Investment properties have many benefits when it comes to building long-term wealth, but this wealth is not always guaranteed.

As a means of diversifying your exposure to different asset classes, property can be less volatile than shares (although not always) and tends to be the haven investors rush to when other assets suffer. While it has lost its gloss since the boom times of the late 1990s, sensible investments in property have many attractions.

All investments need a benchmark to measure capital against return. Residential property isn't any different, it is measure by its rental returns and capital appreciation against time factor.

Your first investment in property doesn't always have to be something you live in. Indeed, buying a small apartment to rent out can be a good way to accumulate a big enough nest egg so you can eventually buy your own place.

Generally, investing in real estate gives you access to two benefits: Capital Appreciation and Rental Income.


What is Capital Appreciation?

Capital Appreciation is the money you make as the value of your property appreciates. The larger cities – especially Kuala Lumpur and Petaling Jaya – have enjoyed occasional boom periods that have seen many property owners with properties that have sometimes doubled in property value in single property cycle . While there's no guarantee your property will gain in value, historically property has experienced steady growth.


What is Rental Returns?

Rental Returns is the income generated from the property that letting out or leasing based on agreed amount of money paid while used or occupying the property. The money collected from the letting or leasing is the Rental Returns of the property. The rental returns of the property can be benchmark by measure the gearing of yield.
 
Gearing basically means borrowing to invest . An investment property that's negatively geared is purchased with a loan that has an annual net rental income amount that is less than the annual interest paid on the loan, plus the deductible expenses associated with maintaining the property. The biggest part of this deduction is the interest portion of your mortgage.

If the annual net rental income amount has have surplus after less all the annual interest paid and expenses associated with the property. The property investment can be defined as Positive Gearing.