On the topic of capital growth vs yield in property, we generally find all new investors typically fall into one of the three following categories:
1. Totally oblivious – investors in this category are largely unfamiliar with either property capital growth or property yield and have little to no understanding how each can impact on a property investment;
2. Partially aware – these investors have generally heard of capital growth and property yield, would struggle to provide an exact definition of each and know they can impact on a property investment but have a limited understanding of exactly how;
3. Generally aware – these investors are aware of both capital growth and property investment yield and can provide a basic definition of each, plus they know each can greatly impact a property investment and want to gain a clearer understanding of how.
If you fall into any of the above three categories, especially the first one, there is no need to be embarrassed. Even some of the most experienced people in the property industry would struggle to clearly define how both property capital growth and property investment yield can affect the outcome of your investment journey.
Luckily for us, this week the Managing Director of the ABN Group, Dale Alcock, has taken time out to provide his thoughts on the subject because it is also one of the most common investment questions he is asked. Dale has provided a brief definition of both capital growth and property yield, and highlighted what types of investments are likely to perform better in each area.
In simple terms, it is important to have a clear understanding of capital growth and property yield on property investment before you decide how and where you want to invest. Whether you choose to pursue property capital growth or high yield property investment will depend entirely on your personal and financial circumstances, but you should have a clear understanding of your chosen strategy and its implications.