Property has long been considered a solid financial investment that can provide long-term monetary gain. However, with property prices on the rise and a plethora of new legislation regulating the rental property market, acquiring new property is becoming more challenging for hopeful investors. We caught up with Kevin Edmunds, Principal of Quinovic Thorndon and Roger Lewis, Principal of Quinovic North Harbour, to find out more about the reality of investing in property in 2021.
Creating a portfolio of investment properties can be a great way to earn a passive income if you have the means to do so. Over the years, your property will increase in value, which means you should make a reasonable profit when you look to sell your property, making investing in property a popular retirement plan. The housing market is relatively stable and therefore viewed as a safe investment. However, investing in property does not come without risk. It can be particularly challenging to navigate through the process of investing if you are just starting out. There are some key things worth noting before you invest in real estate.
New Zealand's rental and property landscapes are changing rapidly. In recent years there have been some significant reforms affecting rental properties. As a property investor, it’s essential to be aware of these changes. If you are unsure how to navigate the new regulations, you should call in the experts to help guide you through the process. Here are the top four changes in legislation that property investors should be aware of:
This legislation brought in new minimum standards for rental properties, aiming to improve the quality of rental homes with regard to heating, insulation, draught stopping, moisture ingress and ventilation.
According to the Bright Line Property Rule, if an investor has owned their property purchased after 27 March 2021 for less than ten years before deciding to sell, they will now be subject to paying income tax on the capital gain.
This legislation has changed how rental properties can be managed, including terminating tenancy agreements and limitations on rent increases.
Removal of tax deductibility for residential investment property is also being phased in unless the property is a brand new build.
Kevin and Roger shared the most common mistakes that property investors make:
The rental market has changed considerably over the last few years. Consulting with a professional property management company before you sign on the dotted line will prevent unpleasant surprises later down the track. A property management company can guide you through the investment process and help avoid any unpleasant surprises along the way—particularly issues relating to compliance with legislation changes that will affect your rental property and ultimately your income.
It can be easy to get carried away when you find the perfect property. However, unexpected costs can arise, so it’s important that hopeful investors remain within their allocated budget. Kevin noted the possibility of investors having to pay for additional fixtures to ensure the property complies with the Healthy Homes Standards. It’s important that you don’t stretch your budget so thin that you can’t afford the additional costs, as this will negatively affect your rental income.
It’s important to identify what maintenance the property will need to undergo before it is ready to be rented out. It’s essential to request building reports and review these carefully to ensure you undertake the necessary work on the property.
The more desirable a property's location, the more interest you will have from prospective tenants. However, this often equates to higher property prices. If your budget is restrictive, look for where there is demand for rental properties. Roger notes the key factors to consider when selecting the location are; within good school zones, close to public transport and nearby amenities.
Investing is deemed a long game as you’re unlikely to reap the benefits straight away. Every prospective investor must know what they’re getting into before making an offer. It’s important to seek advice from professionals in the first instance. Or ask yourself the following questions before you commit. This will help streamline the process.
If you have any questions about investing in a property, get in touch with your local Quinovic office. We’re a nationwide team of property management experts and have managed over 100,000 tenancies since 1988. No matter how big or small your question is, we’ll be happy to help. Ask Quinovic today.
