Purchasing property can be the perfect investment, it is generally low-risk and affordable and can provide a healthy passive income later down the track. Although investment property appears to be a pricey option, now-days there are a huge selection of financing options available meaning most buyers require only a small deposit to purchase the initial investment.
With real estate investments, you have two options. Either you could purchase the property and earn money by renting it out to tenants, or you can make improvements and resell the property for a profit (this is called ‘flipping’ the house).
Both options have pros and cons, taking the time to do your research before purchasing will ensure you have a greater chance of success and a healthy return at the end of it. Below we will discuss a few basic tips for purchasing your first investment property.
Be Wary of the Risks
All investment is risky, and though property tends to be a more reliable investment than many other high-yield options, there is still a chance you will not make a profit. You may even lose some money.
The best way to avoid this situation is to gather as much information as you can, never go with a decision if you are unsure and fully understand what you are getting into. Never put yourself under financial strain and always have a back-up plan should things turn sour. Make a plan and stick to it!
Location, Location, Location!
It has long been known in the real estate world that you always opt for the worst house in the best street. Home improvements and development can always be made but there is nothing you can do to increase the value of the area your property in situated within.
No matter what you do, the value of your property is ultimately dictated by the market. The market is fickle, but one thing that will always factor heavily into property values is the market’s opinion of your location.
Points to consider when looking at location would include surroundings – is it close to town or the beach? School – is it situated near high decile schools? Safety – low crime areas with great security and preventative measures are also a handy selling point.
Consider The Demographics
If your intention is to tenant the property it is important to look at the home from a renters point of view. Simple, tidy 3 bedroom homes that are close to schools and facilities are the most popular options for families needing to rent, or perhaps consider small flats close to a university for students. Buying an affordable property will ensure you are able to offer affordable rent – in turn you will find tenants easier.
Same goes for flipping property. What kinds of people are buying homes in your area? Young families? Mid-career singles? Families buying second homes? The kinds of properties these groups all buy is different. Make sure you know who you’ll be selling to.
Understand Property Investment Takes Time
Property investment is not a get-rich-quick plan. More likely, you’ll have to wait years to see any kind of profit on your investment.
Whether you are planning on leasing the property out or flipping it, you will need to put quite a bit of time and money in at the front end. If you aren’t willing to wait for the investment to pay off, you should look for other ways to make money.
Partner with an Investment Firm
For most first time property investment new zealand it is a matter of trial and error – there are mistakes to be made in order to learn. Investors often talk of having lost money with their first few purchases, but by sticking it out and learning from experience they later on went on to become successful.
Of course, making mistakes is costly in the world of property investments. To avoid this, consider partnering with a property investment firm. These are agencies staffed by local, property investment experts. They can help you make the best decisions and manage your investment properly.
Propellor Property Investments are the ideal option for all Property Investment NZ advice and services.
