Are you planning on buying investment property in New Zealand? In addition to establishing your borrowing capacity and obtaining loan pre-approval, there's something else you'll need to consider: the property itself!
One option open to you is investing in an newly-built residential investment property. Whether you're contemplating buying in the City of Sails or Hamilton, it's worth having an understanding of this real estate option.
Tell me about the benefits
Say you decide to purchase an existing dwelling as a rental property. You'll need to have a deposit, as well as setting up a regular cash flow to make the loan repayments – whether by rental income or out of your own pocket.
However, if you go down the route of investing in an off-the-plan property, you only need to put down a deposit. It's not until the settlement date, after the dwelling has been constructed, that the balance on the property is due.
This gives you extra time to get your finances together, but there's an extra benefit, too.
If you're savvy about your purchase and buy in an area that's on a positive capital growth trajectory, your investment may be worth more by the time settlement rolls around, whether six months or one year down the track. However, you will lock in the sale price when you put down the deposit, allowing you to benefit from potential capital gains. You can also purchase "land and build" packages, of which Goodlife can arrange for all interest to be capitalised into the debt during the build. This means that interest in not an expense while you build – easy!
Of course, it's wise to have a chat to a financial adviser about which areas are primed for capital growth, to ensure you make the appropriate property investment.
New buildings are often constructed in up-and-coming areas that are set for future development. From roads to schools and work centres, it's worth paying attention to areas that are primed for a boost in infrastructure and quality local facilities.
You may be less likely to buy a lemon, so to speak, as these properties aren't older properties requiring extensive repairs.
Here's to your financial independence!
Daniel Carney
Authorised Financial Adviser / Investment Property Expert