Hi Ronnie,

Sounds like the sales guy had very little knowledge of the financial side of property investing. The truth is that he doesn’t really get paid to care whether or not it is a good investment for the buyer – he just wants to sell the property.

I think you are definitely on the right track. Negative gearing can be a good strategy with the right property, but in my view it is an option that is best left to a property with a large land content (which will appreciate over time). Houses or townhouses / villas would be a better alternative. The tax benefits for negative gearing alone are not enough – there must be capital growth.

I am not sure if you live in Melbourne and have a good feel for the apartment market. If not, I am always cautious about buying apartments off the plan in large complexes as there is often very little you can do to improve your prospects of finding a good tenant, or selling the property later as there are many others very similar so they are compared typically by price. It is hard to maximise yield in these cases in my experience.