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  1. #1
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    Default Investment property question

    Which do you think is more important....

    Growth or rental yield?

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    Growth as long as the rental yield mostly covers the repayments

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    BigRedV  (09-07-2016)

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    Definitely capital growth, if you can afford it, yes it may cost you more to keep initially as you will have to top up the repayments ( even with negative gearing ) but long term it will be a better investment and you can use the equity to buy more property to fund your retirement - in Sydney rents can't keep up with house prices so the return is very low but obviously our capital growth is fantastic!

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    BigRedV  (09-07-2016),littleriv  (09-07-2016)

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    Default Investment property question

    Well Sydney is out of the question! Not even looking here!

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    Growth for sure, I look at it as a long term investment. We where just discussing this today trying to figure out where to buy next. Not Sydney.

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    Default Investment property question

    Quote Originally Posted by Janesmum123 View Post
    Growth for sure, I look at it as a long term investment. We where just discussing this today trying to figure out where to buy next. Not Sydney.
    I get this but surely as a long term investment almost all property would see growth in the long term?

    Definitely not Sydney or Melbourne!

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    Default Investment property question

    We are thinking Adelaide or rural NSW.

    One town has rental yield of 7.97% but only 2.36% annual average growth, although some houses have sold for 5x the original price in last 10 years.

    The other has rental yield of 6.83% and 5.59% average annual growth.

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    Id say growth but you also need at least half decent rent too.

    The growth needs to cover the cost of the following just to break even:
    - capital gains tax
    - stamp duty
    - costs associate with selling the house
    - top ups on the mortgage above the rent
    - maintenance, rates, insurance, etc

    Sorry if I'm stating the obvious! I've just seen so many people get burned when it comes to investing in rental properties.

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    Default Investment property question

    Quote Originally Posted by BigRedV View Post
    I get this but surely as a long term investment almost all property would see growth in the long term?

    Definitely not Sydney or Melbourne!
    Yep it certainly does but it's just city properties grow a lot more - say for example ten years ago in our suburb in Sydney the median house price was $550,000 it's now $1,475,000 whereas say in Dubbo (NSW) ten years ago the median price was $350,000 and now it's $430,000

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    Quote Originally Posted by BigRedV View Post
    We are thinking Adelaide or rural NSW.

    One town has rental yield of 7.97% but only 2.36% annual average growth, although some houses have sold for 5x the original price in last 10 years.

    The other has rental yield of 6.83% and 5.59% average annual growth.
    I would think Adelaide would be a more stable market. Rural areas are a bit more of a gamble.


 

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