The benefits of having an investment property

Having an investment property is a popular form of investment and income for many New Zealanders. There are two main returns you can get from an investment property - through rental income, and also when the property increases in value - in other words, capital gain.

If you’ve been thinking about buying a house with the intention of renting it out, here are some of the benefits you should be aware about.

1. You’ll receive an extra source of income

One of the main reasons people purchase investment properties is because it gives you another steady source of income. Based on the location, quality and condition of the house, and a number of other factors, you can set a rent price that will provide you with weekly, fortnightly, or monthly income.

2. You’ll receive capital gain as the value of the house increases

Make sure to do some research before buying an investment property, as the location, space, and structure of the house makes a huge impact on its value. You’ll want to purchase a house that is in a location that is set for growth and development, or is closer to amenities and the CBD as this will mean the house’s value is likely to increase over the years.

3. It’s a physical asset

An investment property is a physical and tangible asset. A lot of people prefer investing in tangible assets rather than intangible assets such as unit trusts or shares as they feel more comfortable actually seeing and having the physical asset.

4. There are tax benefits

There are a number of tax deductions that can benefit investment property owners. Some of the expenses you incur to generate your rental income may be tax deductible. So make sure you seek professional tax advice when acquiring your investment property to understand when you should take advantage of your tax deductions.

5. You have direct control

With a rental property, you are able to manage your investment directly. Although you can hire an agent to look after your property, many landlords prefer taking care of their investment properties themselves because they have complete control over the house’s condition, and are in charge of making sure the property is running at peak performance.

Of course, with any investment it’s important to consider both benefits and risks. Depending on your situation and circumstances, it’s important to determine whether having an investment property is right for you.

For more information on the benefits and risks of an investment property, check out Sorted’s guide on investing in property.