Getting the Best Return on an Investment Property
Getting a good return on an investment property in New Zealand is based on both capital improvement and improving income generated by the property, ie rent. You can maximise returns on your investment with a combination of strategic options, starting with your purchase.
When purchasing an investment, you need to consider:
- Is your intended purchase in a location with significant potential for value-adding improvement and increased rental yields?
- Can you purchase at a reduced price to maximise your returns?
- Can you improve income by adding value to the property with extensions like an extra bedroom, renovations and other improvements which will increase rental values?
- Does the property have additional development potential?
Investment Property Income
Investment property income is typically generated by rent. Rent values depend on a range of factors, including:
- Local rental values: These values are based on location, type of property, competitive rental value, and the condition of the property
- Adding rental value: You can increase your rental value with property improvements, upgrading the premises, and adding value which will attract a higher rental
Managing Property Investment Income
Investment property income can be used for
- Paying off your home loan or investment mortgage
- Capital improvements to increase the net capital value of your investment
Good management of your income delivers considerable upsides for wealth creation. The combination of improved rental values and capital improvements adds considerable value to your investment in a relatively short space of time.
Strategies for Improving Investment Income
Highly experienced property investors often use investment mortgages, equity loans, or similar strategies to manage capital commitments for improving their properties:
- An equity loan (refinance) can provide capital for high-value improvements at a relatively low cost, without committing additional personal capital
- An investment mortgage may deliver tax benefits through negative gearing to offset the cost of capital improvements to an investment property
Talk to iLender about Your Property Investment Needs
iLender is a market leading mortgage brokerage in New Zealand. We can help you with all aspects of your property investment, including equity loans, home loans, and investment mortgages. To speak to one of our experts, call 0800 536 337.
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