Investing in the NZ property market
Great tips on investing in NZ from the experts...
Some very useful insights in this video from Positive Real Estate about beginning your journey in Property Investment.
It's a business
Investing in property is a business decision. Whether you manage the property yourself or choose to use an agent, it's important to treat your investment like a business — banking, tax, maintenance, etc. all need to be managed and recorded accurately. Ensure you build strong relationships with your solicitor, adviser or mentor, accountant, broker or lender, as well as real estate agents — all of whom have valuable knowledge and insight beneficial to your investment portfolio aspirations.
Choose the right location
Naturally, location is one of the primary factors which will determine the asking price of any property. Make certain that there is a real demand for rental property in your chosen area. Research the market well and choose an area where rental demand is higher than supply. Ask the property manager what the general turnover for their vacancy rate is.
Look for features that tenants will be attracted to. A well maintained home will attract a well maintained tenant! Is it close to transport routes and schooling? Make sure you allow for at least a two or three week period in each year when you won't receive any rental income so set aside funds to cover such periods.
If you're borrowing money to buy an investment property, you'll be making loan repayments to the bank. If you're renting the property out, you'll receive income from the property from your tenants. If the interest part of your loan repayments is more than the income you receive from rent, you can claim the difference as a tax deduction (negative gearing). It may reduce your taxable income and save you money on tax. In other words, negative gearing of your rental property, lets you claim losses and tax deductions when you expect to make profits in the future. This means that if you negatively gear your property, these items could be 100% tax deductible.
Obviously, you should seek the advice of your accountant or tax adviser as they will be able to clarify how this would pertain to your own personal situation.
Source: AMP’s Property Investment Tips.