Question from Billie updated on 16th September 2019:
A relative is keen to downsize and get into investing. They will have around $700,000 in cash. What type of strategy, including location & type/number of properties, would you recommend? Ideally, they would like an income to replace their current salary which is around $70,000.
Our expert Kris Pedersen responded:
It would be best if a few other factors were known, in particular their age. If cashflow is a priority and capital growth prospects are to be disregarded, then apartments or getting into regional New Zealand could be good options.
Generally, smaller towns will have higher returns but make sure you are working off net yield rather than gross. Also, bear in mind that going too small or into a region which has a decreasing population can be a nightmare as vacancy rates can be high and real returns can drop.
Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies. www.krispedersen.co.nz