Property Investment:
Growing your property empire
There’s so much more to owning investment property than having the financial means to do so. We know because we’re property investors too and we’ve worked in senior private and commercial banking roles for decades. We know that whether you’re starting out with your second property or you’re a seasoned investor, the playing field is constantly changing, which means you need experts who live and breathe property at your side.
We know the rules inside out and when we present deals to our lending partners, it’s as if they’ve written these themselves.
Property is always a hot topic.
The only constant is change, and nowhere else is this more true than the property market. Kiwis love property, which is why we make sure we’re at the cutting edge of property investment. We know what’s working and where, and what’s coming up that could impact your investments. Simply, we know how to help you maximise your investment in property.
Property investment returns come in two main forms:
- Capital gain, which is your property increasing in value.
- Rent paid by your tenants.
Most property investors look at the long term play — the capital gain. Until that happens, the goal is to have all your property costs covered, including:
- Mortgage
- Rates
- Insurance
- Maintenance.
Know the risks
Lenders look at investment property mortgages with a different lens to that if you were living in the house you were buying. However, they still look at what you can comfortably afford. They want to help you build your property portfolio but the numbers have to stack up. Like anything involving money there are always risks, including:
- If the lender wants their money back you could find yourself in a tight position.
- Having more than one mortgage with the same bank could see both come under threat if they want their money back
- If you sell your property for less than what’s owing, you still owe the bank those funds.
- If interest rates increase your returns will be reduced.
If you keep on top of your mortgage payments and even pay more than you need to each month, you’ll likely never face any potential negatives above. Building your nest egg through property investment is still one of the best opportunities for Kiwis.
Grow with commercial property
Investing in commercial property for yourself or to rent to others is another option to grow your property investments. The ideal is to lease your property to an established business long term.
In many cases the lender will want to include your house in the equation, unless you present a suitable General Security Agreement (GSA) from the business (yours or the lease holder) which gives security over cash flow. Assuming it’s a solid business, your house doesn’t have to be included as security over the loan. As you can appreciate, lenders simply want to protect their own interests. It’s all about risk. If you can offer a lot of security, your mortgage interest rates are often lower. A big benefit about business or commercial lending is that the interest is tax deductible.
There are many ways to structure the right commercial lending deal. Find out how…