Thinking about buying an investment property in New Zealand? You’re not alone! Many Kiwis see property as a way to build wealth, but it’s worth understanding both the good and not-so-good sides before diving in.
The bright side
Investment properties can be a solid way to grow your money over time. Historically, New Zealand property values have generally increased. You’ll also receive rental income each week, which can help cover your mortgage payments and other costs.
There are tax benefits too. You can claim expenses like interest, maintenance, insurance, rates, and property management fees against your rental income. Plus, having a tangible asset that you can see and touch feels more real than shares on a computer screen for many people.
The challenges
But let’s be honest – it’s not all smooth sailing. Property investment requires a decent chunk of money upfront. You’ll need at least a 30% deposit or enough equity in your current property to buy an investment property (thanks to current lending rules), plus legal fees, building inspections, and other costs that can add up quickly.
Being a landlord isn’t always easy either. You might deal with difficult tenants, unexpected repairs, or periods when your property sits empty. And don’t forget – properties need ongoing maintenance, which costs both time and money.
The government has also introduced new rules around healthy homes standards, meaning you might need to upgrade heating, insulation, and ventilation.
Should you do it?
Investment property can work well, but only if you’re financially prepared and understand what you’re getting into. Make sure you have enough equity or savings for the deposit plus a buffer for unexpected costs. Consider whether you have the time and temperament to be a landlord, or budget for a property manager.
It’s also worth exploring other investment options like KiwiSaver, index funds, or other assets that might suit your situation better.
The key is doing your homework, understanding the risks, and making sure property investment fits your overall financial goals and circumstances.
LOOKING FOR A MORTGAGE OR THINKING OF INVESTING? WE’VE GOT EXPERTS IN BOTH.
Keen to make a move in the market? Whether you’re looking for a mortgage to purchase a rental property or see how you can build wealth through an investment portfolio, talk to a Cole Murray Adviser today. We can help you find the right wealth generation strategy for your needs.
