Property Investment

6 min read11 Mar 2026

Should I buy a business or an investment property? Pros, cons and returns compared

Compare buying a business vs an investment property in New Zealand. Learn the pros, cons, deposit needs, returns, risks, and time commitment for each.

Author: Nefe Marson

Financial adviser at Opes. Formerly a senior adviser at one of NZ largest investment firms. Owned 3 properties by 30.

Book free session with Nefe

Reviewed by: Grace Gibson

Financial adviser at Opes. Over 10 years experience in financial services.

Copied

Listen to this article

•0:00

Should you buy a business or an investment property?

Before you decide to invest in either, you need to answer these 6 questions:

What sort of property or business can you buy?
How much deposit do you need to put in?
How much will the mortgage cost you? (if you get one)
What sort of return can you get?
How much time can you invest?
and (most importantly) can you handle the risks involved?

I was reminded of this because I recently worked with an Otago couple.

They were pre-approved to spend $650k on an investment property. They looked at properties with their financial adviser, and the numbers seemed to make sense.

But then they spoke to their business adviser who told them the yield on the property wasn’t good enough. The business adviser suggested buying a business instead.

But deciding between a business and a property isn’t as simple as comparing yields.

Before we get into it, you might think: “Nefe, you help people invest in property. Aren’t you just going to tell me that property is the best?”

I’m not going to do that. This will be an honest comparison of the pros, cons and returns of buying a business vs. an investment property.

Here’s a summary of the main differences. Just keep in mind this is what I see most of the time (the exact numbers can change):

	Investment Property	Business
Average cost	$772,000 (March 2025)	$769,000 (April 2024 – March 2025)
Deposit required	20 - 30%	30 - 50%
Interest rates	4.5 - 5% Standard mortgage rates	5 - 12% Risk-based pricing
Loan term	30 years (max)	5–10 years
Time commitment	Mostly passive	You work full-time in the business (most of the time)
Net yield (Before mortgage costs)	3-4%	10-30%
Risk	Medium-high	Very high

Top takeaway

Property and businesses can cost a similar amount to buy. But the risk, workload, and lending terms are very different.

Question #1 – What sort of property or business can you buy?

Properties and businesses can sell for around the same price

The average business sold for $769,000 (April 2024 – March 2025). Source: ABC Business Sales.
The median property sold for $775,000 (March 2025). Source: REINZ.

Let’s say you’re like the couple I mentioned earlier and you want to invest $600,000.

For $600,000 you could buy a New Build townhouse in Christchurch. Or, if you look for businesses for sale on Trade Me or a business brokerage site, you might find:

A Toyworld franchise in Napier for $400k + the stock
Liquor store in Christchurch for about $500k
Burger Burger franchise on the North Shore for $300k
Childcare centre in Auckland for around $500k
or even a Lone Star restaurant listed around $850k

These are real, tangible businesses.

Question #2 – How much deposit do you need to put in?

If you buy a $600,000 investment property, you typically need a 20-30% deposit.

It’s 20% deposit for a New Build investment property
Or a 30% deposit for an existing investment property.

That means you’d need a $120,000-$180,000 deposit to buy a $600,000 investment property.

Buying a $600,000 business can look very different.

Banks are usually more cautious lending against businesses and may need you to put in a 30-50% deposit.

That means to buy a $600,000 business you might need $180,000-$300,000 of your own money.

More from Opes:

Question #3 – How much will the mortgage cost you? (if you get one)

Getting a loan to buy a business is usually harder than getting a loan for a property.

	Property loan	Business loan
Interest rates	4.5 - 5% Standard mortgage rates	5 - 12% Risk-based pricing
Loan term	Up to 30 years	Often 5-10 years
Servicing	Based mainly on your income and debts	Based on business past profits and forecasts

The biggest difference is how banks set the interest rate.

With property most borrowers pay similar mortgage rates. With businesses, the bank adjusts the rate depending on how risky the business appears.

A bank might be comfortable lending to a childcare centre and offer a lower rate, but petrol stations might be considered riskier. That means they might have to pay a higher interest rate.

Banks also check if the business can afford the loan by reviewing:

The company’s past profits
the owner’s income, and
financial forecasts prepared by an accountant.

But business loans are usually shorter: 5-10 years compared with up to 30 years for property.

That means even if a business looks like it produces a higher return, the loan repayments can still be much higher.

Question #4 – What sort of return can I get?

Businesses tend to generate a higher return than properties. One way to compare properties and businesses is by looking at the net yield.

Net Yield = (Revenue – Costs) / Asset Value

But this is before taking into account any debt.

So if a property costs $600,000, earns $30,000 a year in rent and has $10,000 in operating costs, then:

($30k - $10k) / $600k = 3.3% net yield.

This calculation is a little harder for businesses because the value of a business can fluctuate.

But according to ABC Business Sales, the average small business sells for 3.5x its earnings (EBITDA).

That suggests an average business earns a net yield of 29%.

Of course, there are other things to consider like:

that net yield might include the value of the owner working in the business
properties tend to be more liquid than a business, and increase in value relatively more consistently.

However, it’s fair to say that typically businesses get a higher net yield than properties.

Question #5 – How much time can you invest?

Businesses will often take up much more of your time than property.

When you buy a business around that $600,000 mark it usually won’t have a management team.

You are often buying a business and a job at the same time.

The MBIE Small Business fact sheet shows 72% of all New Zealand businesses have zero employees. That means the owner is doing everything.

That motel business listed for $500k? It often includes owner accommodation because you’ll be the one running it.

That liquor store? You’ll likely be rostering staff, ordering stock and working weekends.

I once looked into buying a liquor store as a side investment to generate extra income, but after speaking to an experienced owner, I realised it wasn’t for me. Most stores at that level only generate around $80,000 in owner income, and many franchisors expect you to be an owner-operator.

To buy a business that runs without you, you’d usually need much more than $600k, so you’re also buying the systems, staff and management.

By contrast investment property can be relatively passive. With a property manager in place, most investors spend very little time managing it.

Action Points – What to do before you choose

Compare the deposit needed
Check the loan repayments
Look at the return after costs
Be honest about the time involved
Make sure the risk suits you

Question #6 – Can you handle the risks involved?

Investment properties (especially with debt) are medium to high risk, but businesses are even riskier.

When a business fails, its value can drop to zero.

According to Stats NZ, only 46% of businesses started in 2019 were still operating five years later. That means more than half closed within five years.

Things are also getting tougher. The Companies Office recorded 2,867 company liquidations in 2025, the highest number in 15 years.

You’ll even see businesses listed for sale for $1, where the owner simply wants someone to take over the lease and liabilities.

Property values tend to be more stable. Even during downturns the value of the property rarely goes to $0.

But businesses do have one advantage: the upside can be huge. If you grow the revenue of a business you can dramatically increase its value. That’s something you can’t easily do with a residential property.

So what’s the right choice for me?

Buying a business isn’t the right move for everyone. And both property and business might not be the right fit for you if you have a low risk tolerance.

Buying a business tends to suit people who are comfortable with risk and have the skills and experience to manage it.

Investment property may suit you if you:

Buying a business may suit if you:

want a relatively passive investment

value stability and long-term growth

are comfortable with higher risk

have industry experience

want to actively run and grow a business

And many successful investors eventually invest in properties and businesses.

That’s why the right choice depends on what you’re trying to achieve.

If you’re considering buying a business:

speak to a business broker or adviser who understands the industry and can help you assess the opportunity properly.

If you’re thinking about property:

Chat with a financial adviser who specialises in property investment to see how it could fit into your financial plan.

Nefe Marson

Financial adviser at Opes. Formerly a senior adviser at one of NZ largest investment firms. Owned 3 properties by 30.

Nefe is a Registered Financial Adviser at Opes Partners with 7 years’ experience in financial services. Before joining Opes, she was a senior adviser at one of New Zealand’s largest investment firms, managing $13 million in KiwiSaver and managed funds. She’s helped clients invest over $26 million in property and owned 3 properties before her 30th birthday.

Book free session with Nefe View Profile

Ok, now for the legal bit:

This article is for your general information. It’s not financial advice. See here for details about our Financial Advice Provider Disclosure. So Opes isn’t telling you what to do with your own money.

We’ve made every effort to make sure the information is accurate. But we occasionally get the odd fact wrong. Make sure you do your own research or talk to a financial adviser before making any investment decisions.

You might like to use us or another financial adviser

Property Investment

What are the top 8 best investments in New Zealand?

Explore the top 8 investment options in New Zealand, including property, KiwiSaver, shares, and more. Get insights on the pros and cons to make better financial decisions.

Property Investment

Personal vs investment spending

Learn who needs to prioritise investment spending, and the psychological money lies you need to conquer to successfully invest.

Property Investment

What is return on investment? (and how does it work in property)

Return on Investment (ROI) is more a complex calculation. Lots of people have an idea of what it might mean, but what does it actually mean when it comes to property investment?

4 steps to getting a mortgage as a self employed person WEBSI Te

Mortgages

4 steps to get a mortgage if you’re self-employed

Learn the 4 practical steps you can take to get your mortgage approved.

OM 3874 How to calculate your income as a self employed person V2

Property Investment

Self-employed and applying for a mortgage? Here’s how banks actually calculate your income

Learn how banks calculate your income, what counts as provable income, and how to boost your borrowing power when you're self-employed.

Reviews

Top 6 property developers in NZ

Discover the top 6 developers we work with here at Opes Partners and why they have made our list.

Property Investment

Opes vs other property managers: Who gets properties rented faster in big developments?

Should you use the same property manager as other investors in a new development? Learn the pros, cons, and which strategy rents your property faster.

Property Market

What’s a good gross yield in Christchurch?

Rental yield is the yearly revenue your investment property generates. Investors want to know what a good rental yield is in Christchurch.