'Stepping out' - first investment advice

Our Experts Answer:

Firstly look to get a revolving credit facility against your home so you have access to deposit funds and renovation funds if you need them. You want the facility size to be sufficient to provide a 20% deposit based on the high end of your purchasing range plus a bit more to cover renovation/contingency funds. In regards to where you should invest it comes down to what you are after. Auckland looks solid from a capital growth perspective but it is hard to find properties with a good return. In the smaller towns you will be able to find better returns but make sure you take all of the numbers into account. I spoke to a customer recently who had thought he had purchased really well as he had bought a property for $60,000 that rented for $180 per week or a 15% gross yield. What he didn't take into consideration however was that the rates were $2,000 a year and with other similar costs taken into consideration the net return was only about 5% which he could have got in a better area for growth.