What Is Capital Appreciation? – RWinvest

Amy Jackson
Amy Jackson
Property Editor
Updated 02 June, 2023
5 Min Read

When you’re just starting out in the world of property investment, you’ll come across a lot of different jargon and industry-specific terms.

If you aren’t too familiar with how property investment works already, these terms may seem confusing and daunting at first.

The good news is, with a bit of research, it’s easy to understand what the different lingo involved with the property market means.

One of the most crucial factors of property investment success is capital appreciation, and knowing all there is to know about capital growth is essential when it comes to investing in property.

That’s why we’ve put together this in-depth guide to capital appreciation and what it means. Hopefully, we can help you understand why when it comes to property, capital appreciation should be a key part of every investor’s strategy.

If you’re asking ‘what does capital appreciation mean’ and ‘why is capital appreciation so important?’, keep reading to find out more.

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Capital Appreciation in Property illustration Capital Appreciation in Property illustration

What Is Capital Appreciation in Property?

When it comes to property, capital appreciation is when the value of a property has grown over time. House prices can go up and down depending on factors such as property market performance. When an investor is able to sell their property for less than they initially paid for it, this means they’ve made capital growth returns.

What Is a Capital Appreciation Fund?

A capital appreciation fund is a specific fund that aims to increase the value of an asset class through investments in high-value stocks within the stock market. Capital appreciation funds are also referred to as capital gain funds, and are a type of growth fund.

Capital Appreciation illustration Capital Appreciation illustration

Why Is Capital Appreciation Important For my Property Investment Strategy?

You might be wondering why capital appreciation is so important for you to know about as an investor. It doesn’t matter what kind of real estate investment you’re making, whether that’s buy to let, buy to sell, or a more alternative investment strategy like holiday lets. Every property investor needs to consider capital growth when planning their investment property strategy.

The reason capital appreciation is so important when it comes to property investment is simple – without capital growth, property investors wouldn’t be able to get the most out of their investment.

Capital appreciation provides one of the best ways to make a sizeable return on investment, which is the main reason that so many people invest in the property market year after year.

Income Tax Illustration Income Tax Illustration

What’s Better For My Investment: Rental Returns or Capital Appreciation?

You might have heard a lot already about rental returns and what a big part they play in a buy to let strategy.

After reading about rental returns and their benefits, you might be considering how capital growth returns compare to rental yields, and wondering which type of return is better.

The truth is, when looking at capital appreciation vs income from rental payments, it’s not as simple as one being better than the other.

While rental returns are definitely the go-to priority for those looking for regular returns they can see right away, capital appreciation is also an essential element of buy to let that’s not to be missed.

The beauty of owning a buy to let investment property is that unlike other investment assets, buy to let allows you to generate two types of return on investment.

While rental returns will bring in regular income over time, capital appreciation allows the investor to receive a lump sum of income upon exiting the investment.

So, in summary, neither rental returns nor capital growth is better when it comes to investing in property. The best investments are those that combine high rental yields with a strong likelihood of capital growth.

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How Can I Increase My Total Return With Capital Appreciation?

Get the Best Capital Growth Potential When You Invest With RWinvest Today!

Are you ready to make long term capital appreciation through an investment in a lucrative buy to let property? Then get in touch with us today.

We offer a property investment portfolio of residential and student properties in high growth cities like Liverpool and Manchester. Enquire today to find out about our current investment opportunities with projected growth of 11.7% by 2026 alone.

To get a better idea about capital appreciation, you can read our blog discussing how much will your investment property be worth in five years.

Disclaimer: For more in-depth information about capital growth, consider seeking out financial services and speaking to a financial expert.

Amy Jackson
Amy Jackson
Property Editor

Amy Jackson is the property editor at RWinvest. Amy has over three years of experience working in the property content sector and has a keen eye for finding the latest news, statistics, and must-have property investment information.

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