The Complete Guide to Residential Property Investment in NZ

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Good Returns reviews a must have book for anyone who is thinking of investing in residential property.

Friday, February 21st 2003, 6:56AM

It is no surprise that, considering New Zealanders' love affair with property investment, there are heaps of books on this topic. What is surprising is that there hasn't been a good, practical how-to guide written on the subject for a while.

A newly released title, The Complete Guide to Residential Property Investment in New Zealand, is just what it says it is. The book will become the bible for anyone wanting to know how to make money from owning houses.

One of the most compelling messages in The Complete Guide to Residential Property Investment in New Zealand is that to be a successful investor, requires a lot of time, knowledge and help.

The authors, property investors Lisa Dudson and Andrew King, say they wrote the book because there are many people who jump into property investment without really knowing what they are doing.

"If you ask the professionals who work with them how many property investors really know what they are doing, you get an answer of around 5 to 10%," they say.

Dudson, principal of Acumen Financial Planning, who also runs a mentoring service, says that most people she comes across aren't making sufficient money out of their property investments.

While location is important, it's not the be all and end all. An investment has to make money and a good rental property needs to be "tenant proof". This includes things like being low maintenance (eg: avoid old villas, big gardens and swimming pools).

Dudson says that the underlying thing to remember about property investment is that it is a business and should be treated as such.

One of the biggest areas people can make gains in, is how they structure their investment. This includes whether it is owned by a company, a partnership, a trust, or some other entity and how the mortgage is structured.

Dudson says that if an investor gets these things right at the start, they will make better profits on their investment.

Dudson also says that little changes to the way you buy and manage a property can make a significant difference to the bottom line of the investment.

A key distinction about the book is that it is aimed at people who want to own property as an investment, as opposed to people who are developing property for capital gains.

However, that doesn't mean the two are mutually exclusive. One of the big plus factors of property is that it is one of the only asset classes where investors can actually add value to the asset themselves.

This can range from the minor, such as putting decent appliances into a house, through to the major, such as adding new rooms or subdividing a property.

One of the many good things about this book is that it is laced with practical examples such as tables showing the impact of different decisions, plus it lists other books, websites and software property which investors should consider using.

Also, it includes useful sections on how to deal with tenants, selecting a property manager and dealing with real estate agents.

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