Over the past couple of years there has been a marked increase in those who are looking into the idea of investing in property in New Zealand. Many of these investors have come over from nearby Australia, but there are still plenty of Kiwis who are trying to get in on the market. On this page I want to give you a brief overview on how you can go about investing in property across the country.
So why invest in property? The main reason why many people get into property investment is to bring in a new income stream. This can come from two different sources. Perhaps the main one is the rental income that the property is able to generate. As long as you keep the property occupied with fairly decent tenants then this should come in pretty quickly. The second income will come when you sell the property in the form of capital gain. Hopefully the property would have increased in value and thus you will net a sizable pay out as a result.
One of the biggest problems that people who want to go about investing in property face is the fact that it can be challenging to get money loaned to you from the banks. They will have a lot of stipulations in place that many people won’t be able to meet, especially if you are classed as an investor. Amongst other things, they need to know that you will be able to afford the required payments every month, even if the property isn’t rented (and there is a good chance that it may not be for some months). They will also need to see a good credit history. Quite often you will also be asked to put up a sizable deposit. Honestly, investing in property is lucrative, but you do need to have the money to spend right at the start. This isn’t the type of thing to get into if you wake up one day and on a whim decide that wish to invest! This is a decision that will take a lot of thought. Many people find that it is often easier to go with the bank that you have already mortgaged your own home with. However, you need to be aware that quite often if you cannot make the rent on one of the properties you could end up losing both! As I said, it is VERY risky! Good planning here is an absolute must.
Once you have the loan in place and secured the property then it is time to get people into it. This isn’t always easy. Not only will you have to find the right tenants, but you will always need to be available if they need repairs carried out. Trust me when I say the life of a landlord is a particularly hectic one! One of the top suggestions from many investors is to bring a property management team in who will ensure that everything goes to plan. This way, you are able to free up some time for yourself. Bear in mind though that the property management fees will eat into your profits so be sure to do your numbers before you engage a property manager.
Remember, this is an incredibly brief guide to investing in property in New Zealand. As you can probably guess, making the decision to invest can be a pretty big one. It is therefore absolutely vital that you carry out as much research as possible into the benefits and the negatives of investing in property. Do not attempt to invest without understanding the business to a point where you are comfortable making decisions and knowing what you are doing!
