So many Kiwis want to invest in property but are scared off by rising house prices and doomsday reporting in the media. They believe it's not possible and that it's only the domain of the rich – but that's simply not true.
A grand total of 38 per cent of the country's housing stock is owned by property investors, Reserve Bank data shows. That's concrete proof that every day New Zealanders can invest, even in this market. It's far more straightforward than you may think; with the right advice and a smart strategy in place you could be reaping the benefits of investment property sooner than you think.
But what's the secret to starting out and succeeding?
Find affordable high yielding property
The above title sums up a simple strategy for making a start in residential property investment quickly and successfully. You don't need to buy at the QV listed Auckland average of $1,045,362. In fact, depending on your budget buying outside of Auckland, nearer to Whangarei's average value of $472,081 may be far more suitable.
Investing in property doesn't have to be difficult. Investing in property doesn't have to be difficult.
In regions such as outer Auckland, Hamilton, Christchurch, Tauranga and Whangarei, finding affordable property under $500,000 or even $400,000 is not difficult at all. By adjusting your location and looking somewhere you may not have considered you can get onto the ladder years earlier and start profiting from property sooner rather than later.
What's more, you can make your early years as an investor far easier by buying a property with a high rental yield. Conveniently, high yields are generally found in affordable areas such as the ones listed above.
Early in your investment career your focus should be affordability and high rental yields.
QV data shows that in Whangarei average yields in suburbs such as Morningside are as high as 5.5 per cent, which may just be enough to cover all your mortgage repayments from day one. Similiar yields can be found all over New Zealand including Christchurch suburb Bexley, where the average property returns an impressive 5.7 per cent.
With tailored advice and step-by-step guidance courtesy of an investment property specialist here at Goodlife, you may be able to find a property that boasts even more impressive returns.
Buying for capital gains
Early in your property investment career your focus should be affordability and high rental yields, simply because it'll make buying and keeping your property easier in the short term. But in the long run you can't ignore capital gains – they're what will really take your investment to the next level.
Again, the areas we mentioned are impressive in this regard. Their QV listed average value gains over the year to March range from a solid 12.5 per cent increase for Auckland central to a hugely impressive 19.3 per cent value gain in Whangarei.
Be smart when you select your property and buy in the right area, your investment could be growing by as much as 20 per cent every year. On a $400,000 property, that's $80,000 of gains in the first year alone.
Tauranga is a promising up and coming area for property investment. Tauranga is a promising up and coming area for property investment.
As you can see, successful property investment isn't as difficult as some make it out to be. All it takes is dedication to make it work, knowledge of the market and the area you're buying in and a comprehensive long-term plan. Goodlife Financial Advice specialise in making the process easy and accessible for everyone regardless of their financial situation.
If you've been considering property investment, we can help you to make that dream a reality sooner than you may believe is possible.
Here's to your financial independence!
Daniel Carney
Authorised Financial Adviser / Investment Property Specialist