What Returns could I make from Property Investment

With an investment property there are 2 distinct sources of measuring Return on Investment (ROI), rental yield and capital growth.

Gross Rental Yield Calculation

Rental Yield

If you have a property worth $500,000, your tenant pays $25,000 per year in rent and you pay $5,000 a year in costs, you have a gross rental yield of 5%, and a net rental yield of 4%.

For example in 2020 RealEstate.com calclulated the average rental yield across 10 Gold Coast suburbs-:

Avg. Rental Yields Gold Coast
Surfers Paradise 3.28%
Miami 4.1%
Jacobs Well 4.59%
Worongary 5.2%
Mt Tamborine 4.61%
Clear Island Waters 4.04%
Arundel 5.13%
Ashmore 5.11%
Broadbeach Waters 3.74%
Mermaid Beach 2.69%

Source: best suburbs to invest in Gold Coast (RealEstate.com.au)

Note COVID 19 has affected these numbers on the Gold Coast. Fox's Real Estate Agents Southport Gold Coast report a serious lack of availability of properties, both for rent and sale.

Capital Growth

Capital Growth is the appreciation (or negative return) of the asset itself expressed as a percentage %.

If say you bought a unit at Main Beach on the Gold Coast for $125,000 in 1991 what would be the price now 2021 (30 years) if you gained a 10% pa Capital Growth on average?

Capital Growth $125,000 30 years
5% $540,242.80
6% $717,936.40
7% $951,531.88
8% $1,257,832.11
9% $1,658,459.81
10% $2,181,175.28

Compare Growth

Which suburbs deliver over the long-term?

You may see a better overall return from a property with a lower rental yield and a higher capital growth.