It’s actually a relatively straight-forward process to purchase an investment property in New Zealand while living abroad.
Goodlife have built the right relationships with the right professionals over the years to ensure you can seamlessly ‘plug’ into this network from overseas.
Below, we’ve broken down the process into easy to follow steps that we can help with every step of the way.
As of the time of writing, banks and lenders in New Zealand have relaxed their lending criteria. Meaning, that it’s a lot easier to borrow money from abroad than it was one to two years ago.
Ideally clients will have approximately 30% deposit, but banks will look at lending on levels as low as 15% deposit, dependent on the client’s criteria.
Of course, if you already own property in New Zealand then there is no deposit required. Your equity in your existing property(ies) can be considered to be your ‘deposit’. You can think of this as the ‘no money down’ approach.
Please see below for recommended price range of property in the Greater Auckland region and Hamilton to ascertain deposit amount. For quick reference it should be between $45K – $90K, or higher if possible.
To ensure you’ll actually be lent the funds to buy an investment property, Goodlife will arrange a pre-approved Letter of Offer from a lender for you. This pre-approval will essentially become your ‘shopping voucher’ for purchase. Meaning, the lender is happy to lend funds (based on certain conditions), and you’re ready to go shopping!
We’ll require scanned documents or PDFs and verified copies of your identification to put this pre-approval application together. We’ll provide a checklist to work from to make life easier for you.
Once you’ve chosen a property, we’ll work towards getting any conditions met that the lender has requested. This is usually a Sales & Purchase Agreement, a Registered Valuation, and a Rental Appraisal. Once we have these, you’ll be ready to go ‘unconditional’ on the purchase – meaning, you’re setting the purchase in stone. You will soon become the proud owner of a residential investment property in New Zealand, or better yet Auckland or Hamilton.
The day you settle on the purchase of the property will be a relatively seemless one as your lawyer will sign everything and get all the ‘ducks in a row’ on your behalf. Easy!
Once we’ve arranged pre-approval from a lender, it’s time to appoint a Limited Power of Attorney. This is a lawyer that can sign documents on your behalf back here in New Zealand.
The reason we call this a ‘limited’ power of attorney is because your lawyer will only be able to sign documents related to the purchase of investment property. And, they will only be able to sign documents that you’ve given specific approval for, each and every time.
To arrange for Limited Power of Attorney, Goodlife can recommend a lawyer here in Auckland City that we’ve had a long-standing relationship with. They are third party to Goodlife and we are in no way remunerated from this recommendation.
Your lawyer will draw up documents to get this limited power of attorney set up. These documents will be sent to you and will need to be taken to a ‘Notary’ local to your overseas location. This Notary will then witness your signature for the limited power of attorney and provide evidence of such. They are there to represent your best interests in explaining this document and any possible concerns or questions they might have. The original of this document will then be mailed back to your lawyer back in New Zealand.
Once received, this lawyer can now sign anything on your behalf related to purchasing an investment property.
This is something we pride ourselves on here at Goodlife. We have been spending the last 15 years perfecting this service.
We will ensure you find the right property in the right area. Always making sure we adhere to the Four Key Pillars of property investment: Growth, Income, Tax Effectiveness, and Affordability.
Cities like Auckland and Hamilton are a hotbed for growth and we have the right relationships to catapult you ahead in this regard.
Together with the ‘Property Search Specialist’ we’ll recommend, we’ll provide photos, council info, plans, and artist’s impressions. We can even Skype when onsite so that it’s almost as though you were right there.
Goodlife will walk you through Property Investment Analysis Reports so that you fully understand the numbers behind the investment. This includes any possible required top-up right the way through to your return on investment.
It makes sense that the same lawyer you use for your limited power of attorney, is the same lawyer taking you through the purchase process – known as ‘conveyancing’.
Once you’ve chosen the right property, a Sales & Purchase Agreement (property contract between you and the seller (vendor)) will be drawn up for your lawyer to sign on your behalf. Your lawyer will trawl through this contract with a ‘fine-tooth-comb’ to ensure you’re getting the right deal. If there’s anything that needs questioning, they will do this on your behalf with the vendor’s lawyer.
They’ll confirm you’re unconditional when you’re ready to go with the vendor’s lawyer, work with the lender to receive funds, and arrange ownership on settlement day – Easy!
You must have the right accountant giving advice here in New Zealand. We will point you at the right professionals who specialise in investment property accounting and who don’t cost the earth! This will ensure you’re managing the financial side of investment property ownership correctly. There are many tax deductible expenses related to investment property that most investors out there never utilise. In affect, they’re leaving piles of tax return dollars sitting on the table. You won’t make this mistake!
We take a holistic approach to our client’s financial well-being. We will do full analysis on your financial situation to ensure affordability, that your right risk profile is met, and that any risks are managed as best as possible e.g. insurance implications.
We will even put your property into the context of a Financial Plan and how it will potentially impact on the growth of your nest-egg for later life. About 96% of Kiwis will retire dead or dead-broke. We want you to be in the 4% that have a diversified wealth creation strategy in place. For New Zealand permanent residents and citizens, that means KiwiSaver and Diversified Portfolios of Managed Funds. In other words: not putting all your eggs in one basket (even though the property ‘basket’ is a strong one!).
Your lawyer and accountant can give advice on retaining a non-tax resident status or applying for one. This means you don’t pay any tax on income gain here in New Zealand while you’re away. And, any losses you experience can be carried over for a number of years upon your return to New Zealand. Meaning, you should go for at least a year paying no tax back here in New Zealand once you do become a tax resident, due to all the losses you’ve carried forward.
This is a serious discussion to have with your accountant and lawyer, and one that Goodlife cannot give advice on.
However, having investigated the matter thoroughly it is our understanding that owning an investment property in New Zealand, particularly under your own name, means that you can retain non-tax resident status.