FAQ2020-09-09T03:08:17+00:00

FREQUENTLY ASKED QUESTIONS (FAQs)

Can’t find the answers you are looking for? We’ve shared some of our most frequently asked questions to help you out.

Q. How do we make money?

A. We get paid a flat referral fee from the building company or a property developer. It is part of their marketing costs and they factor the cost in whether they sell their property through a real estate agent, internal sale person, financial advisors or our recommendation.

Please note that you will never pay more than the registered valuation of the property. We have never had this rule broken and, as a result, not a single client of ours, has lost the value of their investment property.

Our extensive expertise enables us to only source and present you the options that represent great value for money. Your purchase price would never be inflated as a result of the developer paying us a fair referral fee for our services.

Q. Can you use KiwiSaver savings as a deposit on an investment property?

A. Absolutely not. Only for your own home.

Q. Can you claim interest on a loan as a tax-deductible expense on a rental property?

A. Yes, you can. In fact, you can claim all the expenses that relate to property investment. They include legal fees, valuation costs, set-up accounting fees, property management, letting costs, advertising costs, insurance, body corporate, accounting fee, repairs and maintenance, drug testing fees, compliance fees etc.

Q. What should our debt levels look like before we invest in a rental property?

A. Please do not wait to invest until your pay off all your mortgage and all other debt. This will result in a loss of time and most importantly opportunity. As soon as you have enough equity in your own home, around 33%, then you can start looking at property investment. You can still have credit card debt or car finance or both. Book your first consultation and let us assess financial matters holistically so we can improve your situation in an effective manner.

Q. What do you need to have organised when you come to see us?

A. We will prepare you for the meeting by having an initial 15min phone call. By the way, you can book yours now! Over the phone call we will ask you questions about your financial position. It is up to you to decide how much you want to reveal but generally it helps us to know how we can help you and what your options are when you tell us (no hard evidence required at the meetings) the following:

  • Value of your home and other real estate if any
  • Mortgage balance of your own home and any other real estate if any
  • Household income
  • How much do you contribute towards KiwiSaver (%)
  • Any other deductions such as student loan and child support
  • How many children you have under 18 years old
  • How many vehicles your own
  • The details of consumer debt (Credit Card, Overdraft, Gem Visa, Q Card)
  • Which bank you are with
If you want to reveal little over the phone, then prepare these details for our first meeting. You can quote them from your memory, banking apps, emails. Easy peasy!

Q. How much equity do I need to buy an investment property?

A. You need to have at least 33% equity in your own home. Why 33%? Because 20% must stay untouched. Then you can use anything over that threshold as a deposit on investment property.

For example, your own home is worth $800,000 and the mortgage is $500,000. 800,000 x 0.8 less mortgage $500,000 = Investable equity $140,000. So $140,000 can be used as a 20% deposit on a brand new rental property. This means the maximum purchase price you can go up to is $700,000. If you use $140,000 as a 30% deposit towards an older property, then your maximum purchase price is only $466,000. Huge difference!

Example No.2: Value of your home is $750,000, mortgage is $450,000.

750,000 x 0.8 – $450,000 = $150,000 Investable Equity $150,000/20×100=$750,000 Max Purchase Price for a Brand New IP. Congratulations, Give us a call!

Example No.3: Value of your Home is $750,000, mortgage $580,000. $750,000×0.8-$580,000=20,000 Investable Equity – This will not be enough for you to buy a brand-new property in Hamilton or Auckland. Keep reducing your mortgage balance, add value to your property or simply wait for the market to make your property appreciate. Do this exercise again in 6-12 months.

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