The return of the property investor
Investing in property really is all about the numbers... and, truth is, recently the numbers just haven't worked.
The last thing you want with a rental property is a scenario where you're needing to top-up the bank account with your own money each month to cover the mortgage, rates and insurance. With higher interest rates and property prices that have soared over the past few years, along with interest-only lending being more difficult to obtain, this has been the reality for most property investors, which has led to a lot of investors choosing to sell all or part of their property investment portfolio - understandably.
It's all about the numbers. As with any investment, it's either a good one or a bad one. If it's going to cost you heaps of money, load you with risk and not bring you any major benefits, then it's probably a bad investment. If it's going to put money in your back pocket, increase in value and create wealth, then it's probably a good one!
The good news? Things are starting to change:
Banks are being much more friendly with mortgage applications now that there's less demand, making lending more obtainable and interest-only terms (to help keep costs down) more accessible.
Property prices have dipped, and there's signs that they may be stabilising, making property more affordable.
Rents have continued to creep up despite property prices dipping, mainly led by demand.
So, now we have higher rents, property that's more affordable and lending that's more obtainable. There's general consensus that we're at the turning point for property investors re-entering the market.
Over the past month I've seen several examples of clients purchasing rental properties that will be cash flow-positive. These have been near impossible to find over the past few years, but with prices down around 30% in Wellington investors are starting to reemerge. What's more, enquiry is coming strongly from first-time investors wanting to look at purchasing using equity in the home to secure the purchase. If the Reserve Bank does ease the LVR/deposit requirements for investment properties as is being floated at the moment, I'd expect things to pick up even more.
If you've been wondering about your own capacity to consider purchasing an investment property, just reach out! I'd be happy to show you your options.
Note this article is not intended as personalised advice, and should not be acted upon without seeking independent personalised financial advice.
