The fundamental idea is that the value of the property and the rent you can charge should continue to rise over the long term, so you could end up with both a good income stream from rent plus an asset that may be worth more than you originally paid.

Many investors take out a large loan to buy an investment property, so initially the rent from the property may not cover all the outgoings such as mortgage payments and other expenses.  However, to help cushion this, losses incurred in managing the property may be able to be offset against income in order to reduce your tax bill.  Find out more in our tax section.

Over time, as you repay your loan you build up more and more equity in the property (equity is the difference between the value of an asset and how much you owe on it), and the property (hopefully!) continues to increase in value.  Over time rents may also go up, increasing your rental yield (you can make sure your rents keep up with the market by comparing rents against property values using QV Insider). 

Of course, property prices fluctuate and the value of a particular property depends on a number of factors.  The longer you hold your investment, the more likely you are to ride out any short-term fluctuations in the property market and generate wealth.

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This material is for information purposes only. You should seek professional advice related to your individual circumstances. While The National Bank has taken care to ensure that this information is from reliable sources, it cannot warrant its accuracy, completeness or suitability for your intended use. To the extent permitted by law, The National Bank does not accept any responsibility or liability arising from your use of this information. Our lending criteria, terms, conditions and fees apply.