Gains or yields?
Question from Michael updated on 30th September 2020:
I have $250,000 to invest in what will be my first investment property. I live in South Auckland and my goal is to have a good passive income in about 10 years’ time. Do you think I should buy a more expensive property house in a more central Auckland suburb, or even Mangere Bridge, for capital gain? Or would it make more sense to buy two cheaper properties in South Auckland which would produce higher yields?
Our expert Kris Pedersen responded:
You have stated that your goal is around passive income and that the South Auckland properties will produce better yields. If this is your main priority, based on what you have said this may be the way to go. But make sure that you are calculating the comparison off net yields and also taking into account which option may require more maintenance to do a fair comparison. Also, ensure that you do have your goals correctly aligned with your investment strategy.
Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies. www.krispedersen.co.nz
Search the Ask an Expert archive
Browse all questions in the Ask An Expert Archive »