Property investment jargon, explained

Property investment carries a dense vocabulary, and the jargon often makes new investors feel out of their depth. Most of the terms are simpler than they sound. Here's the plain-English version of the ones you'll hear most often.

Yield, gross and net

Gross yield is annual rent divided by purchase price. A $500k property renting at $500/week has a gross yield of (52 × $500) / $500,000 = 5.2%.

Net yield is the same calculation after subtracting holding costs — property management, insurance, rates, repairs, vacancies. Usually 1.0–1.5% below gross.

Use net yield for decisions. Gross is for marketing brochures.

LVR (Loan-to-Value Ratio)

The size of your loan as a percentage of the property's value. A $400k loan on a $500k property = 80% LVR. Lenders use LVR to set pricing and to determine whether Lender's Mortgage Insurance applies (typically above 80%).

Negative gearing

When the rental income from an investment property is less than the costs of holding it (interest, expenses), the property runs at a tax loss. That loss can be offset against your other income to reduce tax. Negative gearing is a tax outcome, not an investment strategy — investing for the loss only makes sense if you expect capital growth to outweigh the cashflow gap.

Positive gearing / cashflow positive

The opposite. Rental income exceeds holding costs, so the property generates net income. Less tax-effective for high earners but better for cashflow and serviceability.

Capital growth

The increase in the property's value over time. Long-term capital growth has been the dominant return driver in most Australian property markets, but it's not guaranteed and varies hugely by suburb and cycle.

Depreciation

A non-cash tax deduction reflecting the wearing-down of the building and its fixtures. Two components: building depreciation (the structure itself) and plant and equipment depreciation (appliances, blinds, carpets). A quantity surveyor produces a schedule.

Equity

The difference between your property's market value and the loan against it. Usable equity is typically 80% of value minus loan balance.

Cross-collateralisation

When two or more properties are used as security for one or more loans, structured so the lender has rights over both. Looks neat; usually a trap. Avoid unless there's a clear specific reason.

Off-the-plan

Buying a property before it's built. You sign a contract and pay a deposit; the property settles when construction completes (12–24 months later). Stamp duty concessions often apply but you carry construction risk.

Strata / community title / Torrens title

Different legal forms of ownership. Torrens is freehold (standard houses on land). Strata is shared ownership of a building, common in apartments and townhouses. Community title is similar but typically over land with shared amenities.

Tenants in common / joint tenants

Two ways co-owners can hold a property. Joint tenants share equally; on death the share passes automatically to the other owner. Tenants in common hold defined shares (e.g. 60/40) and shares pass via the estate. The choice affects estate planning.

Vacancy rate

The percentage of rental properties in an area that are unoccupied at a given point. Below 2% = tight market, rental growth likely. Above 4% = soft market, rental pressure on the way down.

Days on market

Average number of days a property sits listed before sale. A leading indicator of buyer demand. Falling = strengthening market; rising = softening.

Pre-approval

A conditional indication from a lender of how much they're prepared to lend you, subject to specific property and updated checks. Get one before you start serious looking — without it, agents may not take your offers seriously.

The terms aren't gatekeeping. Knowing them just makes the conversations cleaner.