Property ladder: Rental investment tough
The great Kiwi property ladder
Growing up, I was always told that property investment was the way to go, so when I graduated from university I bought my own house as soon as I could, and yes, it was easy, even though my income wasn't particularly high and the property market was rising fast.
I just bought the cheapest house in town and spent the next year fixing it up myself. I think too many first home buyers have excessively high expectations - the house has to be large, good-looking, in the right area, etc - and then they complain that there aren't any such houses in their budget.
I don't regret buying that house for a minute. But then I decided to try property investment, and bought another house to rent out.
That was a mistake. All the people who say landlords have it easy, they don't! If the tenants pay their rent, they trash the house, or vice versa. Some trash the house and don't pay. and this house was in a good area!
When I gave up, I discovered the next truth of owning property. With any other type of investment purchase, you pay the purchase price and that's it, no more costs. If it goes bust, you lose your investment, but that's all. But property has ongoing costs whether it's making money or not, repairs, rates, water rates, etc. And the only way to stop those costs is to sell the house, which isn't always easy. It took me over a year to sell my investment property, and I sold it at a loss. Never again!
In conclusion, I think it's a good idea for all New Zealanders to aspire to owning their own house, and if you're willing to put in some time and effort yourself it can be much cheaper than renting.
But anyone who thinks that owning rental properties is an easy way to make money needs to take a good hard look at the figures before they put any money in. After all, if being a landlord was so easy and lucrative, why is there such a shortage of rental properties at the moment?
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