Investment Property
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Exclusive Advice for Savvy Property Investors
Don’t think you have to drive a BMW, own luxury sunglasses, and only wear polos to own investment properties. Anyone can invest in their future, and everyone should explore their options. Owning an investment property in New Zealand is a fantastic proactive step to securing your financial future. With property investment you can gain cash flow and grow your nest egg. If you are looking to expand beyond your own house or are looking to create a side business, you need to find the right mortgage for your situation.
Don’t let your bank be the gatekeeper to financial freedom. Instead when you work with a mortgage broker, you can structure a mortgage with a lender that gives you the opportunity to invest in your future without breaking the bank.
What Is Property Investment?
The most common form of property investment is buying into a rental property. This means you get a second home. That second home is then rented out for any desire terms. Further, you could rent it out under more exotic lease terms. Usually, this means you are using some socialized room or house sharing system. Lastly, you could be investing in a commercial property. Commercial refers to the ability to have a business on the property. Think of investing in a strip mall or a new development with stores on the bottom and apartments on the upper floors.
Example 1: the traditional lease agreement
It could be based on the traditional rental agreement for long term housing. This would mean constant income from the house based on a lease with a defined term. Only required maintenance would be required as per local guidelines and the terms of the lease. You could do the maintenance all yourself, or you could hire a management company to handle everything for you. The former saves money, but the later saves significantly more time.
A management company can also list the property, pick the tenants, and handle the rent. This allows you to get what is commonly called, “mailbox money.” If the investment is strong, the payments from the management company, after their cut, will not only pay the mortgage but also pay for a few dinners or even a vacation.
Example 2: the digital room share
Due to the digital boom of the last few decades, companies are creating platforms for crowdsourcing services that would have otherwise been in the hands of giant corporations. In this example, hotels were either mega-conglomerates or high-risk motels. Now, digital platforms let you list your rental online for a competitive rate with little overhead.
In a popular area you could raise enough to pay the mortgage without even renting it out every day of a month. This means you could use the rental yourself if it is in a beach town and rent it out while you aren’t there. You still need to clean the place after each visit, like in a hotel, but you don’t have the maintenance costs associated with a standard leased rental.
Example 3: the commercial property
The first two examples have been commercial type business ventures, but the tenants have been residential tenants. An investment property in New Zealand can also be an investment in property that houses commercial tenants. Think about your local shop center. Those businesses don’t actually own the buildings. They rent them out. Business rentals can be more expensive than residential properties but the property investment, NZ, for commercial lots has significant growth potential.
Many commercial property investors in New Zealand get a monthly rent from the commercial tenant and a monthly percentage of the sales. A mortgage broker that specializes in your New Zealand area will be help you find out how much you could afford and what terms you could get from your bank.
Why Is Property Investment A Good Thing?
Investing in a growth opportunity is a good thing. However, it is reasonable to know your limits. We all can’t buy a skyscraper, but we can start building a property investment, NZ, portfolio with the help of a professional mortgage broker and mortgage adviser team. Here are the top three benefits from property investment in New Zealand.
1. Passive Cash Flow
If you work a regular day job, you probably have already realized you only have enough time in your day for one job. However, like investing in stocks or bonds, property investment can be done completely outsourced. All of the maintenance and management can be hired out. This way, you don’t need to take broken pipe calls, interview renters, or list the property on the web. You just get a net check at the end of the month for your New Zealand property investment earnings.
2. Wealth Growth
Remember that property investment isn’t about the short-term gains. Investing in property is all about the long-term realization of your financial dreams. You can use the investment property to pay for retirement, a child’s college, or pass it on through your will. Further, you could turn the cash flow into another down payment on another investment property.
3. Diversification
Don’t put all of your eggs in one basket. If all you ever do is buy gold, you may lose it all in a crash. Further, it may not increase in value that much. You need to be sure that your investment property choice will create a diversified investment portfolio protecting you from financial harm. Property isn’t the same as the stock and bond market. That means they aren’t necessarily affected the same way during downturns in the economy. Diversification protects your overall wealth.
Get A Mortgage Broker
You can’t go at this alone. If you don’t have all of the money upfront then you will need to borrow. That is just how it is. However, not all mortgages are the same and not all banks off the same rates. You need a mortgage broker that can help you find the best deals and the best terms. Make the banks bid for your services. Make sure you have a mortgage broker that will fight for your property investment mortgage terms.
