1. Identify your investment goals 

Property is just one option for investment. We like property because we are able to leverage our capital via mortgages and it provides a relatively low risk and secure option for financial growth. You and your whānau will have your own goals and needs that your investment choices will need to consider. Property is a great vehicle for capital growth but not so good for cashflow. If you are wanting to grow your net worth then property is a necessary part of your portfolio.

2. Find a property investment strategy that suits your personality

When it comes to property investment there are a number of ways to make money. For example, long term rentals, airbnb, property development, house flipping, commercial and many more. Each strategy requires a different set of skills and knowledge.

The basic strategy I recommend when it comes to residential property investment is to buy well and never sell. Here are some tips to ensure you buy well:

a) Buy location - properties that are in good suburbs and close to good amenities i.e schools, water, work. I ask myself - would I live in this house?

b) Buy low maintenance - either buy new or buy old homes that our solid e.g. brick with easy to maintain sections. Make sure they are already compliant for healthy homes so you don’t need to spend money to get it ready to rent.

c) 3 bedroom minimum - The sweet spot are houses with between 3 - 5 bedrooms. Rental value is largely dictated by the number of bedrooms.

d) Garage and off street parking - this is becoming more and more of a luxury so if you can get it then do.

3. Research the market

It is key to know the market your entering. There are heaps of online resources to help you in this case but nothing is better than finding a good real estate agent and / or property manager to assist in your search. I’d recommend joining a property investment group on facebook or the local chapter of the property investors association.

4. Do the numbers

For most residential property the gains are made through capital growth i.e. the value of the property goes up. This is great however, you also need to consider cashflow. Individual rental properties generally have quite low cashflow. For example, an ordinary Dunedin rental property may produce $30,000 worth of rental revenue per year. Ideally, the rent would provide positive cashflow and cover all the expenses - mortgage, maintenance, property management fees, tax etc. More often than not, however, this is not the case. Many investment properties are negatively geared which means the owner has to put money into the property each year. Make sure you structure your mortgage so that you can afford to hold the property. The last thing you want is to have to sell the property at a bad time.

5. Speak with a property manager before you buy

A good property manager will engage with you prior to buying an investment. They can give you advice on healthy homes compliance, property law, and responsibilities as a landlord. A good way to compare property managers is by looking at their google reviews. At Dunedin Property Management we are proud to have a 5 star rating from a mix of tenants and owners.