The 6 Golden Rules to Buying a High Performing Apartment
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Australian property investors make money in five ways:
• capital growth
• rental returns
• accelerated or forced growth
• equity build-up
• and tax benefits
• capital growth
• rental returns
• accelerated or forced growth
• equity build-up
• and tax benefits
Capital growth is a far more powerful driver of long-term wealth creation than cash flow. That’s why investors must have a financial buffer to cover any rental shortfalls or periods of vacancy.
Too many investors fail to recognise that property investment is ultimately a game of finance. Not only does the interest rate matter, but so does the loan structure, time, and inflation.
Equity build-up occurs through three forces working together:
- Capital growth (both natural and forced)
- Loan repayments gradually reducing the principal owed
- Inflation eroding the real value of the debt over time
While the loan balance reduces slowly in dollar terms, inflation and wage growth reduce the real burden of that debt. In simple terms, you’re repaying yesterday’s dollars with tomorrow’s income.
Many beginning investors focus only on location, price, and rental yield — or try to find so-called “cash-flow positive” properties.
But history shows that capital growth is the most important factor in determining the long-term performance of an investment property, because it drives equity, borrowing power, and future opportunity.
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