Should you invest in residential or commercial property?
Investing in property can be a great way to grow your wealth over the long term. What are the advantages of residential versus commercial property – and can you still invest in property if you don’t want to be a landlord?
Exploring Property Investment: A Kiwi Favorite for Wealth Generation
For generations, Kiwis have embraced property investment as a tried-and-true method for cultivating wealth over the long haul.
One of the key differentiators of property investment compared to other asset classes is its accessibility for borrowing. Acquiring property through loans often outshines purchasing shares in terms of ease. This accessibility can amplify both the potential rewards and risks of property ownership.
Property values tend to appreciate over time, but short-term fluctuations can be notable. Consequently, embarking on a property investment journey necessitates a forward-thinking mindset, aligning your purchases with overarching, long-term objectives.
Residential or Commercial: A Vital Choice
When contemplating property investment, a pivotal decision lies between residential rentals (leasing homes to tenants) and commercial properties (providing business spaces like retail, office, or industrial buildings).
Residential property boasts various advantages:
A diverse array of property options, many of which are budget-friendly.
Ease in tenant procurement.
Comparative ease in securing mortgages.
However, managing residential tenancies often demands more time and effort, with tenants potentially requiring more attention.
Turning to commercial property, its merits include:
Exemption from adhering to Residential Tenancies Act or Healthy Homes legislation.
Higher rental income and greater yields, translating to superior returns.
Long-term tenancy arrangements.
On the flip side, premium commercial properties come with higher price tags, and tenant acquisition may pose challenges.
Excelling as a Responsible Landlord
Irrespective of your property preference, excelling as a landlord necessitates sourcing reliable tenants, ensuring their contentment, and maintaining property upkeep to impeccable standards. Property ownership entails ongoing costs, and if you're unable to commit to consistent maintenance and repairs, property investment might not align with your financial goals.
Diverse Avenues into Property Investment
For those uninterested in landlord responsibilities or constrained by budget, alternative avenues into property investment exist. With a modest investment, you can purchase shares in publicly listed companies specializing in property development or ownership, spanning residential, commercial, or retirement domains. This approach offers a hands-off investing experience facilitated by online trading platforms.
Understanding Tax Implications
Embarking on a property investment journey entails vital tax considerations, encompassing the bright line test, nuances for new constructions, and potential GST obligations during property acquisition.
Our expertise is poised to guide you through the intricate landscape of property investment taxes. We'll fine-tune your strategy, unravel your tax responsibilities, and help you craft an optimal ownership structure. Should you be seeking a loan, we're here to streamline your financial accounts. Don't hesitate to reach out - drop us a message or give us a call. We're eager to assist you on your property investment voyage.