Think about cashflow: NZPIF

Andrew King said 2013 would be a good time to buy as prices looked likely to rise.

But he said investors should look for properties where they could add value, and increase the rent. “Look for one where you can maximise cashflow. Cashflow tends to be the problem.”

He said people should be trying to maximise yield without buying in dodgy areas.

“Dodgy areas tend to have the highest return but you end up with bad tenants and high management costs.”

He said a rundown property, bought in a reasonably good area, could end up with a similar rental return but better tenants. Improvements to the property would also translate to higher returns.

Investors should think about the area they were buying in and what tenants there wanted. But often money could be made by altering properties to suit tenants' requirements, he said, such as by adding or converting another bedroom.

 "You can buy a property that doesn't match the tenant's requirements but then turn it into that."