Throughout this article, we’ve mentioned tips on how to invest in properties. Read till the end to know about the best property investors from New Zealand.
How to begin property investment?
When you’re beginning to invest in properties, there are some basics that you’ve to know. You’ve to study the market and look for an ideal location. A bad location won’t get you higher ROIs. Although there are times when a property looks bad, it shows great potential to improve. With such properties, if you do some hard work, you’ll benefit eventually.
Besides knowing these factors, here are 5 ways you may begin investing in properties.
- Rental Properties: Investing in rental properties is a good idea for you if you like renovation projects. This would also provide you with an opportunity to have tenants. Managing the tenants may be a tedious task for you here. But, this investment can provide you with a regular source of income.
- Real Estate Investment Groups: People who own REIGs can have their real estate property, but they don’t have to run it. In these groups, a company can buy apartment blocks. Then the investors can purchase them through the company. This way, the investors join the real estate investment group.
- House Flipping: This type of property investment is for those people who have significant experience in real estate valuation, renovation, and marketing. The house flippers sometimes invest in undervalued properties. Then, they try to sell these properties for a profit in less than six months. Some flippers invest in properties, but with no intention of improving or renovating them.
- Real Estate Investment Trusts: As an investor, if you’re looking to have some portfolio exposure, REIT is your way to go. It would give you the exposure you need without a traditional real estate transaction. With REIT, corporations use the investor’s money to operate income properties.
What is commercial property investment?
Commercial properties are those properties that are used for business purposes and for residential purposes. Contrary to popular opinion, it isn’t just the business class people who can invest in these properties. Anyone can invest in commercial properties if they do it in a rightful manner. Commercial property may include shops, office buildings, medical centers, hotels, malls, and so on.
There are some merits and demerits of doing commercial property investment.
- When investing in a commercial property, you’d expect higher returns. This is because when compared with residential properties, the commercial properties are long-term in nature.
- Commercial properties would also give you higher rental yields. These refer to the earnings that are generated from income-generating assets.
- If there are unfurnished units on the commercial property, you may give them out to tenants. This way, the commercial property investment would become a little less expensive for you.
- It may be difficult for you to find tenants for your property. This may be because of the location of the property or because of the rent amount. For some people, both these factors don’t give them a positive value. This in turn becomes a problem for you because then your property can remain vacant for a long time.
- Commercial properties can get you higher returns. However, if you don’t do your research properly and don’t invest in a good property, then you’d experience a loss. In general terms, you have to do exhaustive research before you finalize a property for investment.
Which is the best investment property calculator?
There are many property calculators that you can use on the internet. When you’d look for a calculator, you’d find that many real estate websites have calculators on their webpage. If you haven’t hired a property investor yet, then you may go to any of these websites.
When you enter the information in the calculators of these websites, put in the information correctly. Even a misplaced decimal point can cause huge errors in your calculations.
However, if you’re working with an investing company already, then they’re the best people to guide you with your calculations. You may give them the information they require and they can do the calculation in front of you. They’d do the calculation on the website, but you may also ask them to do it manually in case you need assurance.
How to calculate the return on an investment property?
ROI or return on investment refers to the return that you get after investing in a property. Low ROI would mean that you’ve had a loss, whereas high ROI would mean that you’ve made a profit. People need to calculate the ROI so that they can know if investing in a particular property would be worth it or not.
Here’s how you may calculate your return on investment while investing in a property.
ROI = (gain on investment – cost of investment) / cost of investment
With this formula, you will easily calculate the ROI for your property investment. Here, first, you’ll need to have the gain on the investment. You’ll subtract this gain from the total cost of your investment. Lastly, you’ll be dividing that amount by your cost of investment.
For example, let’s say that you invested $600,000 on a property and you sold it for $850,000. Now, you can put these values in the above-mentioned formula. Then, you’ll find that your ROI would be approximately 41.6%.
What deposit do you need for an investment property?
The deposit you’ll need for investing in a property differs from country to country. In American states, you need to make at least a 20% deposit. In New Zealand, you’ll need to make around a 40% deposit before you make an investment in a property.
You may use the equity of your existing house to make a deposit. Equity refers to the difference between the current value of your house and how much you owe for it. The way to build up your equity is by paying down your mortgage. It also builds up when the house rises in its value.
You can’t use all your equity as the deposit amount. Usually, banks ask you to keep saving some of that deposit. Although, if the situations call for it, then you can use all the equity amount for making the deposit.
How to leverage the equity in an investment property?
If you want to leverage the equity in an investment property, you can do it. An advantage of using equity is that, with time, the equity position in the property will generally increase.
You may reuse your equity on the property if your investment property has started with some level of equity. The first use of your equity is to apply for a loan or acquire other investors with it.
The second use is to use the existing equity to do another property investment. Here also, you can get a loan or acquire other inventors.
Is it a good time to invest in property?
If you’re looking for property investment, you’ve to consider many factors. First, you’d have to see the market conditions. You’ve to see the investment patterns of other people in the market. While studying these conditions, you should pay attention to the type of properties too.
Let’s say you’re thinking of investing in commercial property. It may happen that these properties aren’t doing well in current conditions. Unfortunately, if you don’t pay attention to this fact, your investment can go to a loss.
Then, you’ve to know about your financial situation too. You’ve to know if your bank would approve your loan or not. If not a loan from the bank, then there may be other sources you can get the money from. But, first, you’d have to think if those options are secure or not.
If everything is looking well, then you may talk to some property investors.
How to hire a property investment financial advisor?
When you’re hiring a financial advisor for investing in properties, you’ve to remember certain important things. You’ve to do a thorough background check on them. You don’t want to end up getting scammed. For your protection, you’ve to see how well they work. You may go to their website and take a look at their previous testimonials and feedback to know what other people say about them.
Once you start communicating with them, you should ask them all the questions that you’ve in your head. It’s better to have clear communication with them, rather than keeping your doubts.
3 Things to Keep in Mind Before Hiring an Agent
Here are four things you’ve to remember before hiring a property investment agent.
- Fee: Be direct with them when you’re asking them about their fee. Make sure that you read all their terms and conditions too.
- Work Experience: Talk to them about their previous projects. They also know that it’ll give you some plus points. Here, you should also ask them if they’ve faced any problems or challenges with previous work.
- Knowledge: Lastly, while interviewing them, you’ve to test their knowledge. Ask them about properties and their management. Test their knowledge of the market conditions as well.
How to buy an investment property in NZ?
Follow these below-mentioned steps to invest in a property in New Zealand.
- Know your borrow amount: When you’re looking to invest in properties, you’ve to know your borrow amount. When you have a clear picture of your budget, you can research properties under that budget.
- Calculate your loan: In the next step, you need to calculate your loan amount. Here, you’d be required to make a deposit. The deposit amount may change, so make sure you’re depositing the correct amount. You may also use your home equity for the deposit amount. After that, you’ll have to think of your loan application fee, valuation fee, and statutory government charges.
- Look for loan options: Once the loan amount has been calculated, you can look for the loan options. You can use a line of credit loans, wherein your equity would be used to make an investment. If you’re looking for some capital growth, then you may opt for interest-only loans.
- Get loan pre-approval: Loan pre-approval is required because it’ll give you a head start on the other buyers. Pre-approval is similar to normal loan approval. The only difference is that here you won’t have to fill in the security details.
- Find the property: Then finally, you may begin the search for your property. There are many opportunities with all types of properties. You may do your property investment in commercial property, residential property, or holiday rental property.
- Invest in property: When everything is taken care of and when you’ve finalized the property, start the investment process.
3 Best Property Investment NZ?
Here’s a list of the best property investors from New Zealand.
- Positive Real Estate: Positive Real Estate is an investment company from New Zealand. They offer many property advice to their clients before they can make an investment. The team of Positive Real Estate works by coaching you through every process of property investment. They’d help you out with your first rental acquisition, your loans, and your mortgages too.
- Opes Partners: Based in New Zealand, Opes Partners are property investors who help you in investment properties in many cities of NZ. They would offer you factual guidance and advice on property markets, mortgages, loans, and investments. You’d find many articles and videos on their websites that are solely dedicated to your needs. Through these content materials, you can gain more insight into investments.
- GRA: GRA or Gilligan Rowe & Associates is a chartered accounting firm that would help you with your property needs in New Zealand. They offer property portfolio advice to both small and medium property inventors. They’d help you out throughout the process of investment so you can have an effective and long-term investment.
Making investments in properties is a big task. You’ve to know the market conditions in your state and country. If you don’t want to have any risks, then you’ve got the ROI you’d get. When you begin with an investment, you’ve to hire the right person for it. You’ve to go with an agent who’s passionate with you about their work.
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About the Author
Shristi is a content writer and owner of F and B Recipes and Snazzy Women. When not writing, she can be found reading or trying new recipes.