When you invest in property, it generates income in two ways. The first way is through capital gains – in other words, the increase in the value of your property each year compared to the amount of money you paid for it.
The second way is through rental income, which is the weekly or monthly rent that is paid by the tenant who occupies your property.
Both rental income and capital gains are offset in part by the costs of running and maintaining your real estate investments. But if you are renting out your investment property, is also important to consider your obligations as a landlord.
Landlord and tenant roles in New Zealand are set out in the Residential Tenancies Act, which outlines the specific obligations that both parties need to carry out as part of their rental agreement.
For landlords, these roles include providing the tenant with receipts or statements for rental payments, carrying out maintenance when it is required and paying the appropriate rates and insurance as needed.
Landlords are also advised to keep the lines of communication open with their tenants and to address any issues that arise early on – before they turn into larger and more complicated problems down the line.
If you are thinking about making a New Zealand real estate investment, it is important that you understand your obligations as a landlord and are prepared to take them on.
Many investors prefer to turn to professional property managers to look after the day-to-day management of their investment than to go it alone, but the choice is up to you.
Property management is just one of many important things to think about when you make your first real estate investment, and it is understandable that the process might seem overwhelming.
This is why the right advice is crucial. A trusted financial adviser can help you through every step of the process and empower you with the information you need to make good decisions about your investment.
Here's to your financial independence!
Daniel Carney
Authorised Financial Adviser / Investment Property Expert