Investment Fundamentals
Melbourne property investment focuses on capital growth + rental yield. Historical data shows 3-5% annual capital appreciation over 10-year periods. Top-performing suburbs achieve 5-8% annual growth.
ROI Analysis: Best Performing Suburbs
| Suburb | 10-Yr Growth | Rental Yield | Capital Gain | Total ROI |
|---|---|---|---|---|
| Footscray | 52% | 4.7% | 5.2% | 9.9% annual |
| Yarraville | 48% | 4.5% | 4.8% | 9.3% annual |
| Coburg | 41% | 4.6% | 4.1% | 8.7% annual |
| Craigieburn | 38% | 4.8% | 3.8% | 8.6% annual |
Investment Strategy
Buy and Hold
Hold properties 10+ years for maximum capital growth. Negative gearing in early years, positive cash flow long-term. Best for long-term wealth building.
Positive Cash Flow
Target 4%+ rental yield. Buy properties generating more rental income than expenses. Requires larger initial capital but provides immediate income.
Calculation: Is It a Good Investment?
Property price $500,000, weekly rent $400, expenses $100/week = $300 net income. Annual yield: ($300 × 52) ÷ $500,000 × 100 = 3.1% yield. Add capital growth projections (example 4% = 7.1% total ROI).
Related: Cheapest Suburbs | Mortgage Guide