What is a common strategy for investors regarding yield?

Investors often look for ways to maximize their investment returns, and one common strategy involves the relationship between yield and property values. When investors buy properties at higher yields, it means they are initially paying a lower price relative to the income the property generates. This scenario can present an attractive opportunity since the cash flow generated from these investments is relatively strong compared to the purchase price.

Selling at lower yields typically indicates that the investor is selling the property when its value has appreciated, which often happens as the local real estate market stabilizes or improves. This dynamic allows the investor to capitalize on both the income generated during the holding period and the capital appreciation upon sale. By strategically timing the market—purchasing when yields are higher (and prices lower) and selling when yields have compressed (indicating increased property values)—investors can effectively realize significant gains.

While other options mention investing without considering yield or focusing solely on capital growth, these approaches do not align with the fundamental principle of real estate investment, which emphasizes understanding and optimizing yield as a key driver of returns. Understanding the yield dynamics helps investors make informed decisions that can lead to profitability in real estate transactions.