Rental income

The amount of weekly rent you can expect to command for a particular property will vary according to a range of factors including the property’s location, the type of property (for example, a house versus an apartment), the number of bedrooms and the overall quality of the dwelling.

Additional points of appeal that can affect the rent returns include the availability of garaging/parking, security, modern appliances and the availability of features that enhance tenant amenity such as pools, gyms, saunas etc.

A local real estate agent will be able to give you an indicative guide of the rent you can expect to charge for an investment property. At present, Australia’s residential rental market is very strong. Metropolitan vacancy rates are among the lowest ever recorded – less than 2% in many cities. This is pushing up rents in many areas, and the situation is likely to continue.

Houses versus units – rental yields – September Quarter 2009

Capital growth plus ongoing income

Over long term periods, quality well-located properties can generally deliver both regular rent and capital growth to investors. No one can predict with accuracy the returns investors can expect to earn in the future, however, Table 4 shows that historically, over very long term periods, the before-tax returns on residential property have stacked up favourably against other mainstream asset classes.

Long-term returns – residential property versus other investments