YIELD VERSUS CAPITAL GROWTH

Capital growth is fundamental to property investment and is what ultimately increases an investor’s wealth. An investor will increase his or her wealth over time by selecting and purchasing properties that achieve long-term capital growth. Rental yield is basically an end to a means – it helps the investor’s cash flow but does little of itself to increase the investor’s wealth.

Wealth comes from the property increasing in value.  When first purchased, a property might be negatively geared, however, over time as the rent increases, it will eventually become neutrally, and then positively geared.  Only occasionally when buying a residential investment property, will the investor be able to achieve a high rental yield whilst also achieving high capital growth, as there is usually an inverse relationship between capital growth and rental yield. Generally, high capital growth properties have a lower rental return on investment as a result of the property’s value having risen significantly over time.  But, in the end it comes down to what the investor wants to achieve in terms of their property goals.

Your Australian Property Solutions (YAPS) caters for all investor purchasing requirements. Prior to starting, we sit down with you, listen to what you want and customise an appropriate purchasing strategy for you.

For best results, best value and best customer service please contact ZAC NEWBOLD on +61 (0) 418 144 644.

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