What To Look For In An Investment Property

May 4, 2023

Investing in property can be a smart financial decision and a great way to achieve financial freedom. However, it’s important to approach it with a strategic mindset. Unlike buying a home, investing should be purely a financial decision, not an emotional one. Here’s a few things to consider when you’re looking for a good investment property in NZ:

Location is Key!

The old saying “location, location, location” still holds true when it comes to investing in newbuild properties. Look for areas that are growing and developing quickly with a high demand for quality housing, good amenities, and public transportation links. It’s important to consider the demographics of the area and the typical resident who will be renting your property.

Property Types

There’s three main types of properties to consider when investing: stand-alone homes, townhouses, and apartments. Stand-alone homes can have a high potential for capital gains, but tend to be more expensive and have higher maintenance costs. Townhouses can be a good middle ground, offering good yields at a lower price point. Apartments can be an affordable, high-yielding, low-hassle investment property, but they normally have lower capital gains and require paying body corporates. Body corporates with apartments are an important cost to consider, as they are usually quite high and can affect your overall income from the property.

Quality Builders

When investing in a newbuild, it’s a good idea to choose a quality developer with a proven track record. Research the developer’s history, look at their previous projects, and read online reviews to get a sense of their reputation. Ensure that they are using quality materials and that their properties have a good standard of finish.

Long-term potential

Investing in property is a long-term commitment, so it’s important to choose a property that has the potential to increase in value over time. Look for areas with a growing population, good job amenities, and good/growing amenities. Additionally, think about how the property may appeal to future renters or buyers.

Building warranties and guarantees

Make sure that the investment you’re purchasing comes with a building warranty and guarantee. This will provide you with protection against any structural defects, faults or issues with the construction of the property, giving you peace of mind that your investment is secure. In NZ, you’re always protected by the Building Act 2004. We’ve written a previous blog here all about different warranties.

Management options

Managing a rental property can be time-consuming, so consider how you plan to manage the property. Would you prefer to manage it yourself or hire a property manager? If you’re planning to manage it yourself, do have the time and resources to do so effectively? If you’re considering a property manager, research potential managers and factor the fees into your investment calculations.

Investing in a newbuild property is generally a smart financial decision, but it’s important to approach it with a strategic mindset. Make sure to take these tips into consideration before you take the leap. Most of the SM property team are active investors themselves and are here to guide you through your investment journey. We know all the ins and outs of newbuild investment and can help you through the whole process. Click here to chat to one of the team today about your options.

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