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Peter Rogozik Property Consulting

Capital growth is king

When it comes to residential property investment capital growth is king. Exceptional capital growth as against rental return will put an investor hundreds of thousands of dollars in front in the medium to long term.

Furthermore exceptional capital growth allows an investor to accumulate equity. This makes it possible to purchase additional assets.

In my experience chasing above average rental return seems to be a preoccupation with overseas investors. Investment strategies that produce the optimum result outside of Australia invariably don’t work in Melbourne.

Melbourne is a unique market place with a unique set of dynamics that drive capital growth. Melbourne has been and is one of the top capital growth performing cities in the world.

That’s right Melburnians, you’re standing in it.

Some investors can be put off by the fact that the initial rental return of the optimum performing capital growth property in Melbourne is a meagre 3% to 4 % of initial capital outlay. However when it comes to residential property rental return is the cream not the cake.

Choosing the optimum capital growth performing property will give investors a positive outcome in regards to rental return. A fundamental of residential property is that capital growth underpins rental growth, not the other way around.

An optimum performing property asset is by definition in high demand by both buyers and tenants. Therefore by choosing a high growth property asset investors can expect regular rent increases, high quality tenants and low vacancy periods.

By choosing a high growth asset investors will over time achieve an exceptional rental return.

All the sweet tasting jam of residential property investing revolves around making capital growth king and all other important determinants of a successful investment will be fulfilled as a result.

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