Property investment can be a daunting proposition. We’re talking about millions of dollars in mortgages and a substantial amount of risk. Sure, that’s what insurance is for, but even so, there can be a whole lot of financial stress and headaches caused by an issue with an investment property. Yet with property investing long being one of New Zealand’s favourite past times, and over 100,000 landlords across the country, there must be enough pros to outweigh the cons or at least there are when you do it the right way. What does the right way look like? Well, that all depends. Whether you are a seasoned property investor or you’re taking your first steps into the wonderful world landlordship, we’ve put together this quick 5 step guide on how to run an efficient, profitable and most importantly, enjoyable, property portfolio.

1 – Choose your strategy
The first step in any investment is deciding what outcome you would most like to achieve. The majority of property investors step into the game primarily as a long-term investment. Investment property is often referred to as the ‘nest egg’ of investors – setting themselves up for their retirement. The two main strategies for investment property are ‘Buy and hold’ or ‘Buy and flip.’ Buying to hold is the most popular, as it involves the least amount of initial capital to get into, carries the least risk and despite popular opinion consists of the least time commitment. Buying to flip can not only present a huge amount of cost early on in terms of deposits, renovations and marketing costs to sell, but can also be a major drain on time, as the juggling of tradespeople and project management all adds up. Deciding whether you would like to take that risk, or buy to hold is your first step to investment success.

2 – Decide your budget
Budgets are, unfortunately, a necessary evil when it comes to property investment. Deciding how much you want to spend should come from a conversation with the bank and with your mortgage broker. You wouldn’t go and do the grocery shop without knowing how much money was in your bank account, only to get to the counter and realise that you can’t afford the food you want. Establishing the budget early on will not only allow you to make an educated decision on whether or not the investment is right for you, but also to make an attractive offer when it comes to purchasing the newest addition to the portfolio. Factor in the amount of deposit you will need to purchase the next property and decide whether you can use equity or cash reserves for this.

3 – Find a good real estate agent
Real estate agents are, of course, employed by the vendor in any transaction. However, as the purchaser of investment property, it is essential to work with a pro-active real estate agent who can present opportunities which might be of interest to you once they go on the market. With Wellington’s real estate market continuing to be strong, it can be difficult to come across opportunities in time, and before you know it, the best properties can be gone as likeminded investors jump onto the properties as soon as they reach the marketplace. Make sure a real estate agent you can trust is on the lookout for you, so you get to see every opportunity that might come up!

4 – Have a property manager on standby There is nothing worse than finding a great property without a rental appraisal and not being able to organise one quickly. With properties on the market selling fast, you want to make sure that you are able to be organised and to keep the pace up so you don’t miss out on any opportunity. You need to find a property manager that you can trust to give you accurate rental appraisals on properties that you are looking at so that you can run the numbers and see if they stack up attractively. Similarly, if your strategy is to buy and hold, having a property manager on board will not only reduce the risk for you, but also drastically reduce the amount of time you have to invest in the project.

5 – Don’t stop there!
Property investment is an ever-evolving beast. It can sometimes be difficult to keep up. The key to success in property investment is to keep moving. Offload the properties which aren’t performing, if you must, but always keep an eye out for those attractive new additions which might help to bolster your portfolio for the future. We pride ourselves at Tommy’s as being your portfolio consultants and, should you be interested, we can offer plenty of opportunities to make your property portfolio work harder for you.

If you would like some obligation free advice on progressing your own portfolio or if you would like to find out how Tommy’s can help you, please feel free to give us a call anytime on 04 381 8604.

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