Rental Yield vs Capital Growth: What’s the Best Investment Strategy?
What is a good yield on rental property NZ? Many Mortgage Masters clients ask the same thing, and our knowledgeable mortgage brokers and financial advisers are here to help you learn how to calculate rental yield NZ. Let’s look at the difference between rental yield and capital growth to help you find the right investment strategy for you.
Rental Yield NZ
If you’re looking for a quick return on investment, it pays to know what is a good rental yield NZ. Traditionally, Kiwi investors focus on capital growth with properties that generate big gains once sold. Knowing how to calculate rental yield NZ, however, can open your eyes to an exciting income stream with reliable cash flow. Rental yield is calculated by dividing the annual rental income by the price of the property. This is a solid starting point for determining potential profit, although you need to consider ongoing costs like maintenance, too. A rental yield calculator NZ or a consultation with an experienced adviser can help you make more sense of what is a good rental yield NZ.
Capital Growth NZ
If you’re looking for capital growth, the lack of NZ capital gains tax on property makes our beautiful country one of the best places to invest. Unlike neighbouring Australia and many other countries around the world, New Zealand does not have a strict capital gains tax, meaning it’s possible to sell assets at a profit later on and make 100% of the profit. The bright line test applies to NZ property sold within a certain timeframe, however. There is a 10-year limit, so if you sell a home within the first decade of buying it, you will be taxed on the profit, which is added to your yearly income to determine the tax level.
Choosing the NZ Investment Strategy That Works for You
Once you know what is a good yield on rental property NZ, you can review different scenarios and determine whether rental yield or capital growth is your preferred investment method. There’s a lot of hype surrounding rental returns NZ in the hottest market, thanks to the strong cash flow and ability to cover the costs of owning and maintaining the home. Then again, the steady capital growth in a different property may end up beating even the best rental yields NZ when you’re ready to sell. That’s why it’s best to use a rental yield calculator NZ and think about both your short and long-term goals to decide on the best location and property to invest in.
Embrace the Best Rental Yields NZ with Independent Financial Advice Auckland
We hope our guide on rental yield NZ and capital growth helps you better understand these two popular approaches to property investment. Mortgage Masters would be happy to go through all the pros and cons to help you make more sense of NZ capital gains tax on property and what to expect from rental returns NZ. Please reach out to us to schedule a consultation to discuss investment strategies and locations in more detail.