Owning an investment property has long been a part of the Kiwi dream. For many first-home buyers, buying a smaller rental property in a cheaper area can be just what they need to get a foot onto the property ladder. For savvy investors, it’s an opportunity to generate wealth. But before you jump in head first into property investment, take a look at these 3 simple steps to get you started.
1. Check Your Finances
Before investing in property you’ll need to take stock of your current financial situation, paying careful attention to your assets, your income and your outgoings. Work out how much you can realistically afford to invest.
If you already own a property, you may be able to use the equity in that property to kick start your investment property portfolio. As a first-home buyer, you’ll need to have a deposit, the amount of which will vary between lenders. Your mortgage adviser will help you determine which lender best fits your situation, working from a panel of lenders, and can help you get pre-approval so you know how much you could borrow.
2. Determine Your Goals and Strategy
Decide on your goals for investing in property and the strategies to get you there. To help you get started, think about:
• Why you’re investing in property – to generate income, build wealth or to save for retirement.
• What your time frame is – how long until you retire, how long you plan to hold onto a property before selling.
• The type of investment property you could buy in order to reach your goals – a smaller rental in a cheaper area versus a modern apartment close to the CBD.
The investment strategy you choose will depend on factors like your age and how close to retirement you are. If you still have 20 years to go until retirement, you’ll likely be looking for capital gain to grow your investment substantially. If you’re close to retirement, you’ll probably choose a strategy that will provide a solid cash flow that you can comfortably live on during retirement.
3. Research the Property Market
Once you have a clearer idea of your goals and investment strategy, it’s time to research the market to find the right property to match. For each property you’re considering, take a look at:
• How long it’s been on the market.
• Any changes to the advertised price since it was listed.
• The sales history.
• Median sale price and historical capital growth rates for the area.
• What price comparable properties are selling and renting for.
Also consider the costs associated with maintaining and possibly renovating the investment property and the likely rental income you could achieve as these will all be determining factors in your property choice.
Investing in property needn’t be a complex process. At every step of the way, our mortgage advisers are available to guide you and assist you to ensure you understand the processes and requirements needed for you to reach your property investment goals.
If you’d like to talk to one our mortgage advisers about your property investment goals and how to achieve these, simply get in touch and we’ll have someone call you back.
While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Mortgage Express Limited for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication.
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