Getting started with your first investment property

If you are considering your first step into property investment, 2025 presents a rare window of opportunity. Here’s why—and how to get started.

Why Invest in Property Now?

After a challenging period, NZ property values rose +0.5% in March and +0.4% in February, signaling recovery. Though prices are still below 2021’s peak, they are up 16.3% from pre-COVID levels—indicating long-term growth. 

Falling interest rates too are making borrowing more affordable, improving investment affordability and returns.

Navigating Recent Laws and Regulations

While the outlook for property investors is positive, there have been some important changes to property investment regulations. Here’s a quick rundown:

1. Tax Deductibility Changes - From April 1, 2025, investors can again deduct 100% of interest on rental loans. This change is expected to improve cash flow for many property investors.

2. Bright-line Test -  From July 1, 2024, only properties sold within two years face capital gains tax—down from ten. These changes could increase returns on investment by reducing the holding period required to avoid bright-line taxation.

3. Healthy Homes Standards - By July 1, 2025, all private rental properties must meet the Healthy Homes Standards, regardless of when the tenancy began. It provides an opportunity for property investors to improve their assets and potentially increase returns.

Six Steps to Buying Your First Investment Property

1. Review Your Financial Position:

Before making a move, carefully evaluate your finances. Consider your income, existing debts, and savings. As a mortgage adviser, I cannot stress enough how essential it is to have a solid financial foundation when starting out in property investment.

2. Set Clear Investment Goals:

Are you looking for long-term capital growth or cash flow? Defining your goals will help you choose the right property and investment strategy.

3. Research Target Areas:

Look for areas with strong rental demand, job growth, and property value trends. The right location can make or break your investment. Your budget will also constraint the areas that you consider. 

4. Run the numbers:

Working with a mortgage adviser will open up a range of financing options. Estimate rental income, expenses, mortgage payments, and potential ROI. Be realistic—and conservative—about what you can expect to earn.

5. Build Your Team:

Surround yourself with a trusted team of professionals. A good mortgage adviser, real estate agent, property manager, and accountant can be key partners in your investment journey. We can connect you with the right people to support your goals.

6. Make the purchase:

Once you find the right property, act fast but don’t skip inspections or due diligence. A smart buy now can pay off for years.

Property investment is a long-term commitment. While any turning point for house prices won’t be sudden or strong, the current conditions present good opportunities for finance-approved buyers. This underscores the importance of being well-prepared and informed as you enter the market. So feel free to reach out to discuss your investment goals and let's create a strategy tailored to your success!