When to Become a Property Investor

If you tick these eight boxes, then now might be the time for you to become a property investor

Residential property investment is almost an obsession in New Zealand. Maybe that’s because it’s one of the easiest investments to understand — after all, we all need a place to live!

But has the shine started to wear off?

Not long ago, property prices seemed to only go up. The New Zealand population kept growing thanks to steady migration – which provided a steady stream of new tenants and demand to buy properties, and interest rates just kept hitting record lows – so lending to buy property was more affordable. Then, in the years following the pandemic, many of these tailwinds turned into headwinds. Tax changes also made property investment less appealing.

While residential real estate remains a solid investment, there’s a growing sense that it won’t be the one-way bet many once believed. It may be property investment is now just one part of the overall investment puzzle – a welcome addition to an overall portfolio of assets, but not the only type of investment there is.

Check to see if you tick all eight of these boxes before taking the plunge into property investment.

1. Homeowner’s Equity

A lot of Kiwi homeowners – even those still paying off their mortgage – might not know how simple it could be for them to become a property investor. The simple way is to use their existing home’s equity.

Home equity is the difference between the market value of your property and the amount still owing on your home loan. So, if the market value of your home is comfortably more than the amount you owe, you may be able to use this to get another mortgage to buy another property. To determine your equity:

1. Estimate the value of your current property, then
2. Subtract the sum you owe – usually just the existing mortgage.

So, if the market value of your home is $900,000 and your total mortgage owing is $300,000, then your equity would be $600,000.

Many New Zealand homeowners have more equity than they might realise.

2. A Long Investment Time Horizon

Property investment is not usually a get-rich-quick scheme, it’s about playing the long game. Successful property investors understand this.

If you have a long-term perspective and the patience to ride out market cycles, property could be a great investment for you. Property values tend to grow steadily over the years. This increase in value over time — known as capital gain — is a key driver of wealth creation in real estate.

One of the biggest advantages of investing in New Zealand property is that we don’t have a capital gains tax. That means when your property appreciates in value and you decide to sell, you won’t be hit with an extra tax on the profit (provided you meet the criteria for long-term investment). This makes property particularly attractive compared to other investment options where gains can be taxed more heavily.

However, to truly benefit from property investment, you need to be able to buy and hold. This means having the financial stability to weather housing market downturns, rising interest rates, the impact of events like pandemics or natural disasters, and unexpected expenses like maintenance or tenant vacancies. Unlike investing in shares, where you can sell instantly if needed, property is a long-term, illiquid asset — you can’t just cash out overnight.

Ultimately, property investment is well suited to those who have a patient, deliberate mindset and the ability to think in timeframes of a decade or two, not just years.

3. Property Investors Are Attentive

The classic Kiwi “she’ll be right” attitude might work for a weekend DIY project, but when it comes to being a landlord, it’s a recipe for disaster. Property investment isn’t just about owning a house and waiting for its value to rise — it comes with responsibilities. Staying on top of rent payments, tracking expenses, abiding by tenancy laws, and properly vetting tenants are all essential parts of protecting your investment.

One of the biggest mistakes new landlords make is choosing tenants based purely on gut feeling. Just because someone seems friendly and reliable during a viewing doesn’t mean they’ll pay rent on time or treat your property with care. A proper tenant selection process is crucial. That means running credit checks, reviewing references, and gathering as much information as possible before handing over the keys.

Why does this matter? Because if you misread a tenant and they do a runner — leaving behind unpaid rent, property damage, or both — the more details you have on file, the easier it will be to track them down and recover your losses. Even with tenancy laws in place, chasing overdue payments can be a time-consuming and costly exercise, so prevention is always better than cure.

This is exactly why many property investors choose to use a professional property manager. A good property manager handles tenant selection, rent collection, inspections, and maintenance, ensuring that your investment is well looked after. They also stay on top of tenancy laws and regulations, reducing the risk of costly mistakes. While there is a fee involved, the peace of mind and time saved are well worth the cost.

When it comes to property investment, a proactive mindset — or the right professional support — will save you stress, time, and money in the long run.

4. Numbers Matter with Property Investment

You don’t need to be a mathematics guru to succeed as a property investor, but you do need to be comfortable working with numbers. At the end of the day, numbers are everything. Unlike buying a home to live in, where emotions often play a role, property investment is a pure financial decision. Falling in love with a property won’t pay the mortgage — cash flow will.

Before diving in, it’s essential to understand your income and expenses in detail.

• Start with your gross income yield, which is simply the total rent you expect to receive.
• Then, go deeper by calculating your net income yield, which factors in all the real costs that come with owning a rental property. This includes vacancies, maintenance, repairs, insurance, council rates, mortgage repayments, property management fees, and, if applicable, body corporate levies.

It doesn’t stop there — when you first purchase a property, you’ll also face upfront costs like valuations, building reports, and legal fees. These expenses add up quickly, so they need to be included in your overall financial planning.

If you’re planning renovations, budget conservatively and assume things will take longer and cost more than expected — because they usually do. During renovations, you’ll still be paying the mortgage, but without rental income coming in, creating a financial squeeze. And unless you’re an experienced tradie, attempting DIY renovations to save money can backfire if mistakes lead to further delays or costly fixes.

Ultimately, costs can be the difference between a great investment and a financial headache. A property might look like a solid opportunity at first glance, but if you don’t keep a close eye on the numbers, it can quickly become a drain on your finances. Smart investors know that property is a numbers game — get them right, and you’re on the path to success.

5. Time

Directly investing in property is time consuming. For ongoing management, you have a simple choice, either:

• Spend a lot of your own time, or
• Pay someone to do it in the form of a good property manager.

Additionally, a qualified accountant is invaluable when it comes to managing the financial side of your investment. Property investment involves a range of tax considerations, from claiming expenses to structuring your finances effectively. Having an accountant prepare your end-of-year tax return ensures compliance with tax laws while helping you maximise deductions and optimise your investment.

With property investment you need to keep your finger on the pulse of market trends, economic shifts, and local developments. A great investment today might not look so great in a few years if things change.

For example, a neighbourhood can take a turn for the worse. You might have bought in an up-and-coming suburb, lured by new infrastructure projects, a growing number of trendy cafés, and promises of growth. Fast forward a couple of years, and it could be the same area has taken an unexpected dive — perhaps a major employer shut down, new developments stalled, or what was once a charming community hub is now best known for traffic congestion and empty storefronts.

This is why it’s crucial to stay informed. Keeping an eye on local news, council plans, and broader economic trends can help you anticipate changes before they impact your bottom line. If the area is thriving, you might consider holding or even expanding your portfolio there. If things are going downhill, it could be time to rethink your strategy — which could mean selling the property outright, refinancing, changing it to a short-term rental, or even redeveloping it. Markets evolve, and so should your investment decisions.

6. Resilience, To Handle the Drawbacks of Property Investment

All types of investment come with risks and downsides, and property is no exception. At its worst, property investment can feel like an endless game of financial whack-a-mole – just as you deal with one issue, another pops up.

Sometimes, everything seems to go wrong at once. You might be hit with major unexpected repairs — a leaky roof, a burst pipe, a blocked toilet, or an oven giving up just as new tenants move in. Insurance can cover some things, but the excess payments and delays can still be painful. Then there’s the risk of problem tenants — those who don’t pay rent on time (or at all), cause damage, or leave suddenly, leaving you with an empty property and no income.

Let’s not forget market downturns, either. Property prices don’t just go up in a straight line, and rental demand can fluctuate. Maybe interest rates rise, making your mortgage more expensive. Property is vulnerable to wider economic trends, natural disasters, and other issues. Any of these eventualities can lead to a spike in vacancies. Suddenly, you’re stuck with a property that’s costing you more than it’s bringing in.

If you don’t have the patience for the ups and downs, these challenges can be overwhelming. But for those who genuinely enjoy property investment, these occurrences are just part of the game.

The key is resilience. The investors who succeed long-term are the ones who can push through short-term headaches, adapt to challenges, and stay focused on their long-term aims. Good property investors will take practical steps to mitigate these issues, including:

• Build a cash buffer to cover unexpected costs,
• Avoid over-leveraging themselves,
• Choose quality tenants carefully, preferably leaving a professional property manager to do it,
• Stay proactive with maintenance to avoid bigger issues later,
• Diversification of their property investment portfolio across different regions of New Zealand, which would ideally be complemented with diversification to non-property assets such as shares or funds, and
• Implementing comprehensive insurance.

Because in property, as in life, it’s the ability to weather the storms that eventually leads to clear skies and long-term success.

7. You Have Other Cashflow

Residential property investment in New Zealand is usually negatively geared. That means the rental income from a property is insufficient to cover the loan repayments, maintenance, interest, council rates (“property tax”) and other expenses for the property in the short-term, so the cashflow is negative. Ideally, the asset will eventually produce enough money to cover those costs, perhaps as rents steadily rise and the mortgage is gradually repaid. A property investor who is negative geared expects to gain from tax benefits in the short-term and to eventually sell the asset at a higher price to make up for the initial losses.

The need for supplementary cashflow means property investments suits those with a stable source (or sources) of income, most often from a well-established, salaried job or perhaps from long-running self-employment. It’s better still if you have low expenses to match – which means you’ll have a regular surplus.

It’s not just to help cover ongoing expense, either:

• Property is considered illiquid, that is, it can be tough to turn the value into cash in a hurry. For instance, if a major life event occurred and you needed to access a large sum of cash, and
• You might have to cover the cost of the property for some time by yourself, for example, in the event of a lengthy vacancy.

8. You Can Listen

The best property investors aren’t just good with numbers, they’re also great listeners. Successful investors surround themselves with experts and take advice from professionals such as solicitors, accountants, property managers, mortgage brokers, and financial advisers.

Shameless plug alert: At Become Wealth, we provide both mortgage broking and financial advice tailored to property and other investments. If you’d like to book a complimentary initial chat with one of our trained professionals, get in touch.

Listening isn’t just about seeking advice — it’s also about understanding and applying one or more of the three fundamental property investment strategies:

Buy and Hold

The most common and typically the least risky strategy. This involves purchasing existing properties and holding them for the long-term, allowing their value to increase while generating rental income. This is what most people think of when they imagine residential property investing.

Fix and Flip

This strategy involves buying properties that need renovation, improving them, and selling them for a profit. In some cases, a "fix and flip" property may transition into a long-term buy and hold investment instead of being sold immediately.

Build

This strategy focuses on constructing new properties, either to sell for a profit or to retain as long-term investments.

While all property strategies require a keen ear for good advice, fix and flip and build investors must listen to an even wider range of experts, including builders, architects, project managers, and contractors. In property, smart investors don’t just follow their instincts — they listen, learn, and act on the best advice available.

Learn more:

• ‍What to consider when buying an investment property
• Is property investment still worth it?
• What is listed property?
• NZ’s top sources of passive income

The Bottom Line – When to Become a Property Investor

If this list sounds like you, then real estate could be a powerful way to grow and preserve wealth over time.

If that’s the case, you might like to reach out to book complimentary initial consult with one of our team, who can assist you with the next steps on your property investment journey.