Grow Your Wealth by Investing in Property

Wed May 4th 2016

Property investment is one aspect of a long-term investment plan. Done correctly, buying and holding is a proven method for increasing your retirement nest egg.

Property investment is one aspect of a long-term investment plan. Done correctly, buying and holding is a proven method for increasing your retirement nest egg.

There have been some huge gains in several areas of New Zealand over the past ten years, particularly in Auckland. Whilst those gains cannot be used to provide an accurate forecast for the next ten, the figures below will give you an indication of what you could have done having bought ten years ago.

To have maximised your gain you would have bought a cashflow positive property that did not require large and ongoing maintenance costs. You would have ensured the property was correctly priced and well presented to reduce vacancy. It is not just about buying anything, it is about being smart about the purchase and its ongoing management.

In January 2006 the average house price across the Mt Eden / Epsom / Ellerslie / Panmure / Onehunga / Penrose areas was $390,000. Exactly ten years later in 2016 the average price stood at $877,000. That's an average increase of $936 per week, every week over that ten year period.

Whilst the 2006-2016 is skewed by the big gains of the past two years, it is important to remember this also includes the pre-GFC and GFC period.

Now consider that a household with an above average income of $120,000 would receive $1,803 per week after tax and Kiwisaver contributions. They then use this $1,803 to pay their mortgage, utilities, transport costs, childcare etc. In comparison the $936 per week gain on the investment property shows the benefit of investing in property over the long term. Even a gain of half of that would put you in a good financial position.

Talk to the mortgage experts at Cave Financial to find out how you can make best use of your income and equity to purchase an investment property. We are also on hand to offer the latest property research, as well as give advice on how to avoid the pitfalls and reduce the risks of property investment.

Want to grow your wealth by investing in property? Talk to Cave Financial now.

Source:

http://www.landlords.co.nz/housing-statistics/?graphsubmitted=true&frommonth=1&fromyear=2006&tomonth=1&toyear=2016&graphareas%5B%5D=33&graphareas%5B%5D=32&graphareas%5B%5D=30&graphstyle=combo&submit=Show+Graph

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