While many in New Zealand own their own home and perhaps one other property, building a strong investment portfolio is an achievable way to gain steady wealth over time. Here are a few considerations if you are aspiring to increase your investment property gains.
Start with Cash Flow
The first property you buy is the hardest, and the subsequent ones will be easier because you will have equity, credit, and trusted relationships with your mortgage broker and accountants. In order to get enough cash to invest in a second property, you should aim for your first investment to return a positive cash flow. That means you will probably want to buy under market, renovate a little, and earn enough rent to make a profit. iLender offers low deposits on investment mortgages, so you can start getting returns on your investment property sooner.
Use a Good Mortgage Broker
Mortgage brokers don’t only lend – good brokers are also knowledgeable in setting up the right mortgage structure and figuring out the current housing market. By utilising certain mortgage structures, you may be able to increase your cash flow in order to buy your next investment, or build your equity to expand your property portfolio.
You should always outsource what you are not good at doing yourself. If you think managing your own properties requires a level of organisation or time you are not prepared for, hire a professional property manager. You can hire a property broker to help determine where and when is right to buy if you are confused by reading the market yourself. Using a property Accountant is also a must for the serious investor.
Sell at the Right Time
Many people are afraid to actually sell their investment property when it hits its peak. When you invest in a property with high capital gains returns, you make your profit when you sell it before its value depreciates again.
Mix Capital Gains and Cash Positive Investments
While young investors likely need their first property to be a cash-positive investment, wealth is built from investment property with high capital gains returns – meaning you buy low and sell high after a short period of time. Aim to have a mix of these two types of returns in your property portfolio. Most successful investors always take the longer view.