Earning an income from property investment
- Investment properties can be set up to earn an income from rental payments.
- This is typically a longer term strategy where you have paid down the loan to a point where the rental income is significantly higher than loan repayment.
- Often properties that have excellent rental return experience slower capital growth.
- When using this strategy you should also be aware of the projected rental growth.
To find good properties for rental return, look for suburbs/areas that are well developed (i.e. not going to change and go up in value) and have a high rental yield. Rental yield is a measure used to determine how good the rent is with respect to the property value.
There are several reports available which show the suburbs with the best rental growth and yields. This is discussed more in Purchasing Decisions.
Rental growth ensures that your rental income is projected to at least keep in line with inflation.