Understanding the basics of investment return – Capital gain versus rental yields

Real estate is becoming an increasingly popular avenue for Australians to invest in, and if you're considering breaking into the property market, there are a number of things you may want to research before taking the plunge.

Chances are you're asking yourself exactly what is there to gain from investing in property. After all, the return on your investment is usually the reason people decide to invest in the first place, right?

Before applying for an investment home loan, deciding on the type of income you hope to achieve from your property can influence your real estate decisions and help you to choose the perfect investment property for your needs.

For example, capital gain is the return on your investment that is based on the overall value of your property, and the differences in that value between when you bought the property and when you sold it.

Something needs to happen in the interim in order to increase the value and, hopefully, earn you a nice profitable return.

Factors that can influence a property's value include the property's location, the state of the economy, demographic changes and many more.

While capital gain can be a time-consuming income endeavour, those who make the right decisions and stick with their investment can earn extremely sizable profits over their original investment.

On the flip side, renting out your property will help you to earn a more regular income than simply relying on capital gain.

The key to this type of investment return is the selection of good, reliable tenants who will pay their rent in full, on time, and consistently.

Furthermore, you can put this income towards paying off your home loan, helping you to become mortgage-free faster than ever!

Regardless of your investment return plans, speaking to a mortgage broker from Mortgage Choice can help you to achieve the right investment loan for your needs.