Property can be part of a long-term plan, but it comes with costs, risk, and tax implications. Here’s a high-level view of the concepts behind the property tools.
What’s the difference between capital growth and cashflow?
Capital growth means the property’s value increases over time. Cashflow means the rent and other income exceed the costs (loan, rates, maintenance). Some properties are bought mainly for growth; others for regular income. Your strategy affects which one you focus on.
What is gross yield?
Gross yield is the annual rent as a percentage of the property’s value or price. For example, 4% gross yield on a $500,000 property means $20,000 rent per year. It’s a simple way to compare properties—but it doesn’t include costs, so net returns will be lower.
What are “holding costs”?
Holding costs are what you pay to own the property: loan interest, rates, insurance, maintenance, property management, and so on. If rent doesn’t cover these, you’re topping up from your own pocket (negative gearing). It’s important to plan for that.
Personal name vs company vs trust?
You can hold property in your own name, through a company, or through a trust. Each has different tax and legal implications. There’s no one “best” option—it depends on your situation and goals. A professional can help you choose.