Property investment is a very profitable venture in New Zealand. Studies show a third of the total investment in the country comprises property, and there’s a good reason for this. Property investment has proved a reliable way of creating wealth. It explains how a 27-year-old model, Lily Adrianne, has built wealth in just three years. The model bought her first property in Auckland at the age of 24. It was then that she discovered her passion for real estate investment and went ahead to purchase 11 more properties in just one year.
How is this possible one would ask? You see, the property market in New Zealand is pretty friendly. Investors can leverage different ways of buying property and are confident about its appreciation. Here are a few strategies Lily used to buy the multiple properties she now owns.
This technique enables the investor to use the cash they have to purchase an expensive property. For example, if you have $15,000 in cash and the cost of your ideal property is $300,000, you can use debt to fund the entire amount and set up equity of 5% as a deposit. This means you can control an asset worth $300,000 using a cash outlay of only $15,000. If the property appreciates at a rate of 5% every year, you’ll have gained $15,000 during the first year alone.
#2: Find a Good Bargain
The best way to build wealth through property investment is to buy low. You may need to enlist the help of a real estate agent well-versed in the property market to help you choose from several properties. When you purchase the property below the market price, you instantly gain equity and have the opportunity to sell it at a profit.
#3: Look for a High-yield Property
Lily explains that her primary goal was to invest in rental properties so had to look for those with high rental yield. Auckland, Wellington, and smaller regions like Invercargill are prime areas for such properties. The main goal is to purchase a property whose rental income covers all the expenses, including property management fees, mortgage interest, and maintenance.
#4: Leverage Opportunities that Add Value
Adding value to property creates not only equity but also increases its value. You don’t need to flip the property entirely; small improvement projects go a long way to adding a property’s value. Here are a few ways you can affordably add value:
- Repainting walls
- Installing new appliances
- Making small repairs
- A bathroom makeover
#5: Leverage Tax Advantages
Self-employed people and income earners are eligible for a tax deduction for expenses associated with investment property. The tax deduction decrease your tax obligations to the state and increase your profits. Additionally, since property investment can be a complex subject, you should find a team of professionals to help you. A well-rounded team should include a lawyer, accountant, contractor, independent valuer, property manager, and a mortgage broker.
Lily has used the strategies above to buy 11 properties in just the last year alone. While property investment is a great way to build wealth, it should never be viewed as a get rich quick scheme. Us these strategies to avoid the big mistakes in property investment and build your way towards financial freedom.