$200,000 to invest

Our Experts Answer:

There are many options to choose from as you have already suggested. However, it is a case of climbing the right property ladder that will achieve your goal. First, set a goal of purchasing a minimum of two properties per year on a buy and hold basis in central Auckland suburbs and you will most likely achieve financial independence in 10 years.

Positive rental yields will give you pocket money initially but it will never give you enough for a deposit on the next property. It is capital growth which eventually gives you the wealth to retire on and the equity to borrow against for further deposits on the next properties. The main point to remember is that mortgages stay constant, while equity continually grows with the value of the property and rent increases. 

Try buying units in a boom cycle, as there is less home-buyer competition, and houses during the slump periods. Home owners buy on emotion and push values up, investors buy on numbers and push prices down.

As a first time investor, rather than having all your investing eggs in one basket (ie: a $1 million house), perhaps you could consider purchasing two do up units in central Auckland suburbs around the $450,000 to $550,000 range. Then cosmetically renovate them to create instant equity in the current hot Auckland market.