How to use the potential yield on a property to help you make the best investment

Julie Brownlee, Fsp Invest, 17 Oct. 2014

Tags: property, investing in property, property yield, yield, net yield, invest in property,



When you decide to invest in property, your goal is to make a sound investment that will make you money over the long-term.

So how can you ensure you make the best decision when selecting a property?

You need to look at the yield your property investment could generate.

Let’s take a closer look at what you should do…



Before investing in property, consider the potential yield


The potential yield of a property has a lot to do with what property you choose to buy in the first place.

One mistake to avoid is to buy a top-rate residential property. If you buy a property like this, chances are the yield is going to be significantly lower than the yield a good second rate property can generate.

But don’t take this too far either. You don’t want to opt for the cheapest option. Chances are you’ll find it difficult to rent out. And if the market takes a turn for the worse, these properties can take a big knock.

Again, as with all things property investment related, it all comes down to location. So the worst property is a very good street is most likely a better investment that the best property in a bad street.


What can you expect of the net yield of your property over the long-term?


Initially, when you first buy a property, you can expect the net yield to be low. This is especially the case if you’ve borrowed a lot of money to buy the house.

Yet over time, you’ll see that inflation along with rising rents will help to improve your net yield.

Not only that, the longer you own the property, the more it’s likely to be worth. As the capital value of your property rises, your loan to equity ratio will reduce.

So there you have it, how to use the potential yield on a property to help you make the best investment.

*********** New release ************

PS: I hope you were able to be at the FSP Invest Symposium: Start NOW, Retire RICH, this Saturday

If you were, you were privy to a diverse range of views and ideas on how to protect your personal financial future.

If you’re missed it though, don’t worry. We recorded the entire conference for you… so that you can ‘eavesdrop’ on these elite investment ideas at your leisure.

You can access the whole thing right here.

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