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COMMENT: Off-the-plan investing in 2020

Friday 27th of December 2019

As the decade draws to a close, existing property investors are conducting portfolio reviews and wondering where they can create efficiencies, boost income and reduce costs. Many others will be strategising to get into the property investment market, and questioning whether off-the-plan investing is the right approach. No matter your current position, here are some tried-and-true rules of thumb from an experienced investor and specialist advisor:

1. Off-the-plan has a number of distinct advantages over existing property.

With brand-new property you have a much lower risk of maintenance and repair costs and a better quality of tenant, which also means a higher rental rate and return to you as an investor. Older properties can cost a great deal of money for upkeep, which eats into income and profit. New properties also tend to rent quicker, reducing the risk of loss from vacancy periods, and the combination of good tenants and sound properties greatly reduces the likelihood of any disputes. As a landlord you have no problem with law changes regarding insulation and other requirements because, assuming full due diligence has been completed, that will be part and parcel of any new build.

2. You can enjoy capital growth even before completion.

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FMA outlines its latest expectations for advisers
Paul Flood: The danger is that the 'goalposts' (regarding what is acceptable or unacceptable adviser conduct) may be susceptible to change. Our 'Principles based' legal/regulatory environment lends itself to “prevalence-induced concept change” over time, perhaps not so much in the written laws and Code, as in the interpretation of the prescribed principles.
18 hours ago Steve Wright
FMA outlines its latest expectations for advisers
Just a tip, if you use more than six, six letter words in a sentence you lose most Kiwi's. So avoid client/adviser confusion when writing your post or article if you would like it read and understood. Ironically, my last sentence was not likely read.
20 hours ago Backstage
FMA outlines its latest expectations for advisers
All things said are great aspirational goals for a great financial advice industry, it mirrors what both the legislation and the code requires. However, like most things discussed it talks about what's expected not how it's done. The hardest aspect of financial advice today isn't what it is, it is how it is done. The how only comes from those that have done it, the how is only provided with examples. Guidance documents that spell out what's required along side how it it done. We’re still dealing with the same issues we started with in 2021, figuring out the how. And figuring out the how in every advice business is consuming resources that could easily be shortcut by the FMA demonstrating what they are expecting. It's not about “do it this way” its about this is the sorts of things we’re looking for. In the absence of standards and expectations, guesswork prevails. That represents significant risk to FAPs and the result is onerous overcooked advice processes for multiple advice operations and undercooked she’ll be right for single operators focused on getting the work done. Both approaches have potential for harm and as its been said earlier, leaves advisers open to explain they haven't been speeding with the authorities have pulled them over. The advice industry needs guidance on the how we know the what already.
2 days ago Jon-Paul Hale
Who is responsible for notifying policy changes?
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2 days ago Jon-Paul Hale
FMA outlines its latest expectations for advisers
To correct errors in my previous post: "policies, templates, and controls" should read "policies, processes, systems and controls", and "is more conductive" should read "is more conducive".
3 days ago Paul Flood