Investment Property | Get The Right Loan
In NZ, real estate investing remains to be a popular way to grow your money through long-term capital gains.
The value of your properties increases along with the developments you are willing to finance. However, property investments require substantial finances for the project to have great returns.
What are the risks associated with property investment?
Real estate is not a risk-free investment. In your property investment journey, you could encounter the following roadblocks.
Price fluctuations. Although the real estate market is quite stable, there is still a possibility that prices would fall in a downward trend.
Tenant vacancies. When the property sits for too long without a tenant, you will have to fork out your own money to meet the monthly mortgage repayments.
Liquidity risk. Typically a property does not sell overnight. If you have an emergency financial situation, you won’t be able to access your money from the property right away.
What is your property investment strategy?
There are two different ways to earn money through property investments.
Buy and Hold
This is a passive type of investment where you purchase a nice property and hold it for an extended period of time. You receive rental income and your expenses are limited to mortgage payments, taxes, rates and repair and maintenance costs.
Fix and Flip
This is a more risky type of investment where you purchase a “fixer-upper” or “do-up” type property, allocate resources to fix and renovate it, and then sell right away for a profit. Renovating a property can expensive initially but you will also get a faster return on your money.
No strategy is better than the other. The right investment path depends on your knowledge, planning and risk appetite.
Aside from buying the property, a fix and flip investor needs additional funding to support renovation and development expenses.
Fix and flip loans will solve your funding problem but often at a higher cost. In addition, the property itself will be used as collateral.
Don’t worry, though. Many lenders think highly of property investors! Use your position to negotiate for better deals.
We can also introduce you to other suitable financing options.
How will you finance your investment?
- cash deposit to pay for the down-payment or use equity from existing property
- mortgage approval to cover the remaining amount
In most cases, if you are buying an investment property, banks and lending institutions will only cover a maximum of 80% the property price.
Contact us, tell us about your plans and let us work together to make them happen.
OneLife Financial is also offering income protection insurance.