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Financial Tools


There exist three primary Residential Property Investment types. Income Generating Property, on which the predominant focus is high rental income, Capital Growth Investments which have no rental income but are purchased for the potential the property shows to grow in value over time and thirdly, properties which exhibit both Capital Growth and reasonable Income  potential.

It is important to differentiate between these 3 Investment types. They all have merit given the right scenario, but analyse every Investment Opportunity within context. Many Investors place emphasis on income generating property only which can be short sighted as property should be construed as a long term investment.

Investing in an area where property has historically shown strong capital growth and which can simultaneously produce a decent income would be first prize. Often properties with only capital growth potential will outperform those whose merit is based upon income potential only, but these are notably harder on the cash flow!

See examples below. (Please note that these figures are basic hypothetical examples only. There are many variables influencing the performance of an Investment Property and this should be taken as an illustrative guide only. This is a tool to be used at your own discretion and Opportunity cannot be held responsible for any decisions made based on this information.).


Income Gererating Focus Only
Capital Growth Focus Only
Capital Growth With Average Income Generation

Unit Price

500,000
500,000

500,000

Capital Growth (Annual % p/a)

2
10
10

Rental Income (8% Escalation p/a)

4500
0
3000

Expenses (8% Escalation p/a)

500
500
500

Net Rental Income Per Month

4000
-500
2500

Net Rental Income Per Annum

48000
6000
30000

Bond Repayments Per Month

5000
5000
5000

Bond Repayments Per Annum

60000

60000

60000

Net Income (1st Year)

-12000
-66000
-30000

Total Net Income (10 Year Period)

95,355
-686,919
-165,403
       
Results After 10 Years
Income Gererating Focus Only
Capital Growth Focus Only
Capital Growth With Average Income Generation

Unit Value After 10 Years

597,546

1,178,974

1,178,974

Debt Still Outstanding On Property (After 10 Years)
365,122
365,122
365,122
Capital Return Value
232,424
813,852
813,852
Total Net Income Generated
95,355
-686,919
-165,403
Total Return On Investment
327,779
126,932
648,449

 

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