6 Reasons to Invest in Property in New Zealand

by Dec 12, 2016Uncategorised

investing in property in Auckland

Investing in property is one of the simplest strategies to grow your personal wealth. It allows you to generate long-term income and hold a valuable asset, helping you create a better financial future.

With good financial management, expert advice and a home loan with great rates, you can open the door to a range of possibilities and benefits. Below we list the top six reasons to create wealth through a New Zealand property investment.

1. It’s Easy

Unlike buying stocks and shares, property investment requires little education or specialist knowledge. As long as you do your research, get professional advice and organise your finances, there is little risk of overpaying or making a poor purchase.

Property is an easy asset to understand, without any of the complicated terminology found in the stock market. Assessing the value of a property is fairly straightforward and creating a strategy is also simple. All you need to do is understand basic property investment principles like capital growth and rental yields.

2. Stability

Many people are hesitant to invest in property because of high prices and the state of the current housing market. In reality, property is far less volatile than other forms of investment.

For example, if you invest $100,000 in shares, you have no guarantee of what the investment will be worth in a few years. The value can’t be estimated by adjusting to the cost of inflation, nor can you accurately predict how social or technological changes might affect the success of a company you invest in.

If that $100,000 was used to buy two properties valued at $200,000 (each with a $50,000 deposit), you would have $400,000 worth of properties and $300,000 in mortgages. Consistent rental income will pay off those mortgages within 25 years, historically property in NZ’s cities doubles every ten years and can be tax free.

3.Rental Income

Rental income offers a consistent and generous cash flow. This allows you to pay off mortgages using other people’s (tenant’s) money. Good rental income also increases the market value of your investment property.

If your financing costs and other property-related expenses exceed your rental income, you can negatively gear the property. This allows you to offset your investment income against costs to reduce the tax you pay.

You can also claim a number of deductions on your rental income including rates, insurance, repairs and maintenance. With tenants and the government subsidising your purchase, property is one of the most affordable investments available.

4. Capital Gains

In New Zealand, capital gains on medium to long term property investments don’t attract tax. While some movements in the housing market can negatively affect the returns you gain, property generally increases in value over time.

New Zealand has a rapidly growing population, expected to reach six million within 50 years. The resulting demand for housing will increase property’s value and offer favourable capital gains returns over time.

5. Leverage Value

Your investment property can also be used as a working asset for further investments. For example, you can use the equity in both your home and investment property as security to borrow for another investment mortgage.

The financial leverage you access in property is far greater than a share portfolio. This makes property investment one of the most efficient tools for growing wealth.

6. Flexibility and Control

If you buy a share, you buy it at the market price with no options for negotiation. That price and future value can be affected by unpredictable factors like news and emotions. Property, on the other hand, is all about negotiation.

Property is also resistant to fluctuations in the market as housing represents a basic need. Unlike shares, if something happens to your property, an insurance company will cover it. Even if the housing market crashes, you’ll always have a tangible asset that will hold future value.

Investment Property Finance Made Simple

If you’re ready to invest in property, speak to iLender for a home loan with the best rates and lowest deposits. Our expert mortgage brokers have extensive experience helping investors climb the property ladder in New Zealand.

With access to bank and non-bank lenders iLender is still able to provide 80 percent finance for property investors.

Call us today on 0800 LENDER (0800-536-337) or contact us online with any questions you have about property investment.

About iLender

At iLender we put your best interests first and not the Bank – our advice is unbiased as all Lenders who we do business with pay about the same in commissions.

Although we are Auckland based Mortgage Brokers, we help customers everywhere in New Zealand and overseas with buying property in New Zealand, as we are very much about online and giving advice here and now!

The 5 big benefits of Property Investing

Rental property is a popular and profitable form of investment. Buying the right investment property can provide strong capital gains and regular income, while being able to leverage real estate opens up new opportunities for creating wealth.  Thinking about...

How to get a mortgage when you are Self-Employed

There’s a lot to be said for working for yourself. Whether you’re a freelancer, contractor, or small business owner, striking out on your own offers a sense of opportunity that’s hard to find in salaried roles. However, self-employment can make things tricky when it...

Government Housing policy changes – March 2021

Can they work or is there ‘an elephant in the room’? A lot of comment has been made around the Government’s changes to Residential Property Investment over the last few days, so I thought commentary from me, with nearly 30 years in Property Finance, might bring some...

What kind of loans can I get with bad credit?

A few financial slip-ups in the past can have a surprisingly big impact on your credit rating. A bad credit rating indicates that you may be a risky borrower, which can make it difficult to get the bank’s approval when the time comes to apply for a home loan....

LVR changes and what do they mean for you?

Background In 2013 the Reserve Bank introduced LVR restrictions to curb a potential overheating of the property market. As a rule, owner occupiers needed a 20% deposit and investors 40%, later reduced to 30%. There was some leeway with banks able to lend a very small...

Getting a home loan: What to do when the bank says “No”

It’s easy to feel discouraged when a bank rejects your home loan application, but it’s important that you do have other options when it comes to securing a mortgage. Non-bank lending can be an excellent option for home buyers who have had their mortgage applications...

Credit searches – What to know before you apply for a Mortgage or Loan

All Lenders use a credit search as part of their assessment of a Mortgage or Loan Application and there are some things that are important to know. Some Lenders use a credit scoring system, some don’t. Credit Scoring Mainstream lenders use a credit scoring system and...

More Reasons To Be Cheerful

Upturn in House Prices… A couple of the major Banks are predicting house prices to increase by up to 7 per cent next year with the property market due to "spring back to life". This is a welcomed announcement as it comes on the back of a fairly quiet winter - so signs...

Can I get a home loan with bad credit?

Getting a mortgage can be challenging if you have bad credit or no credit history. Banks tend to perceive you as more of a risk and are generally less inclined to approve your home loan application.  But that doesn’t mean it’s impossible to get a mortgage. Here...

The truth about mortgages, interest rates, the housing market and everything else the media likes to sensationalise!

  'House prices down' 'First home buyers finding it impossible' 'Investors exiting the market' Such headlines are gross exaggerations and often blatant misrepresentations of the truth. The Housing Market This is flat, but stable. QV (NZ's leading provider of...

Best mortgage rates, 10% deposit owner occupied and 20% rental purchase, self employed with no financials and help for those with bad credit or arrears.

Hundreds of reviews on TradeMe and Google makes us your ‘Number 1’ choice.

Call 0800 536 337