The kind of investment property that you want to purchase will depend on your goals. You have to consider whether you want to buy a property and hold on to it for long term capital growth. For this strategy to work effectively, you need to consider the location where you want to buy. Property prices can usually increase in older, well established suburbs where renovation is possible on a bigger land and also in areas where property prices will increase due to the growing population.
Other investors purchase property for the rental yield. Positive income returns happen when your investment income is higher than your investment expenses.
Negative gearing is when the cost of owning a property is higher than the income it produces. If the rent you get for an investment property is less than the interest repayments, strata fees, maintenance and other costs, your investment is negatively geared, or making a loss. This loss can be offset against your income, reducing your income tax bill.
Whether your investment property is negatively geared, or getting a positive rental income, you can claim expenses relating to your rental property for the period your property was available for rent.