There are two main types of returns from property investment:
- Rental yield - The annual rental income compared to costs (net profit)
- Capital growth - The increase in the property’s value over time.
Whether your goal is rental yield, capital growth, or both, answering these five key questions can help you make informed decisions.
1. Do you have an investment strategy?
Your property investment strategy should reflect your goals, your risk appetite, and your investment timeline. You could start by defining your financial milestones. When do you want to achieve them? How could property investment help? Clear goals will guide your decisions and keep you focused.
2. How long do you plan to own the property?
Your time horizon shapes your approach:
- Short-term property investment - Buying, renovating, and selling quickly (property flipping). Be aware of tax implications
- Long-term property investment - Building a portfolio for retirement income or to accumulate wealth through future capital gains.
3. What matters most - capital gains, rental yield, or both?
Whether your priority is capital gain or rental yield this will influence the type of property you buy.
For example:
- High yield - Apartments in city centres may potentially deliver stronger rental returns but may have slower capital growth
- High growth - Properties in emerging suburbs or regional areas may offer lower initial rental income but higher long-term value.
Note: Capital gains tax (CGT) may apply.
4. How much can you borrow?
Once you’ve set your goals, explore your borrowing capacity. Online tools like BankVic’s calculators can help give you a borrowing power estimate, https://www.bankvic.com.au/calculators/borrowing-power/.
Key factors include:
- Deposit - At BankVic, you may start with as little as 10% deposit (Lenders Mortgage Insurance may apply)
- Equity - If you own a home, you might use its equity to secure your investment
- Other costs - Stamp duty, legal fees, and maintenance.
5. What is your budget?
Finally, stress-test your finances:
- Estimate rental income (research the area and ask for historical data).
- List expenses such as:
- Property management fees
- Insurance
- Council rates
- Water bills
- Body corporate fees
- Maintenance costs.
Compare income vs. expenses to understand your true affordability. What you can borrow and what you can comfortably repay may differ - this analysis closes the gap.
Ready to take the next step?
Whether you're buying your first investment property or restructuring an existing multi-property portfolio, we're here to help. Reach out to our BankVic Home Loan Mentors to explore how we can help support your journey toward long-term financial wellbeing.
We’re here to help
If you have any questions about how investing in property can support your long-term financial goals, visit bankvic.com.au/home-buying/investor, call 13 63 73 or book an appointment with a Home Loan Mentor by visiting www.bankvic.com.au/book-appointment.
