Property Investment? Are you a property investor looking for a lucrative property investment opportunity? Purchasing an investment property is a major decision. Whether you are a beginner or a seasoned investor, we can help give guidance and expert advice on top-class property investment opportunities that help you yield the best results. Based on your investment preferences, we provide the right real estate investment opportunities that cater to your requirements effectively.
We provide our clientele with top-end advice not only with respect to acquiring property, but also with in respect investing or lending to the real estate industry. We feature a team of highly qualified and experienced investment property experts possessing in-depth knowledge in the given industry. We empower you to make the right, well-informed decision in property investment. Right from helping you select the right location to finalizing the property, and closing the deal.
How much of a deposit do you need for your property investment under LVR Restrictions?
New Zealand house prices will increase if there is a strong demand for homes , but will the housing supply keep up?
Our qualified property investment advisors can guide you through the Pro's and Con's of these differing property investment strategies.
The property investment nz steps after you have bought your first investment property or investment real-estate, is to do it all again. This is how you build your property portfolio.
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Investing in Property can be a way to build wealth. This is because of leverage. This is your ability to multiply your return on investment using other people’s money. Money loaned to you for say a bank or lending institution.
There are so many different reasons why New Zealanders want to invest in property.
Possibly one of the most stand out reasons is that they see real estate investment as a way to create wealth and long-term capital growth.
Your real estate investment portfolio can earn you an income through rental yields. But with the current rate of property value growth within New Zealand, it can also give you excellent longer-term property yields.
There are 2 types of potential returns. The first is from rent paid to you by tenants and the other is that longer term return as the property value increases. This return is called capital gain.
Real estate investment is not considered to be ‘liquid. Why? Because you cannot immediately liquidate i.e. turn to cash if you need cash suddenly. To get any cash or money out of a real estate investment, you need to sell the property or increase your mortgage over the property. In doing either of these, there can be extra costs incurred such as valuation fees, real-estate agent fees and lawyer service fee costs.
A usual approach is for investors to buy an investment property to make a long-term profit. Initially there may be minimal if not negative profit or returns after expenses such as insurance, rates on the property, maintenance and mortgage expenses have been paid. Holding a property for a set period is important as if you sell a property earlier, there could be capital gains tax incurred as well.
With the current levels of house prices in New Zealand, you may not see any positive investment returns for a while. However, you are still able to build equity and really have property renters pay off your mortgage over the lifetime of you holding onto that asset.
As with any form of investment. Investing in property also carries risk. It is important to determine your personal risk tolerance irrespective of what type of investment you are considering. Your age, time of life, financial situation and persona circumstances should also be considered. Consider the requirements of your dependents and what is the current level of debt repayment that you would need to meet. Could you afford to keep an investment rental if the property was left untenanted because of market changes for say three months. Do you have enough income to secure the loan for that property? How concerned are you about the risk in residential or commercial real estate investment? What ever your answers are, start slowly. Don’t walk before you can crawl. Do not over borrow or over commit. Don’t panic if property values plateau for a few years. Manage your risk levels with facts and research backed by the advice of your investment team supporting you.
Investing in Property has often been described as a reasonably safe investment but there are risks.
A bank or financial lender could ask you to repay the mortgage unexpectedly. Depending on circumstances and the economic environment, you may not be able to sell the property or possibly sell the property for enough to cover the amount owed on the property i.e. your mortgage
If one lender is used to mortgage both your own home and your rental investment, the lender / bank could potentially sell both properties if there was a difficulty in paying either of the mortgages.
You may need to sell the property at a time where values have reduced or dropped. You could still be left money owing to the lender after the property settlement / sale of the property has occurred.
Any real estate capital loss can be magnified when you’ve leveraged into other properties.
Affordability of the loan or mortgage. Interest rates fluctuate and may increase. If interest rates increase your monthly return on that property may reduce.
Not doing your due diligence when about to acquire a property. This is the most important step before even proceeding to make an offer on a property.
You may not always have a property that is tenanted. If you are unable to sustain your mortgage payments over this time, you could be forced to sell that property.
When investing in property is executed incorrectly, it can put your family home at risk.
A tenant could damage your property or become difficult to evict. P-Labs can be very costly to clean and can have a significant impact on the value of a property. Sometimes a tenant’s bond may not be enough to cover some of these costs. There are various insurance options available to you.
Property maintenance, repairs or compliance expensed could increase or become legislated. This can have a negative impact on your rental returns. the house may age, when you buy an investment property.
Interest rates, and other costs, could rise significantly, impacting your ability to service your loan.
In order to mitigate or reduce these risks, you may consider paying off the mortgage faster.
It all sounds easy. You buy a house; you fix up the house and then rent it out. You now have a rental property.
But not evaluating the risks Investing in property you are exposing yourself to possible financial losses that you may not expect. It is important to consult with professionals to provide you with some level of peace of mind.
A change to the property market can turn a good investment into an unforeseen loss. Experienced property professionals have experience and insight into the current market and their wisdom can help you make better decisions around your investments.
Building styles E.g investing in a leaky building could be disastrous. Ensure you have any possible property purchase thoroughly looked over by a qualified property inspector.
Acquiring too many properties at once or in a short timeframe can provide you with unnecessary headaches. Again, obtain professional input before proceeding with any property purchase and determining what property acquisition pace is comfortable for your circumstances.
Do not overextend yourself. If you are buying an investment house or apartment, you are very likely to have an existing mortgage. Review your circumstances and ensure that you are not overcommitting yourself financially. Do not commit to anything more than you can afford.
Property can provide you with a future passive income.
You can build a property portfolio that will continually produce a return / positive yield each year.
Whilst environments change unexpectedly, NZ property has out-performed bonds, shares, bonds and bank interest for some time.
It provides you with flexibility to sell your real estate assets at the optimal time.
Save on Tax.
As in any society and New Zealand is no different when it comes to tax, the harder you work, the more tax you need to pay. But if you make any loss on your rental this usually results in a tax deduction or refund.
There are so may properties on the NZ market. Finding the correct property that matches your investment strategy can feel a little daunting.
This is where property investing research becomes so important. Conduct a detailed research study on each property and its location. This research could include: –
When did this property come to market?
What is the history since it has been listed for sale? Are there any changes to the advertised prices since the property was listed?
What is the sales history of the property? You could find out what the property was bought for by the previous owners and the holding period that all previous owners have kept the property for.
What is the median sale price for similar properties in the area? Historically what is the capital growth rates of this location.
What are comparable properties renting for in the area?
What is the estimated current market value of the property?
Saving money in the bank or investing in property? Investing in property would involve more work than say for example, saving your money in a bank or investing in the stock market (shares or managed funds).
Finding the right real estate investment can take time.
Finding good tenants and managing the rental property.
Maintaining the property as needed and arranging for this maintenance work to be done.
Collecting weekly rent and the bond monies. Registering the bond monies with Tenancy Services.
Communication with your tenants.
Obviously, a property manager could do some of this for you but there would be a weekly % fee charged for this property management service.
Consider the location. Local Schools, Zoning, Proximity to transport hubs, level of crime within the areas. Local parks and access to employment. These can all impact on your ability to rent out or resell a property.
Do you own your own home? If you have some reasonable equity in your house, you may not need to find a deposit to invest in property. Under this scenario, you could use bank funds to start building your property portfolio
Review all your current debt. Reduce this debt. It could be student debt, credit cards, cars, medical bills and more. It is best that these are all reduced significantly before you being to invest in property and buy your first investment.
Do you have debt issues? Do you find saving for your future to be difficult? Perhaps committing to a house investment plan that allows you to make your money work for you is a good option. You will earn rental income, use the banks / lenders money to support your investment strategy and have a focused plan surrounded by your team of professionals to support you.
Are you looking to reduce your tax? The more money you earn, the more tax you pay. House investments can reduce the amount of Income Tax that you pay in each respective financial year.
Do you need a retirement plan? You could build your house investment portfolio for your retirement. It may start of as a single investment house or a portfolio of chosen properties. This investment strategy can be the start to creating a passive income through rental investments in years to come.
Contact your solicitor to discuss the clauses you should add to any sale and purchase property agreement. Also consider that building inspection reports and those companies that provide those are not considered an essential service.
The social lockdown may also impact on tenants vacating or moving into your rental property. Current, movers or related support services for a move may not be identified as an essential service.
As an example, Heating or ventilation. Home heating is one of the healthy homes standards. All private rentals must comply with the healthy homes standards within 90 days of any new or renewed tenancy after 1 July 2021, with all private rentals complying by 1 July 2024.
Good home ventilation reduces the amount of moisture in your property. This helps keep tenants healthy, makes the home easier to heat, but can also reduce indoor home repairs.
Ventilation is also one of the healthy homes standards.
When investing in property, what return could inspect from a rental property. This would be a key deciding factor when choosing a particular investment over another. The general return value can be influenced by several factors.
What is the tenancy rate of the area you are to purchase in?
What type of property is a good renter within the area? Is it a house, apartment or unit? properties rent well in this area: houses, units, townhouses or apartments?
What is the growth plan (council infrastructure plan) for the general area? The future of transport infrastructure? Is it a high density area with the potential for infill housing? Where are the greatest employments hubs in relation to the property? Who is moving into the area or who is moving out? Local knowledge is very important.
This rental return will help you assess the suitability of any possible property. Does it fit into the investment strategy you have chosen? Will it return the rental yield you require? Always remember to include all rental expenses into this calculation. These expenses could include maintenance of the property, insurance, rental management fees, council rates or body corp fees.
This is a business. Well, that is a mindset shift required. An emotional attachment to a property is not a good enough reason to make an investment in that particular piece of real estate. Also consider acquiring a diverse portfolio and an emotional attachment to a house may become an obstacle to you achieving your property goals.
A property portfolio exit strategy. What does that mean. This is a plan that you have in place should you ever be faced with a financial situation where you need to sell off a property in your portfolio. Planning so that you don’t act on impulse can help you prevent any capital loss or further financial losses.
The equity can be described as the difference between a property’s market value and the amount you owe on it, the mortgage. If you opted to sell your property and repaid your home loan to your lender, the equity would be the amount you have left.
Leveraging is where you use the cash you have available to look at perhaps buying a more expensive property. You could also use debt to purchase a new property with the equity that you have in your existing property. Leverage can be very powerful when it comes to growing your wealth.
This is simply where the cash flow positive property is able to pay for all its expenses from the rental Buying cashflow positive property
On the day of purchase, you may buy a property that is able to generate a profit. This is ideal. Typically, such opportunities exist in lower-income areas or in regional New Zealand towns or in the apartment market. With each of these types of property there are risks associated with such an investment purchase.
A cash flow positive property can be created by increasing the rental income that that property can produce.
A larger home could be divided into smaller units. You could add a bedroom onto a dwelling in order to charge a higher rental. Or perhaps you could subdivide a section and add on an additional dwelling. Many of these suggestions would involve council consent but can increase or create additional cash flow.
A house investment or investment in property should eventually be a source of passive income for you. So, consider the following.
Unless for good reason and capital gain, avoid purchasing a labour-intensive DIY project. Purchasing a property, fixing up the home and flipping the property can provide good yields or returns but there could also be unexpected costs when doing this. If this you proceed with this, there are property agents that can help you facilitate this do-up process and will typically have a lot of experience in managing do-up property projects. Buying a house, fixing it up and flipping it on the market can yield significant returns.
Set a timeline. What are your goals? Think long-term investment goals or short-term investment strategies. This may vary from person to person and therefore you do need an experienced investment team to guide you through these decisions. Focus on what you want to achieve. Your personalised real estate investing strategy. Why? It will look different for different investors. If you are a first-time home buyer your strategy will be different to someone that already owns their own home in New Zealand. Understanding the baseline that you are working from and what your investment goals are will help you drive the best investment strategy for you and your family.
This is typically a legal structure. A legal structure could include a trust, company or similar. Before you proceed with make an offer on any property, you should sort out your property ownership structure. So, whether you are going to purchase a property as an individual, as part of a trust, via a company, a partnership or as part of a shared ownership scheme, please discuss your plans with a professional. This could include both your lawyer and your accountant with relevant property investment experience
This investment team will be able to advise on
1. How much you can borrow.
2. What your loan and purchase costs may be.
3. Provide guideline on what your investment loan options could be.
4. Help you with your pre-approval of your loan.
5. Find a suitable property for you.
6. Secure and Buy your investment property.
7. Organise any required insurance. This could include building and landlord protection.
8. Deciding on whether you want to secure the services of a property management company.
This venture should be treated as you would any business. Don’t choose the first property you like or can afford. Treat your property strategy and investment venture as a business. Just as you manage your business by hiring the best people or consulting with specialists when you need specific skills. Call on your investment team. They are specialists and can support you with their specific, relevant and experience to support you as you implement your chosen property strategy.
Investing in residential property, when done correctly can help you reduce your mortgage, create a passive income and help you increase your personal wealth.