Location is probably the single biggest factor that will impact the future value of your investment. So irrespective of the type of property you’re thinking about, aim for the best location you can afford, preferably one offering good transport links, proximity to lifestyle features like shops, restaurants and parks, plus public ameni- ties like schools and hospitals. A good location will maximise rent and capital growth while minimising rental vacancies.
There’s two ways to measure your return on investment. Capital growth – the change in price over time – and rental yield – how much rent you’re getting as a proportion of what you paid for the place. Gross rental yield is your annual rent divided by the purchase price, or value, of the property.
If you’re in the market for an investment property, deciding what capital growth rate and what rental yield you will target will depend on your own financial situa- tion.
The key is to research locations carefully, looking at important factors like popula- tion growth, tenant demand, local price growth and any developments planned for the area. It is also critical to consider the type of property best suited to fulfilling your goals.