The traditional favourite for New Zealand investors
Investment property has been a very popular investment up and down the country for the following reasons:
- Leverage. Real estate is one of the few investments where you can borrow funds to invest more than your available capital and increase your overall return on investment.
- Control. You have control over most parts of the investment. This includes control over:
- Whether you or someone else manages the property
- Any improvements that can be made – renovations
- How you structure your lending for the property
- Rental income. Rental income can be put toward repaying a mortgage, and/or providing passive income.
- Tax advantages. There is a chance your rental property will give you tax deductions you can use against your other income, reducing your overall tax paid.
To make the most of the advantages above, a key step to successfully investing in property is to do so with minimal emotion and ensure that your long-term goals are backed by robust calculations.
Talk to an expert
Over recent years, New Zealand real estate has experienced significant increases in value, though unfortunately for property investors, rental incomes have not experienced the same growth rates. This means that seeking advice from an expert, preferably an Authorised Financial Adviser (AFA), regarding affordability is a must.
As property investment is such an interesting subject, many of your friends, relatives, and colleagues will readily share their own tips on property as an investment. When given such advice, proceed with caution, as although many of these people may mean well, and are often successful property investors themselves, this is no guarantee of future success in the continually developing property market. This is where Milestone Direct’s AFAs can provide professional advice based on economic fundamentals, helping you remove emotion from the situation and focus on what you want to achieve.
For your information, the downloadable PDF to the right is a graphic display of annual returns for various asset classes (types of investment), ranked from best to worst across the last 10 years. In dark green it displays the yearly return for New Zealand property.
Owing to years of growth in residential property, the capital gain from real estate has been a great way for many Kiwis to build wealth for retirement. As rental income in relation to property value is now typically quite low in the main centres of New Zealand, it can be tough to live off the rent after all expenses are paid.
Therefore, if you’re aiming to retire with a robust passive income flow, calculating the investment yield on each property is crucial to understanding the current or future income that will be provided. In many cases, on reaching retirement, Milestone Direct clients decide to sell some or all of their property portfolio and invest the proceeds in a more diversified portfolio which can better provide their retirement income.
To assist you with investing in real estate, Authorised Financial Advisers from Milestone Direct can find you a great mortgage rate, ensuring you have a solid team of legal and real estate professionals on your side and confirm your cash flow and budget options are viable.
For a free, no-obligation consultation with an Authorised Financial Adviser about how property investment can work for you, call 0508 MILESTONE (0508 645 378) or leave your details and query below. We'll respond within one weekday.