How Investors Make Money from Property
Property investment offers several pathways to build wealth. Below, we summarise the most common property investment strategies and outline the key considerations for each so you can better understand how to make money from property.
1. Invest for Income (Positive Cashflow Strategy)
Many property investors focus primarily on the rental yield a property delivers. Yield refers to the income generated through rent and is used to measure how much rental income a property earns each year.
For investors wanting to make money from real estate using a high-yield approach, the goal is usually to ensure the rental income exceeds the expenses required to hold the property. When this happens, the property is considered positively geared.
Pros and Cons of High-Yield Properties
Higher-yielding properties often show lower capital growth over the long term.
They are often houses, units or dual-key properties aimed at the investment market, which only makes up around 30% of property buyers in Australia. This may limit the pool of potential future buyers and increase liquidity risk during downturns.
Often investors seeking income from their assets look towards commercial properties, which usually offer higher income and lower expenses – especially given the tenant usually pays for outgoings. Whether or not this is the right strategy for an investor, usually depends on where they are within their investment journey. Often investors start to consider commercial assets when they move out of the accumulation phase and into the consolidation phase.
While earning income immediately is appealing, investors must also consider that this income may be taxed. Professional tax advice is recommended before proceeding with this strategy.
Tax Implications and Equity Building
On the upside, because the property generates additional income, this may suit investors who want to use those extra funds to pay down debt, therefore increasing their equity in the property.
2. How Do You Make Money from Property Through Capital Growth?
The most passive but often most rewarding way investors make money from property is through long-term capital growth. Buying in areas with strong growth and holding over many years allows investors to benefit from the compounding effect of increasing equity.
Identifying High-Capital Growth Areas
Areas with consistent capital growth are typically located in major cities with strong employment opportunities and multiple demand drivers, including population growth, wages growth, infrastructure development and economic stability.
Choosing land-locked areas near major CBD employment hubs is a proven approach to selecting outperforming locations.
Long-Term Trends and Investment Stability
Markets may fluctuate in the short term, but long-term trends show that property investment delivers results similar to long-term stock market performance, reinforcing property as a stable wealth-building tool.
3. Invest to Manufacture Additional Equity (Renovation or Development Strategy)
Buying a property that can be renovated or developed is an effective strategy for making money from property by accelerating capital growth. Renovations can be as simple as cosmetic upgrades or as extensive as structural reconfigurations. Development projects range from knock-downs and rebuilds to subdivisions and multi-unit developments.
The Importance of Avoiding Overcapitalization
To ensure a profitable outcome, it’s vital not to overcapitalise. Investors need a strong understanding of local market values and what the finished product will realistically be worth.
Exit Strategies and Tax Considerations
Many investors sell their completed projects and pay tax on the profits. Others prefer to refinance and hold the property, benefiting from instant equity creation, long-term capital growth, premium rental income and substantial depreciation advantages.
What Is the Best Way to Make Money from Property?
The best way to make money from property depends on your goals:
- High-yield strategy for income-focused investors
- Capital growth strategy for long-term wealth building
- Manufacturing equity for faster gains through renovation or development
Each strategy offers different benefits, risks and timeframes, so choosing the right one depends on your financial position and investment objectives.
Expert Support from Streamline Property Buyers for Your Brisbane Purchase
As one of Brisbane’s most awarded buyers agents, Streamline Property Buyers is committed to helping you make informed and confident property decisions. Whether you’re purchasing a home or an investment, our services offer tailored strategic guidance and expert support every step of the way:
- Assessing suitable properties aligned with your goals and financial requirements
- Structuring competitive offers and leading negotiations
- Giving you access to off-market opportunities not available to the public
- Managing risks and safeguarding your interests through the entire contract process
With our team’s expertise, you can approach the Brisbane property market strategically and with assurance.
Conclusion: Choosing the Right Property Investment Strategy
We hope this overview clarifies the many ways to make money through property investment. If you would like help determining which strategy best suits your goals, please contact us today. We look forward to assisting you.
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