Rental properties continue to be a great investment for Kiwis. Due to high immigration inflows and many ex-pat Kiwis returning home, the property market has been especially profitable lately. It looks as though this trend is going to continue in the near future, especially in Auckland.
The main difference between an investment property and your own home is that you can earn an income from it. Property investment has two types of potential returns: rental income and capital gain. As an investor, you may aim to buy investment properties that can provide both types of investment return. Different investment properties will provide different levels of capital gain and rental income. It will be up to you to decide on your investment goals and the most suitable properties to achieve them. The one consistent piece of advice for property investment is to buy the best quality properties you can in the best location you can reasonably afford, and don’t rush to sell.
Advantages of Investing in Residential Property:
• Expenses, including interest on your borrowings, are tax deductible.
• Capital gain – make money as the value of the property increases.
• You can leverage your investment.
• Receive rental income.
• For people who can’t save, paying off a mortgage is an enforced savings plan.
• Can be great way to save for retirement.
As with any investment, there are no guarantees of its future success. Even property investment is often described as ‘safe as houses’, it does involve risk like any other type of investment. It is important to understand the kinds of risk as well as the extent of risk involved in property investment, and to learn ways to manage it.
Risks of Investing in Residential Property:
• The time involved in dealing with a residential property investment could become unreasonable.
• The property could be vacant for a period of time.
• “Bad” tenants could cause stress.
• The owner of the property will have to deal with problems associated with the tenants.
• The property will need maintenance and repairs; this will cost time and income.
• Interest rates could rise making mortgage repayments much higher.
• House prices could remain static and may even fall.
Unlike other types of investment, property requires active management to maintain its value. Although it is possible to manage a rental property yourself, it can be time consuming and very stressful. Most investors spend a lot of time on tenant screening, rent collection, dispute handling, maintenance arrangements, document submissions, etc. It’s also hard to remain emotionally detached when you have tenants contacting you directly, or you personally have to deal with damage to your property.
With Lifestyle Property Management, we can help you avoid extra stress and gain your investment return hassle free. As property investors ourselves, we understand what is important to you. Our comprehensive screening system allows us to find the best tenant available and minimise any disputes in the future. We have access to reputable tradesmen at cheaper service fees. Also, we will provide you with up-to-date market information to help you achieve maximum return at tenancy commencement and renewal.
For more detailed information, please see “Why Choose Us”.