Why Property

Why would you invest your hard earnt money in property?

• Access to immediate tax savings
• Property gives you the ability to multiply your return on investment using OPM (Other Peoples Money)
• Property has out performed shares, bonds and bank interest for over 40 years
• You don’t have to have a cash deposit
• Best of all it is estimated that 98% of the world’s millionaires made their money through property*

At KEY2 we believe you should investigate before you invest, so we have put together a list of 5 KEY questions we would ask when dealing with a property investment company.

1. What makes this property a good investment for me?

2. What standard of quality is the development, how big is the development and what is supporting the value of the properties being offered?

3. What is the company's track record in the property market and are the staff active property investors themselves?

4. What fees are involved and who pays them?

5. Can I speak to any of your clients?

Here are a further 5 questions you may want to ask

1. Can I secure my preferred property under a due diligence period before I commit to purchasing?

2. Is the company controlled by any professional governing body or acts of legislation?

3. What other types of properties does the company offer?

4. Do they offer access to purchase properties before they are released to the general public?

5. Can they assist me if I need to sell my property?

These are not the only questions you should ask but they will certianly help you find out more about the property you are looking to purchase and the company you are dealing with .

What do our Banks think about property investment?

Banks know a thing or two about risk – when to take them and when to back off. So, if a bank will lend you money to invest in a property, you can be certain it’s the best investment.

• Why will a bank rarely lend you money to invest in a finance company?
• Why will a bank rarely lend you money to invest in mutual funds or stocks?

But the banks don’t stop there. While banks rarely lend you money for any other kind of investment, they will frequently offer you the lowest interest rate on your property loan. Nowadays, you are also very likely to qualify for a 100 per cent loan – no deposit required.

“Looking at a model in which Auckland house prices have gone up by 77 per cent in the past five years, they have had a 670 per cent return on their 10 per cent deposit, excluding interest costs.”

– Gill South on landlords in the New Zealand Herald article ‘Rental markets hit new heights’ (29 April 2007).

More than 90 per cent of the world’s millionaires were made through property.

“In real estate, I can make money, and the government will let me count it as a loss of money. The government gives me a tax break on my gains rather than making me pay taxes on my capital gains.”

– multi-millionaire Robert T.Kiyosaki, ‘The Rich Dad’s Retire Young, Retire Rich’.

In New Zealand, capital gains are tax free for most property owners. Property is a powerful way to build wealth because of leverage – your ability to multiply your return on investment using other people’s money (usually the bank’s money).

Another advantage of leverage is that it gives you the opportunity for much higher returns on the actual funds you invested. You can buy an investment property without having any cash in the bank. You can finance off your existing property.

Valuation company, Quotable Value’s statistics reveal that average property values rose 12.2 per cent countrywide over the past year to $378,672 to July 2007. Prior to that, the valuation company reported that values increased by 13.1% from May 2005 to the same month in 2006. It’s an historical fact that real estate values have consistently and steadily increased over time.

The growth in property values trumps inflation every time. What other investment lets somebody else pay it off? With property, the tenant pays off your investment. You can drive past your investment; see it; touch it. Property is an investment of substance – and, you can even add value by improving the asset. Small touches and improvements to the property improve its overall value and increase your income earning ability through the higher rents you can ask for.