There are many different ways to invest your money, each with its own particular advantages and disadvantages. Against the backdrop of volatile global stock markets a residential property investment could continue to be a safe and profitable investment.

There are also a number of social and demographic factors that further support investment in the residential property rental market:

People are getting married later in life, and therefore often find themselves renting a home first.
The increase in house prices is raising the barrier to entry to the property market for first-time buyers, who then need to rent initially.

There are more single households as a result of the growing divorce rate, increasing the demand for rentals.

People tend not to stay in the same job for long and want more freedom of movement. Renting instead of buying makes this possible.

Astute investors are realising the investment potential of residential property and are including this in their investment portfolio.

An obvious intention of investing in residential property is to make a return on your investment. In general terms your return is obtained from the excess of rental income over expenses and the capital profit when the property is sold.

In most circumstances any alternative to an investment in residential property requires the investor to contribute a substantial amount of cash at the commencement of the transaction. One of the advantages of residential property investment is that, in addition to a deposit, the investor is also able continually to invest in the same property every month. This is often a requirement as the rental income earned will be less than the loan repayment and other costs at the initial stages. In order not to contribute, or contribute a lesser amount every month, the investor will need to pay a higher deposit. Therefore, as with other investment classes, investors in residential property may be required to make either an initial lump-sum deposit or may have to Invest an amount on a monthly basis, or a combination of both.

Residential property is a fairly distinct type of investment in that loan funds are readily available to residential property investors, compared with investors in other asset classes.The extent to which a person borrows money to invest in an income-producing asset, is known as gearing. Gearing is generally expressed as a ratio. For example, 100% gearing means you have borrowed the full amount of the investment, while gearing of 50% means that you have borrowed only half the investment amount.

There is a cost, in the form of interest and the repayments on the loan amount, associated with borrowing money. However, from a return perspective you will benefit from the capital growth on the full investment amount and not just on the amount that you invested. In the case of a residential property investment this means your return is based on the total property value, not just the deposit Gearing magnifies your return, but it magnifies your loss as well. Always consider that there may not always be capital growth. Therefore, the more you borrow, the greater your potential gain or loss!