Last month I spoke about the benefits of buying a spec show home. I received a lot of feedback about it, so in this issue I will discuss new builds and off-the-plan developments and why they are a great investment option right now.

I will get into the specifics of this subject and also discuss the proposed government changes (some of which have already been enforced).

Currently investors don’t have too much certainty, but that’s where new builds come in, as they provide certainty over other property options.

The much discussed topic of the Government’s “ring-fencing of losses” Bill, where the Government plans to axe landlords’ tax deductions, really makes property investment less attractive. More to the point, you must account for where money is going and if you are going to make a loss short-term to make a capital gain, with this bill you have to really minimise that loss more than ever. Let’s discuss these further.

Maintenance

Over the past month, several property managers told me they’d lost properties from their books as investors were selling up because of new government rules coming in. Reasons like letting fees, capital gains, ring-fencing, as well as unplanned maintenance issues were among the main reasons for those investors

New investors often underestimate the maintenance that their property(s) will require and don’t have a proper maintenance plan, especially for older properties, where a maintenance plan is a must. Of course, sometimes you can still face issues even when well prepared. For example, when a major plumbing issue arises and you face a $10,000 payment.

‘Talking with new build buyers over the past 10 years, one thing always comes up in conversations: their properties have extremely minimal or no maintenance issues’

Obviously, a new build won’t cause you this type of headache, and if you buy a new build that comes with a guarantee, for example a 10-year master build guarantee, you won’t face any huge issues for a few years.

Talking with many new build buyers over the past 10 years, one thing always comes up in conversations: their properties have extremely minimal or no maintenance issues. So, over a 10-year cycle, this can save you thousands of dollars.

How Will I Ever Be Able To Pay My Mortgage Off Before I Retire?

I often speak to people who are in their forties to sixties and in well-paid jobs, who still cannot see how they will be able to pay off their $200,000 - $500,000 mortgage before retirement.

Statistics have proven that the right new build can provide you with 80% to 100% profit within a 12-year property cycle. Even if the market achieved only 50% of that projection, you should profit by $200,000 - $500,000 depending on what priced new build you purchased. Would this help towards paying off your mortgage securing your retirement? The key is to get something that suits your particular situation and fits in the budget.

Besides these, things like fixing mortgages long term, set rents, no maintenance, and low expenses versus income makes new build investments attractive, with capital gains you never thought were possible.

If you’re interested in learning more about new builds and other property investment options, we hope you can join us at one of our Property Seminars held in February this year. Check the back inside cover page of this magazine for details.

Property Ventures is a licensed Real Estate Agency that specialises in Investment property throughout New Zealand. They also have the NZ Property podcast/YouTube series where Mark interviews the property experts from around the country helping hundreds of thousands of investors. He can be contacted at mark@propertyventures.co.nz or 0800 NZPROPERTY (697767) Or watch the Podcast/YouTube video at www.propertyventures.co.nz/podcasts