Yield not Capital Gain Says Property Investor

propertyTraditionally property investors bought property for the rental yield and potential capital gain was considered a bonus rather than the core reason for the purchase.  Nowadays with property values making headlines almost weekly there has been a notable shift in what’s important to a growing number of investors.  Property is now often purchased for it’s future potential rather than it’s ability to add immediate value to an investors existing buy and hold portfolio.

Discussions on PropertyTalk suggest more and more property investors are forgoing the traditional ‘positive cash flow’ requirement as a trade off in securing property in high capital growth areas and this is particularly notable in Auckland.

The shift in focus from yield to capital gain may be the undoing of some property investors says a well known investor on PropertyTalk.  Property investors need to get back to basics i.e. property investment 101 which focuses on yield, adding value and pretty much ignoring the capital gain potential.

“The successful real estate investors I know in the U.S. who are all a lot more successful than either of us and most likely anyone on this forum, focus on cashflow, i.e. yields and also adding value. Their strategies do not rely on prices increasing…”

Orion – PropertyTalk member

Novice property investors are more likely to fall victim to the capital gain race believing property investment is all about property values therefore that’s where the money is to be made from investing in property.


This blog article was written for PropertyBlogs by Mobilize Mail.

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