To be successful in the world of property investment, investors need to be aware of the current market conditions and how they may impact their investments. Here are six things that all New Zealand investors need to be mindful of to make wise and profitable decisions in today’s market.
Understand The Lending Climate
One of the most important things for investors to be aware of is the lending climate. Lenders are currently much more stringent when it comes to extending credit, so investors need to be realistic about their potential returns and ensure they have a well-diversified investment portfolio to spread their risk.
On the other hand, property investors need to be aware of the regulations and restrictions that are currently in place. For example, they need to have information on LVR Restrictions in NZ, as the Reserve Bank introduced stricter lending criteria in recent years, which means that it can be harder to get a loan than it was previously. Therefore, investors need to ensure they are aware of these and how they may impact their investments. The current lending climate is something that is constantly changing, so investors need to stay up to date on the latest developments.
Being Aware Of The Local Market
Investors also need to do their research on the local market and understand the trends that are happening in their area. What is the average rental yield? What is the average sale price? What is the average time on the market? All of these are important factors to consider when investing in property.
Local market conditions can vary greatly from one area to another, so it’s important to be aware of what is happening in their specific market. For example, if an investor is looking to purchase a property in Auckland, they would need to be aware of the high prices and demand in that area, as well as the potential for capital growth. However, if an investor is looking in a more regional area, they may find that the prices are lower and there is more opportunity for rental yield.
Having a Well-Diversified Investment Portfolio
This means that they shouldn’t put all their eggs in one basket and should have investments in a variety of different property types and locations. This will help to spread the risk and protect investors from any potential short-term fluctuations in the market. Imagine if an investor only had an investment in Auckland – if the market crashed, they would stand to lose a lot of money. However, if they had investments in different areas around New Zealand, they would be less affected by any one crash.
Doing the Research
Property investors also need to do their research on the local market to make informed decisions about where to invest. This includes studying factors such as population growth, employment rates, and average rental yields. Also, it’s important to research the specific property that they are interested in – what is the potential for capital growth? What is the expected return on investment?
These will vary from one area to another, so investors need to be aware of these different factors.
Working With A Qualified Accountant And Solicitor
Property investors should also work with a qualified accountant and solicitor to make sure they are getting the most from their investments. These professionals can help investors structure their investments in the most tax-effective way, as well as help with any other legal issues that may come up.
For example, investors should have a solicitor look over any contracts before they sign, to make sure they are getting the best deal possible. It’s also important to have an accountant look over your financials so you can be sure you are making the most of your tax deductions.
It’s important to remember that property investment can be a complex process, so it’s always best to have qualified professionals on your side.
Being Prepared For Short-term Fluctuations
As mentioned earlier, property investment is a long-term game and it’s important to be prepared for short-term fluctuations in the market. This could mean having a buffer fund to cover any unexpected costs that may come up or having a solid exit strategy in place. This means being prepared to sell your property if the market takes a turn for the worse.
It’s also important to keep in mind that things like interest rates, tax laws, and government policies can all have an impact on the property market, so investors need to be prepared for these changes as well.
There are several things that property investors need to be aware of to make the most of their investments in today’s market. By understanding the current lending climate, being realistic about potential returns, doing their research on the local market, and working with qualified professionals, investors can set themselves up for success.