Strategies In Today's Market
Mark Honeybone explores how to make the most of the opportunities presented to us in the current property investment environment.
1 October 2018
Last month I wrote about different strategies to use for getting into the property market without significant capital. Following this subject, I also often get asked about what the best property investment would be to buy right now. I’m not a financial adviser, however I know a bit about the industry and can certainly share my point of view.
Before starting to look for your next property investment, you should ask yourself what you’re wanting to achieve and what your goal is with this property. These are definitely the two questions to keep in mind before starting anything, as the direction to take becomes very clear once you’ve answered them. Besides this though, I wanted to share my thoughts on strategies and opportunities in the industry I see right now. Of course, depending on the individual, I believe they can work a treat right now.
The Property Market
It varies throughout the country, however what’s happening at the moment is fascinating. With Auckland being a little softer, there still aren’t as many listings as there would usually be at this time of the cycle. Fewer listings and low-interest rates seem to be keeping the market reasonably stable.
In my recent podcast/video I interviewed Kiwibank chief economist Jarrod Kerr who gave me high confidence that the New Zealand economy and its housing market aren’t going to crash any time soon.
‘Before starting to look for your next property investment, you should ask yourself what you’re wanting to achieve’
Buy The Right Property
Even though the current market is limited, you can still buy well in some areas. Just be patient and stay focused. Many vendors are realistic about the current situation and aren’t wanting the prices of two years ago.
In the current market, it is imperative that you don’t overpay for a property. Depending on the strategy you choose, you will probably need to recycle your equity by 35% (as I write this article) before you can look at purchasing your next property. I have written about how to achieve this in previous articles (developments, renovations, etc).
This is still a very good idea. The key here is to buy the right new build. With only 20% deposit it is one of the easiest ways to get into property investment in New Zealand. At the moment there are still other tax benefits you don’t get with second-hand stock. With benefits like fewer maintenance issues for at least a few years, this is a great strategy to consider.
If you think your area has peaked and reached its potential, doing nothing might just be your safe strategy to implement. Although I advise you to watch the market closely and grab any opportunities appearing, as you don’t want to miss out by being too safe.
Again, if you are unsure as to what to do and looking at an area where land banking offers a chance to subdivide into a few sections, I advise to buy well and hold long term. Make sure to check your local council rules though.
As I previously mentioned in this column, if a section’s value raises double over the next 10 years, this will be multiplied by as many sections you can subdivide into. Just be careful with paying too much and try to cover the mortgage with the rent (which of course isn’t always possible).
Note that it isn’t always about getting a bargain; if you can pay a price that works with your plan and strategy and gets you the result you’re after, then pay it. Of course, negotiate on price, however don’t lose the deal for the sake of needing to win. If both parties win, what is wrong with that?
Property Ventures is a licensed Real Estate Agency that specialises in Investment property throughout New Zealand. They also have the NZ Property podcast/YouTube series where Mark interviews the property experts from around the country helping hundreds of thousands of investors. He can be contacted at [email protected] or 0800 NZPROPERTY (697767) Or watch the Podcast/YouTube video at www.propertyventures.co.nz/podcasts