7 things to consider before becoming a property investor

Sunniva Holt is a property developer, mind-set strategist, speaker and author from Auckland. She fell in love with the property industry when she bought her first home at just 19 and has never looked back.

Here, Sunniva shares her advice for those who are considering a career in property investment. 

Property investment has become quite an obsession in New Zealand – and for good reason. We have exceptional market growth, no capital gains tax and no stamp duty. It’s an investment that makes sense and is generally a lot more stable than other investments. As my dad used to say, they can’t make more land – well, that’s unless you’re in Dubai, I guess!

Although owning property is awesome and you can make a lot of money from it, there’s more to it than buying the first decent house you see. 

If you’re keen to kick off your own property portfolio, you might want to consider these factors first. 

1.    Do it because you love it 

Sometimes it’s really damn hard, everything can go wrong all at once and you'll have bills up to your eyeballs. If you're not that into it, it's going to be tough to stick it out. I've been in the property market for 17 years and I'm completely obsessed with it, but there have still been times I've wanted to sell the lot.       

2.    Choose a home you’d actually live in

When you look at properties, make sure you choose one that you would be happy to call “home”. This will ensure it's easy to rent out now and on-sell later.     

3.    Numbers are everything

You don't have to be amazing at maths but you'll need to at least be handy with a calculator. Work out your gross and net yield, taking into account possible vacancies, maintenance, repairs, insurance, rates, mortgage payments and body corporate fees. 

When you buy the property, you will have the cost of valuations, building reports and lawyers’ fees. 

If you’re renovating the property then you’ll be paying a mortgage but not receiving any rent for that period of time. Plus, renovations almost always take longer and cost more than planned, especially if you're trying to do them yourself. 

Costs can make the difference between a good opportunity and a massive drain on your finances, so you need to keep a very close eye on them.  

4.    You cannot afford to be sloppy

A ‘she’ll be right, mate’ attitude does not fly.  Keep on top of rent payments, track your money daily and don't choose tenants just because they ‘seem like nice people'.

Credit check potential tenants and make sure you get lots of details because, if you read them wrong and they turn out to be a bad egg, the more information you have the easier it will be to track them down and hopefully get your money back.  

5.    Property is not a get rich quick scheme

You can ‘flip’ houses but that comes with a lot more risk, plus it puts you under extra scrutiny from the tax department. The real money is in buying and holding, so if you want to do well, be patient.  

6.    You’ll be asset rich and cash poor for a pretty long time

It’s like the best savings account ever - the good thing is you can’t touch your money and the bad thing is you can’t touch your money! 

7.    You get what you give with tenants

Treat your tenants well and generally, they will treat you well in return. Don't be tight and refuse to spend money to keep the property up to scratch. Don't try to be their friend, that will come back to bite you. Instead, be polite, be fair and be firm.               

Read more from Sunniva at sunnivaholt.com.

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