What to Look for When Buying an Investment Property
Buying a home to live in is often driven by emotion—sunlight in the kitchen, space for a veggie garden, or proximity to your favourite café. But when buying an investment property, it’s all about the numbers and long-term potential. It’s a business decision, and it needs a business-like approach.
That’s where a structured checklist becomes invaluable. By evaluating properties across five key areas—location, developer, lending ability, build quality, and price—you can confidently separate good investments from risky ones. Let’s take a closer look at how to apply this approach.
Location Still Matters—A Lot
Capital growth potential often starts with the suburb. Historical price trends can be a great guide, especially when supported by population growth, infrastructure investment, and job opportunities. Ask yourself: has this area seen steady capital growth? Is it in a region with economic resilience and a diverse job market?
Strong-performing locations often share common traits: they're on transport routes, close to employment hubs, and have increasing housing demand. On the other hand, regions with a narrow economic base or declining population pose long-term risks.
New Zealand’s current housing intensification policies also add another layer—areas zoned for greater development may offer future upside beyond rental income alone.
Know Who's Behind the Build
If you're purchasing a new build, understanding the developer’s track record is just as important as the specs of the property. You’ll want to know whether they are financially secure, have a good reputation for quality, and are reasonable to deal with if something goes wrong.
Some investors assume that big-name developers are always better, but that’s not necessarily true. A smaller developer with consistent delivery and good communication can be just as trustworthy—sometimes more so.
Also check whether the build is truly “turn-key.” Will it come with landscaping, curtains, heat pumps, and appliances? These features can save you both time and unexpected costs at handover.
Will the Bank Support It?
A property might look great on paper, but if it’s hard to finance, it’s not a good investment. Check whether the bank will lend the full 80% (common for new builds) or whether you’ll need a bigger deposit. Consider whether insurance will be straightforward—especially important in high-risk regions or older apartment blocks.
Banks also take cashflow and affordability seriously. A strong property isn’t just easy to buy—it’s easy to keep. If your mortgage repayments are manageable, the investment will be more sustainable in the long term.
Fit for the Market, Not for You
As the investor, you don’t have to love the property—but your tenants do. That means picking homes that appeal to the typical renter in the area. This might mean a two-bedroom townhouse near public transport, rather than a four-bedroom family home on the edge of town.
Tenant demand also relates to the home’s layout, its maintenance needs, and compliance with the Healthy Homes Standards. Look for materials that are durable and easy to replace, layouts that make the most of smaller footprints, and properties that don’t require constant upkeep.
When it comes to features, a simple, low-maintenance garden and a reliable heat pump may be more valuable to tenants than a fancy benchtop or imported flooring.
The Numbers Need to Stack Up
At the end of the day, your investment needs to be financially viable. That means good yield, manageable expenses, and—ideally—room for capital growth. A rental return of 4.5% on a well-priced property in a growing suburb will generally outperform a flash new apartment in a flat market with high body corporate fees.
Make sure you know how to calculate yield (both gross and net), and understand how the bank will assess it. Their calculations are more conservative than yours, especially for existing properties.
Don’t forget to evaluate the property’s long-term value. A cheap property with high rent might not appreciate in value, while a slightly more expensive home in a growth suburb might deliver better results over time.
Price, Value, and Opportunity
Finally, a good investment property should be priced fairly relative to similar properties in the area. A registered valuation can be helpful here, especially when working with new developments or properties without much recent sales history.
If you’re buying off the plans, confirm what's included, when the build is expected to finish, and whether the value aligns with comparable properties nearby. You want to enter the market at the right level, not at a premium that you’ll struggle to recoup.
Remember, some of the best investment properties won’t tick every box—but understanding where the strengths and risks lie will help you make better decisions.
Ready to Start?
If you’re seriously considering buying an investment property, the best place to begin is by speaking to a mortgage broker. They’ll help you understand what you can borrow and how to structure your lending in a way that works for your long-term goals.
With a solid checklist in hand and expert advice on your side, you’ll be well placed to make a smart, confident investment.
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