Capital gains are the increase in market value of your investment property as determined by the market price. They are typically seen as a long-term investment strategy.
Core Strategic Issues
Unlike rental income, capital gains investment strategies are based on asset appreciation. This strategy includes property upgrades and value-adding and is subject to local market forces. These forces may increase or decrease the capital value of the investment asset.
Managing Investment Properties for Capital Gains
There are several options for managing your investment property for capital gains purposes:
- Planned property improvements: This approach includes adding value directly to the property, like extensions, renovations, and upgrading an investment property to a smart home, installing heat pumps for example
- Long-term capital appreciation strategies: This strategy is based on the principle that market price increases over time. Typically, less emphasis is placed on property improvement, which also reduces net outlays
- Combined property improvements and capital appreciation: This type of capital gains management is designed to improve rental income and simultaneously improve capital values
Managing Capital Gain
Every investment property is different and every investor is different. A strategy that works for one person may not work for another. Some strategies may involve excessive financial outlay or unacceptable financial risk.
Experts on property market investment in New Zealand generally agree that “bottom line management” is the best all-around approach to managing capital gain. This approach includes risk management and best practice financial management to ensure profitability.
Looking at Capital Improvements?
Capital improvements, renovations, and property upgrades can deliver significant capital gains value. The major issue is finance and managing the bottom line to protect your assets.
There are several options available for financing capital improvements. You can choose to spend personal capital or finance your improvements with an investment mortgage or equity loan. The question still remains; which is right for your investment needs? With the Reserve Bank limiting Banks it’s good to know that at iLender 80% investment mortgages are still the norm.
Want Expert Help with Your Investment Property Capital Gains?
iLender is a leading mortgage brokerage and experts in property investment in New Zealand. We can assist you in managing your capital gains, capital improvements, investment mortgages, equity loans, and improving investment property values. Give us a call on to discuss your investment choices.
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