It’s our view that potential for capital growth over the medium-long term is at the top of the many things to consider when investing in property! Remember, as astute investors buying property put simply, is the transaction to purchase an asset.
Whilst the asset will be income producing, we aren’t purchasing the tenant and we aren’t purchasing a rent roll. Yes, rental yields and rental returns are important to any investor from a holding cost perspective, but ultimately, whether a $400,000 property is returning a rental yield of 5% or 6% is a net difference of about $50 per week or just over $2,500 per year (less than $40,000 over 15 years).
However, a low maintenance, structurally sound $400,000 property purchased in a strategically selected location which sees capital growth of just 1% more per annum than the ‘average’ 6% works out to be a difference of nearly $150,000 over 15 years.
Whilst these are very round numbers, it’s clear there is a significant difference.
Every single week, PROPERTYOLOGY spends hours upon hours researching the property economics of all 550 Local Government Authorities in Australia, in order to uncover the various towns and cities which we feel have the best potential for our investors.
Working with clients, we understand that there are lots of other important considerations too – for example depreciation, rental yield, holding costs, and gearing – just to name a few. But none of these trumps the main consideration.
When selecting this particular property, the second property we have assisted Tom and Melinda purchase, we remained focused on our prime objective.
The city where this property is located services over 160,000 people and already has quite a tight rental market. Our research indicates that in the short term, demand for accommodation in this particular location is only going to increase, meaning potential rental increases!
With an initial anticipated rental return in excess of 5.8% we believe that Tom and Melinda have given themselves a great chance of achieving the best of both worlds!
We look forward to working with you again very soon Tom and Melinda. Congratulations again!