If you have any spare cash or equity in your own home, buying an investment property is a great way to grow your wealth over the long-term.
We’ve helped hundreds of home buyers and investors enter the Auckland property market. Hotspots that are attracting a lot of attention at the moment include Ellerslie, Glen Innes and Te Atatu Peninsula. All three suburbs have relatively high rental yields and property values have steadily increased over the last 5 years.
Auckland is experiencing unprecedented growth in home values, fueled by a severe shortage of new home builds and an increasing demand for houses. When investing in property, I advise my clients on the importance of understanding yield.
A property’s income earning potential is an essential consideration for an investor. Yield is the amount of rental income earned in a year expressed as a percentage of the initial property purchase price.
A $500,000 property rented at $600 per week will earn $31,200 a year, which is a 6.25% yield.
A seasoned investor will be much more concerned with a properties yield than its purchase price. I’d much rather own three cheap properties with high yields than a million dollar mansion in Remuera with a poor return.
Boost Yield and Make a Higher Return
Adding value to a rental property will provide an excellent opportunity for you to increase its investment yield.
If the investor in the above scenario could increase their weekly rental from $600 to $750 per week by spending $100,000 they would have increased their yield to 6.5%. It’s essential you stick to your budget on any improvements and don’t over-capitalise.
I can advise you on the above and a lot more that you should consider when buying a rental property. We will provide:
- Finance to purchase the investment property.
- Assist in securing the right investment property.
- Provide you with the right specialist advice partners, including lawyers, accountants and property surveyors.
- Explore ways to negatively gear a loan.
- Set up the loan structure to maximise tax refunds.
- Provide a cash flow analysis and budget to minimise your own cash flow input.
Finding the right investment property and correctly structuring the loan are key factors required to ensure a successful investment.
Call me now to arrange a meeting and see how we can move you a step closer toward financing your next investment property.