Like anything else in life, learning how to buy property for investment takes time and effort, but the benefits you’ll receive far outweigh the efforts you need to put in.
To help ease the learning curve a bit it’s helpful to have a few hard and fast rules. These are designed to help you get set up the right way, stay non track, and keep the process moving towards your goals.
1. Make informed decisions
Buying an investment property under market value can be difficult, but it’s not impossible.
Understand your vendor. Why is the vendor selling? Do they have an offer on another property? (could mean they want to sell quickly)
Understand your market. Study the market; what makes the property desirable? Is there something that I can do to add value and increase my yield? Is the market bearable and sustainable?
2. Understand yields and cash flow
How do you work out the yield?
Here’s how to quickly calculate the gross rental yield of an investment property. Weekly rent x weeks in the year = Annual rent/purchase price x 100 Example: $475 pw x 52 weeks = 24,700/$450,000 x 100 = 5.49% gross yield.
Of course your true (net) rental yield will deduct your investment property expenses such as strata fees, utilities, property management fees, etc. from the annual rents.
Annual rent – costs (excl. interest)/purchase price x 100 = net yield
So as you can imagine, the higher your gross yield, the better your net yield will be.
Consider how this translates to your cash flow.
3. Diversification
New Zealand does not have a single property market
We have many markets all across the country, each of them with their own individual nuances (e.g. popular suburbs, employment outlook, demographic, etc.).
If you really want to experience faster growth, over time you’ve got to learn how to invest in different cities.
As the saying goes, “you don’t want all your eggs in one basket.”
4. You need to build a team to support your investing business
You’re not simply buying property for investment, you’re building a business. That’s why it’s vital you make the most of the time that you have available by outsourcing tasks; especially time consuming ones that can be done by someone else. It’s about letting the professionals do their job.
5. You need to get professional property investing advice
One of the best things you can do for your property investing business is to find a successful property mentor to help ease the learning curve.
This can speed up your results because you’re not travelling down the wrong path and making mistakes that cost you in both time and money.
Grab a seat to your next closest Property Investor Night!
Interested in learning more about property investment coaching? Or want to learn more about getting your portfolio on the right track?
We hold free information nights all around NZ every month. Use the form below to grab your seat to a live event. Tickets are free – but the event is high value.
It’s the best opportunity to gain some invaluable info, learn about our proven strategies, find out about market trends, and get free advice on your next best move.
Register for your next nearest ASAP – seats fill up fast, so don’t delay.