Cash Flow Vs. Capital Growth.
When investing in property, there are two main approaches. Cash flow and capital growth. A cash flow strategy focuses on earning steady income from rent, ideally with rental returns that exeed ownership costs. These properties are often found in regional or out city areas where prices are lower and yields are typically higher.
A capital growth strategy focuses on properties in areas likely to increase in value over time such as innner city suburbs or higher demand locations. These properties might have lower rental income now but are chosen for their long term appreciation potential. This strategy is often paired with negative gearing, the combination has been criticised as pricing young people out of the city.
Many Australian investors aim for balance. A property that provides some income today while still growing in value over time.