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Geared investments (or investments made from borrowed money) are generally designed to increase the potential for tax deductible expenses (such as interest costs).
The ultimate goal of this strategy is for the assets purchased with borrowed money ton increase and create a profit upon sale after repayment of borrowed funds plus expenses. The assets purchased would normally be direct property or Australian listed shares.
The main risk associated with such a strategy is that the asset you purchase with borrowed funds will actually fall in value, even to the point where selling the asset doesn't completely satisfy the underlying debt if selling is forced you at an inappropriate time. This will mean that, although you might receive extra tax deductions over time, you might actually lose capital (and carry over a debt) when you eventually sell the asset.
The potential to make a higher gain by borrowing exists only because of the added risk you take in using borrowed funds in the first place.
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