Taking out an investment home loan and securing property in a growing real estate hotspot is a great way to accumulate wealth and create your own nest egg for retirement.

However, one of the first things to consider when selecting an investment property has to do with your long term goals, and the type of income you hope to earn from your real estate. There are two main income types from investment properties – capital gains and rental yields.

Capital Gains

If you're interested in a long term, slow burning investment, capital gain is the type of income you should concern yourself with. This is based on the increasing value of your home, and the differences between what you purchase the property for and what you sell it for.

Understandably, it can take an extended period of time to see decent returns on these investments. Furthermore, the rate of growth will also depend on a number of external factors that need to be considered prior to purchase.

For example, the location of the property, the state of the economy, projected demographic or market value changes are all things to think about when choosing an investment property.

Rental Yields

On the flip side, renting out your property and securing a rental income is the second type of  investment profit you can make.

These returns are far more frequent than capital gains, and are good for anyone interested in securing a regular income from their real estate.

Rental income tends to be for a shorter term than capital gains, and many investors will have a mixture of both long and short term investments in order to facilitate their capital growth.

You can contact a Smartline Mortgage Adviser on 13 14 97 for home loan advice. Or complete our call request form and we'll call you!

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DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.