your Loan Application for Positive Cash Flow

Lenders calculate serviceability on rental income at 80 per cent of market rent, not the actual lease amount. A property leased at $600 per week is assessed at $480 per week. That shading accounts for vacancy, arrears, and periods between tenancies, but it also means a property with strong rental income on paper may not improve your borrowing capacity as much as you expect.

Debt-to-income limits apply separately to investor and owner-occupier lending. From 1 February 2026, lenders can approve up to 20 per cent of new investor loans to borrowers with a total debt-to-income ratio of six times or greater. If your total borrowings, including your home loan and the proposed investment loan, exceed six times your gross income, you may be restricted to lenders with capacity remaining under that quarterly limit or need to reduce the loan amount to stay within the threshold.

Structuring the loan with a larger deposit, using equity from your home, or purchasing a lower-priced property with strong rental yield all improve the chance of approval and positive cash flow. A mortgage broker with access to investment loan products from banks and lenders across Australia can identify which lenders still have capacity under the debt-to-income limit in any given quarter and which offer the most competitive investor interest rates for your deposit and income profile.

Call one of our team or book an appointment at a time that works for you. We work with property investors across Ormeau and the northern Gold Coast to structure investment property finance that delivers confident outcomes from day one.

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