The Four Key Elements to Residential Investment Property
The following four characteristics are essential if you’re going to get it right in investment property. Slip up on any of these, and financial ship-wreck is that much more inevitable. We get this right for our clients so that you don’t have to navigate these waters alone.
Let’s examine those four key characteristics:
It’s a common fact that pretty much any property in NZ will grow in value. So how can you go wrong? That’s a good question actually. But, we don’t think that this is what you should be asking. You need to be asking: Which properties or areas have more potential for growth.
Being based in Auckland, we know the areas here that have better growth potential. These are areas where land values are still low. Various pockets in South Auckland, West Auckland, Albany, Tuakau, Waiuku, Gulf Harbour etc. Even Hamilton is hot-spot, and we can also help in expanding your property portfolio here.
We rely on external ‘Property Search Specialists’ to point our clients in the right direction. It’s these long-standing relationships that have seen our clients buy in the right area, every time, without fail – At or under valuation.
Growth is one thing, but the right rental yield must go hand-in-hand. This is why we steer clear of areas like central Auckland. You just won’t get the right rental yields.
We will analyse every property recommended to you, and if it doesn’t bring in the right amount of rent (rental yield), we will throw it off the table.
The right rental yield means less out-of-pocket costs for you. If you can benefit from the growth of a property and not forgo much of your own hard-earned money, then we’ve done our job.
We can’t even begin to tell you how many clients we have that when they originally came to us,they were getting this essential characteristic drastically wrong.
Our clients generally get between $5000 and $15,000 back from the IRD every year. Can you now see how this is an essential arm to managing investment property?
It comes down to two things: The right Accountant, and the right legal ownership structure for your property.
Accountants area dime-a-dozen. But, a good one is worth their weight in gold. They’re just like doctors in that a good Accountant will specialize in certain things. You don’t want a ‘GP’ managing your financial health. You want a ‘specialist’. We will point you at an investment specialist Accountant that is good at what they do, and doesn’t cost more than your average Accountant.
If you’re a couple, you need to speak to an Accountant about setting up a limited company (LTC) to own your investment property(ies). This way, you can split the losses accurately according to who pays the most tax and receive the biggest tax return you possibly can.
Paying for your investment property debt should be first the responsibility of your tenant, second the ‘tax-man’, and third (contributing the least) you.
It’s no good for us to tick the last three boxes, but you can’t afford it. Our in-depth analysis of every client means we check the viability and affordability of owning residential investment property. If it’s not affordable, and there’s no changes that can be made to your circumstances so that it is, we won’t recommend it.