Capital Gain vs Great Yield

Discussion in 'Investment Strategy' started by SAIL01, 20th Jan, 2020.

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  1. SAIL01

    SAIL01 Member

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    3rd Nov, 2019
    Posts:
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    Location:
    NSW
    Hi All,

    I'm looking at buying an investment property for $285K that is earning $365 p/w in rent. The tenants have been there a while and very much want to stay on. Rent has been $365 p/w since 2015.

    It's a townhouse about 11km south of the Brisbane CBD. I just can't see the capital growth being great in this property but I don't really know that, it's just a feeling. My strategy is to buy and hold so over the course of 10-20 years you'd hope there'd be some growth but I'm not confident.

    Property history is:
    • Build 2000
    • 2001 sold $159K
    • 2006 sold $202K
    • 2009 Sold $300K
    • 2016 Sold $285K
    • 2020 sale ask $285K
    Is buying an investment property mainly for the yield and not putting capital growth as a priority a viable/recommended strategy?

    Thanks in advance for your input!
     
    Last edited: 20th Jan, 2020
  2. Sackie

    Sackie Well-known cafe bum of the East Premium Member

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    Vaucluse, Sydney.

    You'll get a zillion different answers. In my experience if you want to build any meaningful wealth, you'll need a decent amount of CG and or manufacture equity. Only focusing on yeild in areas you think won't grow well will very likely not create much wealth.
     
    kierank likes this.
  3. Trainee

    Trainee Well-Known Member

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    Does the expected property value / rent help you with your goals?

    What are the alternatives and how do those help you with your goals?
     
  4. PandS

    PandS Well-Known Member

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    There are no easy answer there is only your situation and how you can accommodate one or the other or both but generally

    1. Yield helps the people who already got large capital and only want an income
    2. Capital gain if you want to get rich and grow your capital and eventually settle down to 1

    while you have a job yield doesn't play a significant part in your cash flow, when you retire
    yield plays a very important part
     
  5. Property Twins

    Property Twins Mortgage Brokers, Buyers Agents & Mentors Business Member

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    Hi there
    What is the supply like of townhouses in the area?
    Is this a large complex?
     
  6. Property Twins

    Property Twins Mortgage Brokers, Buyers Agents & Mentors Business Member

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    Not ideal....

    As its a strata property - what is the quarterly strata fee like?

    is $285k based on your max borrowing capacity or based on the deposit amount you have?