What We Can Learn From ‘Positively Geared’ by Lloyd Edge
Source: Amazon, 2024
Positively Geared by Lloyd Edge is an insightful guide on building wealth and achieving financial independence through property investment. Lloyd Edge, a self-made property investor, shares his journey from being a schoolteacher to creating a multi-million dollar portfolio. The book focuses on the power of positively geared properties—properties that generate more income than they cost to own—and provides a step-by-step strategy for achieving financial freedom.
Here are the key lessons from Positively Geared and how they can inform and inspire property investors to build a financially sustainable and profitable portfolio.
1. The Power of Positive Cash Flow
One of the central themes of Edge’s book is the importance of positive cash flow in property investing. Unlike properties that rely solely on capital growth, positively geared properties generate income immediately, covering expenses and providing a surplus. Edge emphasizes that positive cash flow can allow investors to reinvest profits, reduce reliance on salary, and achieve financial independence faster.
Lesson: Cash flow-positive properties provide stability and freedom. By focusing on properties that generate income beyond their costs, you can build a self-sustaining portfolio, reinvest returns, and achieve financial security sooner. Positive cash flow properties are particularly valuable for those who want to live off rental income or retire early.
2. Set Clear Financial Goals and a Roadmap
Edge emphasizes the need for clear financial goals and a well-defined roadmap. He encourages readers to set realistic objectives, such as the amount of passive income needed for financial freedom, and create a strategic plan to reach these goals. Having a roadmap provides clarity and helps investors stay focused and disciplined.
Lesson: Setting clear goals and having a roadmap increases the likelihood of success. By knowing exactly what you want to achieve, you can tailor your property investments to fit your financial goals, ensuring each property serves a purpose in your overall strategy.
3. Invest with a “Buy and Hold” Strategy for Long-Term Growth
Edge advocates for a buy and hold strategy, which involves purchasing properties with the intention of holding them for the long term to benefit from capital appreciation and rental income. By focusing on properties that generate income while also appreciating, Edge builds wealth over time without the need to sell or rely on market fluctuations.
Lesson: The buy and hold strategy is a proven way to build wealth sustainably. By holding onto positively geared properties, investors can enjoy steady income and long-term growth, allowing for compounding returns and a more reliable pathway to financial independence.
4. Start Small, but Start Now
Edge shares his own experience of beginning his investment journey with a small, affordable property, emphasizing that starting small is often better than waiting for the “perfect” property. By investing in modest properties with positive cash flow, he was able to gain experience, build equity, and leverage his initial investments to purchase more properties.
Lesson: Begin with what you can afford and don’t wait for perfect conditions. Starting small allows you to get into the market, learn from experience, and use the growth and cash flow from initial properties to fuel future investments.
5. Leverage Equity to Expand Your Portfolio
Edge explains how he used equity from his existing properties to finance new acquisitions, enabling him to scale his portfolio without having to save for new deposits. By refinancing properties that appreciated in value, he could access the funds needed to continue investing and growing his portfolio.
Lesson: Equity is a powerful tool for expansion. Leveraging equity allows investors to use the increased value of properties to fund additional purchases, accelerating portfolio growth and allowing for compounding returns.
6. Diversify Your Portfolio to Minimize Risk
Edge highlights the importance of diversifying investments to spread risk and create a balanced portfolio. He suggests investing in different types of properties (e.g., houses, apartments, commercial spaces) and locations to reduce reliance on any single market or property type. This approach helped him achieve steady returns while protecting against market volatility.
Lesson: Diversification helps protect against market fluctuations and tenant-related risks. By building a varied portfolio, you increase your resilience to market downturns in any one area or property type, ensuring a steadier cash flow and growth potential over time.
7. Focus on Growth Areas and Infrastructure Development
In Positively Geared, Edge stresses the importance of investing in high-growth areas with strong infrastructure. He looks for locations with good amenities, transport options, schools, and employment hubs. Properties in areas with ongoing or planned infrastructure developments often experience higher demand and appreciation, making them ideal for a buy-and-hold strategy.
Lesson: Location is critical for both rental demand and long-term growth. High-growth areas with strong infrastructure tend to attract tenants and appreciate in value over time, making them ideal for building a portfolio focused on positive cash flow and capital growth.
8. Adopt a Long-Term Mindset
Edge’s journey to financial independence wasn’t achieved overnight, and he advises readers to adopt a long-term mindset. He explains that property investing is a marathon, not a sprint, and that patience and consistency are essential. By holding properties for years or even decades, investors can benefit from compounding returns and weather short-term market fluctuations.
Lesson: Property investing rewards patience and long-term thinking. Sticking to a buy-and-hold approach allows you to take advantage of market cycles, build equity, and enjoy the power of compound growth.
9. Don’t Let Emotion Drive Decisions
Edge warns against making emotional decisions in property investing. He emphasizes that success in property requires an analytical approach focused on numbers, cash flow, and market fundamentals. Buying based on emotion, he argues, can lead to overpaying or choosing properties with poor long-term potential.
Lesson: Successful property investing requires a data-driven approach. Focus on the financial aspects of a property rather than personal preferences or emotions, ensuring that every investment decision is based on its potential for cash flow and growth.
10. Learn the Importance of Due Diligence
Edge stresses thorough due diligence before purchasing a property. He encourages researching market conditions, conducting property inspections, and verifying rental demand and property expenses. This careful preparation can help investors avoid costly surprises and increase the likelihood of successful investments.
Lesson: Proper due diligence is essential for minimizing risks and maximizing returns. By researching thoroughly before buying, you can avoid pitfalls and ensure you’re making informed decisions about each property.
11. Work with a Team of Experts
Edge shares the value of working with a team of professionals—including mortgage brokers, accountants, property managers, and real estate agents—to help navigate complex aspects of property investing. He credits much of his success to seeking expert advice and building relationships with knowledgeable professionals who supported his goals.
Lesson: A strong team of experts provides essential knowledge and support. Surrounding yourself with professionals in finance, real estate, and property management ensures you make informed decisions and avoid costly mistakes.
12. Use Property as a Vehicle for Financial Independence
Ultimately, Positively Geared emphasizes using property investment as a means to achieve financial independence. Edge explains how passive income from positively geared properties allowed him to leave his teaching job and live a lifestyle of freedom and choice. He views property as a powerful vehicle for reaching financial independence and encourages readers to define their financial freedom goals.
Lesson: Property investing can provide a pathway to financial independence. With a well-managed portfolio of positively geared properties, you can create a reliable source of passive income that covers expenses and provides freedom from traditional employment.
Final Thoughts
Positively Geared by Lloyd Edge demonstrates how focusing on cash flow-positive properties, setting clear financial goals, and investing in growth areas can help investors build a successful and sustainable portfolio. Edge’s emphasis on long-term thinking, careful research, and diversification makes the book especially valuable for those seeking financial freedom through property investment.
The insights and strategies outlined in the book encourage readers to take a disciplined, numbers-driven approach to property investing, helping them avoid common pitfalls and make decisions that align with their financial objectives. By following Edge’s principles, investors can build a profitable property portfolio that not only provides immediate income but also builds long-term wealth and financial security.
