The thing that makes property an amazing investment choice doesn’t necessarily have anything to do with the property itself. What makes it amazing is the ability to use leverage to borrow money in order to purchase the property and benefit from gains on the full value of the property.
Say you invested $100,000 in a managed fund that was earning an average of 5% annual return. This would get you a return of $5,000 (before fees and taxes).
But if you were to use that same $100,000 as a 20% deposit and borrow $400,000 to purchase a $500,000 property (if purchasing new) you’ll earn returns off the full $500,000. If we use the same return rate of 5%, you get $25,000 < this is what makes property investment powerful.
While property investment may seem simple from the outside, there’s a lot that goes into buying the right property and making sure you can hold it through the fluctuations of a property cycle. In this guide, you’ll find everything that you need to know about what makes property such a powerful investment option, and how to make sure you buy the right investment property to meet your financial goals.
Click here to download the New Zealand Property Investor Handbook by Momentum Realty.