Positive gearing is a property investment strategy where the rental income from a property exceeds the costs of owning and maintaining it. This means that the investor makes a profit from the property each year, even after accounting for all of the expenses.
For example, let's say an investor buys a property for $500,000 and borrows $400,000 to finance the purchase. The investor's annual costs for the property are $20,000, which includes mortgage payments, property management fees, and property taxes. If the rental income from the property is $30,000 per year, then the investor is positively geared, as their annual profit is $10,000.
Positive gearing can be a good way to generate income from property investment. However, it is important to note that positive gearing also increases the risk of the investment. If the rental income from the property falls, or if the property's value decreases, the investor could make a loss.