The best kind of investment has always been widely believed to be in investment properties. Investing in real estate can be a very successful type of investment that brings more savings, despite it taking a longer period to see the results. And if you’re interested in investing in property, you may have heard investors talk about rental yields. A rental yield is the calculated rate of income return against the costs associated with the investment property, usually given in percentage form. And when it comes to rental yields, there’s gross rental yield and net rental yield.

Rental Yields

Gross rental yield involves calculating between annual rental income and property value, whereas net rental yield involves more elements and factors to the equation but gives a more accurate prediction of your return. However, there’s no precise prediction of whether high rental yield is better than low rental yield. For example, a property with low rental yield and low expenses can give a higher rental return while high rental yield with high expenses can lead to lower rental return since there are could be missing factors in the calculation. On the other hand, depending on individual circumstances, the higher the rental yield, the better the rental yield may be.

A recent research conducted on Sydney’s top suburbs has revealed the notion that suburbs with high rental yields may result in low capital growth suburbs. The research was done by and revealed that Mount Druitt was at the top of the list for top 10 yielding suburbs in Sydney’s greater metro area. In the year ending March 2015, the highest rental yields were concentrated in Sydney’s west and southwest according to Onthehouse.

Making the Right Investment

Most people who have neglected Mount Druitt due to its negative reputation in the media may have missed this great investment opportunity. However, some smart investors who looked past the media may have received the best rental yields as well as strong capital growth over the past year. Investing in property can be a gamble when the property market is unpredictable, especially in different suburbs. The western suburbs may be giving good returns one day and then turn around on you the next day.

One can never accurately predict the outcome of any type of investment, whether it’s stocks, shares or property. Sometimes it’s always safe to quit while you’re ahead. But sometimes taking that risk can mean big wins for you in the end. The best you can do is speak to as many industry professionals and consultants, do as much research as you can and find out the various outcomes of your investment before you walk down that path. For any financial advice or investment property loans, you can count on NSW Mortgage Corp to have your back anytime, anywhere.