High yield or capital growth?
Question from Harold updated on 3rd September 2013:
I have a revolving credit line secured against my freehold property up to $700,000. Would it be better to invest in high capital growth areas in Auckland or spread it over two to three rentals for high yield returns?
Our expert Ron Hoy Fong responded:
We are currently in a boom market, possibly for another two to three years, so now is the best time to invest in capital growh properties.
The amount to be made through capital growth will outstrip the potential amounts that can be made from cashflow. I would also suggest using your $700,000 mainly as deposits on purchases and leveraging the funds to buy additional properties. Check with your mortgage provider - this would be conditional on your serviceability.
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