What SMART Investers Always Look for in Properties

We sat down with Adam Farrell, Director of Lighthouse Property, to discuss what smart investors consider when purchasing an investment property.

One of the first things investors should consider is the type of property title. In New Zealand, freehold is the most desirable option, as it provides full ownership of both the land and the dwelling. However, other types like leasehold, cross lease, and unit titles come with their own pros and cons.

• Leasehold properties can offer good cash flow but come with ongoing costs that can increase significantly over time. They are typically not a good option for those looking for capital gains.
• Cross lease properties can sometimes be undervalued due to common misconceptions, but they can present opportunities if converted to freehold.
• Unit titles often come with body corporate fees, which can be worthwhile if managed well, but investors need to be wary of high maintenance costs associated with shared amenities like elevators and pools.

A property’s potential for capital growth is heavily influenced by supply and demand. Investing in a unique property within a development—such as a rare two-bedroom unit in a predominantly three-bedroom complex—can make it more attractive when it comes time to rent or sell.

Additionally, large-scale developments can create oversupply issues. If too many similar properties enter the market at the same time, it can lead to a “race to the bottom” in rental prices, making it harder for investors to secure high returns.

Not all properties are created equal. Certain features can make a property more appealing to tenants and future buyers, increasing its long-term value.

• Additional Bathrooms: Properties with two bathrooms tend to rent faster and attract more tenants than those with just one.
• Corner or End Units: These usually offer more privacy, better natural light, and sometimes more land.
• Car Parking & Garages: While not always essential, parking can be a key selling point, especially for larger homes in suburban areas.

One of the biggest mistakes new investors make is wanting everything in one property—cash flow, affordability, growth potential, and every possible amenity. While it’s great to have a checklist, investors need to prioritise based on their budget and goals.

Similarly, choosing the right investment strategy is crucial. Many first-time investors consider renovations or property development without fully understanding the time, cost, and effort involved. If you’re time-poor or lack experience, new-builds or turnkey properties may be a more suitable option.

Negotiating a good deal is important, but some investors become too focused on getting a bargain and risk missing out altogether. In a soft market, the real discount is often in market conditions rather than an extra $5,000 off the purchase price. Those who spend too long waiting for the “perfect deal” may find themselves priced out when the market rebounds.

A property’s location plays a significant role in its growth potential. Access to transport, schools, shopping centres, and other amenities can drive demand and increase long-term value. Investors should also look at planned infrastructure projects that may impact an area’s desirability, such as the City Rail Link in Auckland, which is expected to improve transport times and property values in nearby suburbs.

• At the end of the day, the biggest risk in property investing is doing nothing. Smart investors set clear criteria, understand market trends, and take action when they find a property that meets their goals.

  If you’re considering an investment property and want expert guidance, reach out to Lighthouse Property for professional advice tailored to your needs.

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