Have you written off the idea of investing in property because it has never felt like the right time?
Between the intimidating prices of housing in Auckland, knowing if you are making a good properly choice, and the thought of saving a deposit, you feel a little lost. Not to mention the time investment needed to trawl TradeMe and hunt out local realtor listings for potential properties.
But do you want to hear some good news?
There has actually never been a better time to invest in property.
In fact, there are 5 very specific reasons why now is the time to get started. They are: low interest rates, the growing housing shortage, spend on infrastructure, the America’s Cup, and the policy change opportunities.
It might not seem like these 5 things have much in common, but we will now look at how they combine to make the perfect environment for investing.
Reason 1: Low Interest Rates
At the end of 2018, interest rates were at the lowest recorded value since World War II. That means for 70 years, interest rates have never been as good as what they are now!
Gone are the days of 20% interest seen in the late 80s. Instead, rates are now hovering around the 4% mark at all major banks, and sometimes dipping below. This is the time to capitalise!
While you still need to be able to service the mortgage payments without putting yourself under financial strain, it means that you are not paying more than you need to the banks. It makes the idea of taking on a good loan, even better.
A good loan does not mean one of a decent value. What we are referring to is the concept of good debt, where you borrow money to make more money. Any loan that you have to service out of your own pocket is considered a bad debt (though sometimes a necessary debt). A good debt is one that doesn’t cost you. The loan effectively pays for its own cost. In property investment, it means that the tenants pay the cost of the loan (the interest portion at least) so it ends up costing you nothing to service.
Reason 2: Growing Housing Shortages
The media is constantly highlighting what we all know - that there is a growing housing shortage in Auckland. Currently, it is a shortage of more than 72,000 houses. Yet, people still continue to enter the city needing somewhere to live. They are not looking to buy a home, they are hunting for a landlord to pay rent to.
That landlord could be you.
By purchasing a home in a central Auckland suburb, renovating it to add value and then making it available on the rental market, you will have tenants climbing over themselves to live there. On average, rental rates have been increasing between 3% and 5% each year, making your investment a sound one for the future.
Reason 3: Infrastructure Spend
Auckland is a changing landscape. The kiwi idea of a 3-bedroom home on a quarter acre section is fading into the distance when it comes to the central suburbs. Unitary plans and zoning for higher density housing are coming into effect, changing Auckland to a new kind of city.
All of this change requires a spend on infrastructure which will in turn create more jobs, and more tenants needing rental properties.
History tells us that this point of the decade is usually where property prices enter a slump. Due to a number of factors, this is not happening in Auckland right now. Infrastructure spend is one of those reasons. Despite the fact that property prices are not dropping, the current opportunity to invest in housing is huge.
Reason 4: America’s Cup
Once again, the America’s Cup will shine a spotlight on the beautiful global city of Auckland. Back in 2013, every property with even the hint of a waterfront view was snapped up. In fact, there were not enough Auckland properties to met the demand back then. Imagine what it will be like in 2019 and 2020 when we are already in the thick of a housing shortage!
We are not creating sufficient land in the inner city and not building enough houses to accommodate demand. This will result in an upcoming rental boom and property boom. The impact of the America’s Cup will be our first visual sign of this.
Now is the time to invest, especially if the property has a water view!
Reason 5: Policy Change Opportunities
The coalition government have proposed many changes to housing policy. Everything from not being able to offset rental income, to the potential for a Capital Gains tax, and even policies around tenants rights.
Many people have stated that this will impact the property market and encourage landlords to sell their current investments. There is a very negative perception around the proposed changes. But, these proposed changes are also creating real opportunities to invest now.
Many investors buy to then sell a property on again after a short period. But we do not encourage that tactic here at Ronovationz. Our philosophy is to build a portfolio of value that you will hold onto long term. For that reason, many of the policy changes will not really apply. So, what you are left with is the opportunity to snap up great properties with low competition.
Want to learn more about why 2019 is the year you should finally realise your dream of investing in property? Then, sign up for our free seminar on February 23rd in Auckland at Eventbrite here: https://www.eventbrite.co.nz/e/5-reasons-why-2019-is-the-year-for-property-tickets-55091534262?aff=ebdssbdestsearch