Top 10 Ways Positive Gearing Works for Lisarow Investors

Positive gearing means your rental income covers the loan repayments and holding costs, leaving you with surplus cashflow each week.

That surplus matters in Lisarow because you're not dependent on capital growth to make the investment viable. You're covering the mortgage, the rates, the insurance, and still putting money aside. For investors on the Coast who want to add a second property or manage a period without full-time work, that breathing room changes what's possible.

How Rental Yield Determines Whether You're Positively Geared

Your rental yield is the annual rent divided by the property's purchase price, expressed as a percentage. A property generating $550 per week in rent and purchased at the suburb's current median would typically need a yield above 5 per cent to stay positively geared after loan repayments and costs, depending on your deposit and the rate you're paying.

In our experience, Lisarow investors targeting positive gearing often look at older-style units or duplexes within walking distance of the train station. Tenants value the direct line to Gosford and Sydney, and the rental demand stays consistent. Properties close to Lisarow Public School also tend to hold tenants longer, which keeps your vacancy rate low and your cashflow stable.

Why Loan Structure Affects Your Cashflow More Than Rate Alone

A variable rate investment loan with a redraw facility gives you access to any extra repayments you've made, which can be useful if you need to cover an unexpected repair or a short vacancy. A fixed rate locks in your repayment amount, which makes budgeting more predictable but removes flexibility if rates drop or you want to pay extra.

Consider an investor who bought a two-bedroom villa in the older part of Lisarow with a 25 per cent deposit. They took a variable rate loan with principal and interest repayments, kept the loan amount modest, and cleared $80 per week after all costs. That $80 per week went into an offset account linked to their owner-occupied home loan, which reduced the interest they paid on their own property. The cashflow from the investment property directly lowered the cost of their home, and they avoided the interest-only structure that would have deferred principal repayment.

Interest-only repayments can increase your weekly cashflow in the short term because you're not paying down the loan balance, but you're also not building equity through repayments. If your rental income drops or your rate increases, the margin disappears quickly. Principal and interest repayments cost more each week but reduce your loan balance over time, which gives you more equity to work with if you refinance or want to access funds later.

What Deposit Size Means for Lenders Mortgage Insurance and Cashflow

If your deposit is below 20 per cent of the property's value, most lenders require you to pay Lenders Mortgage Insurance. The premium is calculated on a sliding scale based on your loan amount and loan-to-value ratio, and it's a one-off cost that's usually added to your loan balance rather than paid upfront.

LMI doesn't affect your weekly cashflow directly unless you've capitalised the premium into the loan, which increases your loan amount and therefore your repayment. A larger deposit reduces or removes the LMI cost entirely and lowers your repayments, which makes it easier to stay positively geared. If you're using equity from your home to fund the deposit, the loan secured against your home will have its own repayment, and that repayment isn't offset by the rental income unless the loan is structured as part of an investment loan facility.

How Holding Costs and Claimable Expenses Change the Real Surplus

Council rates, water rates, strata levies if applicable, landlord insurance, property management fees, and repairs are all deductible against your rental income. Interest on the investment loan is also deductible. The surplus you calculate before tax is different from the surplus after you've factored in the tax benefit of those deductions.

In a scenario where an investor in Lisarow is paying $480 per week in loan repayments, $60 per week in rates and insurance, and $40 per week in management fees, and receiving $620 per week in rent, the pre-tax surplus is $40 per week. Once the investor claims the interest portion of the loan repayment, the rates, insurance, and management fees as deductions, the tax refund increases the effective surplus. The actual cashflow benefit depends on your marginal tax rate, but the deductions mean the property is more positively geared after tax than it appears on paper.

Strata levies for older villa-style complexes near the Lisarow shops tend to sit between $400 and $700 per quarter, depending on the age of the building and whether the body corporate has set aside funds for major works. A building with a history of special levies will reduce your cashflow unexpectedly, so it's worth reviewing the strata records and recent meeting minutes before you settle.

Why Debt Serviceability Tests Matter Even When You're Positively Geared

Lenders assess your ability to service the investment loan by adding a buffer of at least 3 percentage points to the current rate and testing whether you can still meet the repayments at that higher rate. Even if the property is positively geared at the current rate, the lender tests it at a rate that's higher than what you'll actually pay.

From 1 February this year, lenders also apply a debt-to-income limit, which means they can only lend a certain percentage of new loans to borrowers whose total debt is six times their income or more. If you're already carrying a home loan and you're applying for an investment loan, your total debt includes both. The rental income from the investment property is included in your serviceability assessment, but lenders typically only count 80 per cent of the rent to allow for vacancy and management costs.

If you're refinancing an existing investment property to access a lower rate or release equity, the same serviceability test applies. The rental income helps, but the buffer and the debt-to-income ratio still apply, so your ability to borrow depends on your total income and total debt, not just the cashflow from the investment property.

How Location-Specific Rental Demand Keeps Your Property Tenanted

Lisarow's rental market is shaped by proximity to the train station, the hospital precinct in Gosford, and the light industrial areas around Somersby. Tenants who work in healthcare, trades, or logistics value the access to the M1 and the rail line, and they tend to stay longer if the property is close to both.

Properties within 1.5 kilometres of Lisarow Station rent more consistently than those further out toward the bushland edges of the suburb. The walk to the station matters more to tenants than it does to owner-occupiers, and that difference shows up in your vacancy rate. A property that sits empty for an extra two weeks each year costs you $1,100 in lost rent on a $550 per week lease, which erases your surplus for more than six months.

When Interest-Only Makes Sense and When It Doesn't

Interest-only repayments are sometimes used by investors who want to maximise short-term cashflow or who expect the property to deliver most of its return through capital growth rather than rental income. The repayment is lower because you're only covering the interest, not reducing the loan balance.

For a positively geared property in Lisarow, interest-only can increase your weekly surplus by $100 to $150 depending on your loan amount, but it also means you're not paying down any debt. If your rate increases or your tenant leaves and the property sits vacant, the margin disappears and you're covering the full cost from your own income. Principal and interest repayments cost more each week but build equity, and that equity gives you options later if you want to access funds for another deposit or manage a period of reduced income.

If you're holding the property long-term and you're not relying on capital growth alone to make the investment work, principal and interest repayments align better with a positive gearing strategy. If you're planning to sell within a few years or you're confident the property will grow in value quickly, interest-only might suit your timeline, but it's a choice that depends on your broader financial position and how much buffer you have if conditions change.

What the Tax Changes from 1 July Next Year Mean for Your Deductions

If you already own an investment property or you're buying a new build, the existing negative gearing rules continue to apply and you can deduct your interest and holding costs against all your income. If you're buying an established property after 12 May this year, any loss you make on the property from 1 July next year can only be offset against income from other residential properties, not against your salary or business income.

For a positively geared property, this doesn't limit your deductions because you're not making a loss. You're still claiming the interest, rates, insurance, and other costs, but your rental income is higher than those costs, so there's no loss to offset. The change affects investors who rely on negative gearing to reduce their taxable income in the years before the property starts generating a surplus. If you're targeting positive gearing from the start, your tax position is simpler and the new rules don't reduce your cashflow.

Capital gains tax changes also take effect from 1 July next year. For gains that accrue after that date, the 50 per cent discount is replaced by cost base indexation and a 30 per cent minimum tax rate on real gains. For properties you already own, gains up to 1 July next year are taxed under the current rules, and only the portion accruing after that date is taxed under the new rules. If you're buying a new build, you can choose between the old discount and the new indexation method when you sell.

Call one of our team or book an appointment at a time that works for you. We'll look at your deposit, your income, and the rental yield you're targeting, and we'll help you structure the loan so the cashflow works from day one.

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