In Percentages Residential Property Investor Magazine Successful property investment, like many businesses, is often about numbers and how they stack up. One of the big numbers in the property calculation is the interest you pay on your mortgage. While the percentages you pay for mortgage interest are rising, there are other percentages to consider when contemplating a property investment. A key percentage is the rental yield. This is a comparison of the achievable annual rent to the purchase price of the property.
Rental yields differ around the country and even within suburbs.
Factors that affect yields are the likelihood of capital growth, the ability to get tenants and the ease with which the property can be managed. If a property is difficult to manage and the likelihood of capital gains is poor then you would expect a higher yield to compensate. In general, if the yield is above the interest rate you are paying then you are probably in a good position. Your expectation for capital growth is another important percentage. Large capital gains are unlikely in our current environment.