Property Investment 101 with John Hawke

John Hawke has been in real estate for 16 years and investment properties are his specialty.

Having an investment property is an exciting step for the future, but have you thought of everything before you buy? Here are 8 ideas worth considering:

1)      Location, location, location. It should come as no surprise that a desirable location should be high on your list of priorities. Consider what location will continue to be attractive to tenants (a lovely area, good schools, close to SIT or amenities) as well as in the future so that you keep increasing value via capital gains.

2)      If you can’t afford to buy where you want to live, it could be worth investing in property somewhere else. Having a property going up in value and using a home loan to create disciplined savings could help you get one step closer to your goal.

3)      Insurance: not all policies are the same. Are you covered for loss of income for example? Could you afford to make loan repayments if the tenant stopped paying rent? We know it’s boring but reading and comparing insurance policies is a small price to pay for peace of mind, knowing that you have everything covered.

4)      Hidden costs: body corporate fees, property management commission, property maintenance. Don’t make the budget so tight that you can’t afford to put money back into your property when you need to. Looking after your asset is part of the investment.

5)      Insulation – from 1 July 2019 new minimum standards around insulation are being enforced, with penalties up to $4,000. Double check if your potential investment property is up to standard before you rent it out.

6)      Have a think about what investment property ownership structure would work out best for you. Sole ownership, partnerships, trust or company? If you aren’t quite sure, catch up with your accountant for a bit of advice.

7)      Mortgage brokers: it is worth contacting Loan Market or a similar mortgage broker, they compare and negotiate with lenders on your behalf to make sure you get the best possible interest rate, which on a home loan can literally save you thousands!

8)      Good investment properties move quickly. Don’t wait until you read about it in the newspaper. Talk to your real estate agent so that they know what you are looking for, that way you can get a head start in a competitive market!

If you are looking for more specialist investment advice in the Invercargill area, call John on 021 228 6180.

Source: https://www.tenancy.govt.nz/maintenance-and-inspections/insulation/, 25/10/18