Real estate is a long-term investment

If you're new to investing in real estate, it's essential that you begin with the long-term in mind.

The first thing you should know is there are are two different ways for real estate investors to make money from their property.

One is the potential income that you can gain from the rent your tenants pay. Market figures, including average weekly rents for the area the property is located in, can help you get an idea of this income source, although it is important to bear in mind that this can fluctuate depending on a number of factors.

The second way that real estate investors can earn from their properties is through capital gains – in other words, the increasing value of the property over time.

Of course, you can never predict what the market is going to do in the short-term, but if you go back and look at the value of residential real estate in Auckland over time, you can get a better understanding of how the market performs as a whole.

You will need to weigh up the income you expect your property to generate over a year compared with its purchase price. This numberis known as your yield, and should also be considered along with your mortgage, fees and other costs as you figure out how much you can expect to earn from your property.

This is a much different planning process than purchasing a home to live in, and if you are new to the world of investing, you will want to seek out real estate advice from a trusted professional with a solid understanding of the market.

Don't be afraid to ask questions – the right information can help you make good choices about your real estate purchase.

Here's to your financial independence!

Daniel Carney
Authorised Financial Adviser / Investment Property Expert