What is Gearing in Real Estate?

What is Gearing?

De Waal says the term gearing is the same as using other people’s money to invest.

Gearing is thus your own investment with a multiple to achieve that 171% growth.

Let’s say you to any of the top financial institution and you decide that you want to buy shares.

Even their own shares, they may only lend you R35,000 to buy shares to the value of R35,000.

The lender may even ask you for extra security for the loan and you may have to cede a policy to them as security, says de Waal.

If you put down a deposit of R35,000 and invest in the right property, you can gear that R35,000 deposit using leveraging to secure a property of R1m.

Such investment opportunities are available through the Rent2buy Finance product, says de Waal.

One needs to look at the additional costs that are associated with investing in a Rent2buy Finance product.

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Such as the monthly repayment required to invest in such a property and the costs of taking transfer of the property after the initial two-year rental period.

Author: M De Waal

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