The most important thing that many people do not fully appreciate is that true wealth as a property investor comes from building up and holding a profitable portfolio, not from timing the market and landing a single, outstanding deal.
You might wait until you have all the information in the world and pick up a property just at the right time, the deal of the decade. However, the investor who in the same time has accumulated a portfolio of 5 properties, sticking to their rules but not looking for miracles, is going to blow your returns out of the water over time any way you measure things.
It is about doing the research and talking to the experts. Almost anyone can and should do this, you don’t need to call your self a property investor and it is nothing to be afraid of.
We’ve all seen ads screaming the word 'wealth', we would all love the get rich quick option but that seems as mysterious as unicorns. For most of us the term “property investor” has connotations of an elite club only for the highly educated or well to do business folk.
That is far from the truth, yes there are people in our fair land with large portfolios of properties but for the general population, it is very possible to own rental investments mostly for a comfortable retirement. This is an area we spend a lot of time discussing with clients.
When thinking of property investment it should be about a long term goal like retirement or family security. Everyone’s reasons will be personal to them. If you have never understood the point of investing think of it like this. What age would you like to retire?, let's say it is 65 years.
How are you going to support your living expenses and lifestyle for potentially another 20 years?. Do you believe there will be a government superannuation when you retire? is it worth the gamble of relying on it?.
I know what you’re thinking, “but I have KiwiSaver”, and that’s great but how many years will that give you, assuming you are mortgage-free when you retire, let's do the figures.
You retire at 65 and you live for another 20 years, you have $300,000 in your KiwiSaver. That would give you $288 a week for expenses and lifestyle. Is that going to be enough?
Now if you need $500 per week you are going to run out of KiwiSaver in 11 years, then what?
Now unless you are Hansel and Gretel you cannot eat your house, you need an income. Enter stage left, the rental investment. Hear me out, you don’t need to wait until you are mortgage-free to buy a rental property. You just need enough from the value of your house for a deposit on the next place.
It sounds scary to have two mortgages but don’t forget that New Zealand has a rental shortage. Get the right property, the right tenants and it pays the mortgage for you.
Stay with me on this, you hold onto that property for 10 years or so and your mortgage will start shrinking, the rent goes up, the value has likely gone up by a third.
So imagine if you buy more than one over the next 20 years, short term pain for the long term gain. The theory is that by the time you retire you have two properties that give you an income each week, or you sell one and live from the profits.
Book a Meeting
Tineka Kavanagh
Mortgage Adviser
Phone: 0276504964
Email: [email protected]
