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.

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-:

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?

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.

Refer Sunshine Coast vs Gold Coast

Commercial Rentals

Check the rental history

Always check to see if rents are not fasely inflated, or there is not a history of arrears. You can check the rental payment register.

With a good tennant and a long-term lease rental returns can be better than the residential market.

Commercial Rental Tips

• Buy at the right time in the right industry
• Location - a small regional town may have a higher rental yield and a smaller capital growth over time.
• Buy an asset that is easy to re-let
• Research your asset - don't pay too much
• Commercial properties need a larger deposit - often 30%