Investment property question

[BigRedV]

Which do you think is more important....

Growth or rental yield?

[Mod-Wise Enough]

Growth as long as the rental yield mostly covers the repayments

[Elijahs Mum]

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!

[BigRedV]

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

[Janesmum123]

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.

[BigRedV]

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!

[BigRedV]

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.

[babyno1onboard]

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.

[Elijahs Mum]

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

[babyno1onboard]

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.