What do rising property values mean for rental income?

Rising property values are dominating the headlines right now – especially in Auckland, where they have increased by an average of 33 per cent over the past three years.

We all know that this is good news for investors in terms of the capital gains associated with your property – in other words, its increase in value compared to the price you originally paid for it.

But capital gains are just one of two ways that you can make money from a New Zealand real estate investment. The other is through rental income – and with rising property values, rental yields have the potential to shrink over time.

You might be wondering what this means for investors – and the reality is that the answer is not a one-size-fits-all solution.

After all, every investor has different goals, and is at a different stage of building their property portfolio. Whether you are just starting out or you're a seasoned pro with several property investments under your belt, there has never been a more important time to make sure you are getting the right real estate investment advice.

Importantly, a trusted professional can talk you through the costs associated with investing in property so that you can make sure you are able to afford it.

They can also help you determine strategies to help you reach your property investment goals, including maximising your rental yields.

For example, Hamilton real estate investors are turning their focus to multi-rental dwellings. This sort of decision can be a cashflow-positive one – many investors are forecasting yields of 7 per cent, even in ten years' time. Others are adding sleep-outs onto existing properties to maximise their yields, which might be another strategy worth considering.

With so much to think about, speaking to an adviser you respect and trust is an essential part of the process. Consider it an investment in your investment.

Here's to your financial independence!

Daniel Carney
Authorised Financial Adviser / Investment Property Expert