Home | How to build a property investment portfolio – our tips
There are many different reasons why New Zealanders may invest in property.
Perhaps the most stand-out feature of real estate investment in terms of creating wealth is the ability for long term capital growth.
During this period of capital growth your portfolio can also be continually earning you income in the form of rental yields too.
Real estate can be a great way to implement a wealth creation plan and give you excellent, long term outcomes.
Positive cash flow
The way most people fund the deposit for their investment properties is through the equity within their own home. Equity is formed through the capital growth of the your home purchase.
For example: If you bought a house in 2014 for your own use. If the house was priced at $500,000, at the time most buyers would use a 20% deposit to secure a mortgage of $400,000 (80% of $500,000).
In 2020 this property has increased in value to $690,000. When purchased a $100,000 deposit was used.
Equity = Property Value – Mortgage
This means you now have $90,000 worth of wealth or equity within the property. Banks can use this equity and added cash to fund your next purchase!