Owning one property could earn you more than your entire salary

There are a million and one ways to make money. Working a nine to five is just one method of paying the bills and saving for the future, but sadly most New Zealanders look to it as the only option. 

To help shock Kiwis out of that mentality I thought we'd look at an example of how much owning one investment property could earn you, before comparing that number to the average salaries of a few common professions.

After all, the more you know about investing in property, the better it sounds. 

Your Auckland salary may not be as much as the average property investment's income. Your Auckland salary may not be as much as the average property investment's income.

What could your property investment make? 

If you bought in Auckland four or five years ago your property could have increased in value by as much as 50 per cent. But in the interest of keeping this comparison fair, let's use the Reserve Bank's statistics for the average New Zealand property value increase since 1991, which is around 7 per cent. 

Next, let's say you've bought a property for around $500,000 – this may be a challenge in Auckland, but in locations like Tauranga and Hamilton it's a cinch. Lastly we'll assume we've found you a yield of 5 per cent.

You could earn an accountant's salary without even lifting a finger.

Once again this may be a struggle in Auckland (unless you're really looking), but QV data shows that whole suburbs in cities like Whangarei and Christchurch have average yields exceeding that amount.

When you've paid off your investment loan, your combined income (including increases in equity) will be $60,000. Let's deduct that figure by $5,000 to account for any expenses and use $55,000 as our measuring stick. I don't know about you, but for me that's a good chunk of money.

How does that compare to your salary?

You'll obviously know straight away how that compares to your salary. But how does that figure of $55,000 compare to average incomes in Auckland according to PayScale?

  • Graphic designers earn over $7,000 less at around $48,000.
  • Accountants earn around $2,000 less at $52,225.
  • Account managers earn about the same at $55,855.
  • Software developers earn around $11,000 more at $66,933.
  • General/operations managers earn far more at $92,591.

As you can see, after you've done the hard yards and paid off your investment loan, your property could generate significant passive income. It's certainly not easy to get to that point, but with the right advice and a lot of dedication, you could eventually be earning an accountant's salary on top of yours, without a single extra hour in the office. 

Here's to your financial independence!

Daniel Carney
Authorised Financial Adviser / Investment Property Expert

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