Yields – Return on Investment in Property

The Yield or Yields are also known as your “Return on Investment” or R.O.I. and is usually expressed as a percentage of the amount financed against the investment property, rather than the properties value.

There are also net and gross yields:

    •a net yield is the return shown as a percentage after costs such as agents fees, fees and charges

    •a gross yield is simply the percentage amount derived by dividing the income by the amount borrowed against the asset

From our experience an average yield for a newly purchased investment apartment in an inner suburb of Melbourne will generally be between 4% and 4.5% before tax benefits and depreciation.

There are definitely investment properties that offer higher returns than this but generally these will experience lesser capital growth over the long term; we must remember our two goals are capital growth and affordability.

You must be able to afford the property and, just as importantly, unless the property experiences Capital Growth there is no prospect of future wealth or point to owning it.

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