Top tips for you and your investment property

Meta Financial presents top tips for your investment property in New Zealand. Here is expert advice on ways to navigate property investment. TIP #1: Claiming all expenses, even the little ones, accumulate over time and can add up to a significant sum of money. Also, check with Meta if the loan has been documented at commercial or residential rates. If a residential property is held as security, you may be eligible for a lower interest rate & more favourable loan term!

Claimable Expenses: 

  • Mortgage repayment and income protection insurance
  • Legal fees involved when buying a rental property (when sum equals $10,000 or less)
  • Depreciation of capital expenses (appliances, heat pumps, whiteware)
  • Maintenance and repairs (excluding value increasing renovations of the property)
  • Vehicle and travel expenses when travelling to inspect your property
  • Accountants, lawyers, property manager professional service fees
  • Chattel depreciation is still permitted – get an expert valuation done and pass this to your accountant.
TIP #2: Revisit your portfolio to familiarise yourself with the costs associated with each property you own over its lifetime. Meta can cash flow model each property – or your entire portfolio, so you know your position now, next year and every year according to known changes forthcoming or anticipated future events such as interest rate rises. Being crystal clear financially will move you one step ahead of the game and give you the knowledge you need in order to problem solve arising issues as they come. Also, be sure to check you’re meeting the compliance requirements for each.

Things to ask yourself: 

  • How much will your costs rise as interest deductibility is phased out?
  • Does the property have the ability to generate an income?
  • Does your property meet healthy homes requirements?
  • Are maintenance and repairs up to date?
  • What is your current interest rate and how long is it fixed for?
  • What will my return look like if interest rates go up by 1, 2, 3 percent or more?
TIP #3: Whilst expanding your portfolio means it’s harder to manage, you already have steps in place to use as a baseline when adding a property. Furthermore, if one of your tenants are having trouble paying rent, let them know they may be eligible to apply for a one-off rent arrears payment from Work and Income.

Options and tips to expand your portfolio: 

  • Adding a newly built property to your portfolio means less maintenance and repair costs. Most lenders allow you to purchase a new build with only a 20% deposit, usually used from the equity in your own home.
  • There are a few lenders that will still let you buy an investment with only a 20% deposit.
  • Buy for yield rather than capital gains. Calculate yield by taking how much income the property generates and dividing this number by the value of the property. This will help you realise the value of the investment against other rental properties.
  • Buy a run-down house, renovate and add value quickly. This is called ‘cash-flow hacking’ and Meta can introduce you to the professionals. This is a great way to offset the loss of interest deductibility on existing homes.
  • Cash yields on property in New Zealand can be very high if you target cash flow strategies or properties that you can subdivide, renovate (see above), add minor dwelling, cabin as a second room/sleep-out, or with a high-income stream such as a ‘dual key’ apartment.
  • Property gains are non-taxable in New Zealand for most long-term investors, and we have no stamp duty or specific land taxes.
  • NZ has no stamp duty, which saves investors typically 3-7% of the purchase price when compared with overseas jurisdictions.
Get in touch for personalised financial advice and make your investment goals become reality.

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This calculator is intended as a guide only and is based on the Residential Owner Occupied rate. It is not intended to provide advice, and is not a quote or an offer of finance by any lender.