#2: Properties with unconsented building work

You might think a newly renovated house is a good thing.

But what if those renovations were never approved by the council? That’s called unconsented building work. 

And it could leave you paying thousands to fix someone else’s mistake.

One investor I met bought a house with two kitchens. The downstairs kitchen hadn’t been approved by the council.

Getting it signed off could cost another $25,000 to $30,000.

And if you buy that house, you inherit the problem.

You could also struggle to get a mortgage or insurance. You might even need to remove the work.

How can I avoid this mistake?

Watch for words like ‘unconsented’ or ‘unpermitted sleepout’ in listings.

Get your lawyer to check the council records and a building inspector to check the work.

#3: Leasehold properties

Some Auckland apartments sell for less than $50,000 … but there’s a reason they’re so cheap.

With leasehold properties you own the building or apartment, but not the land underneath it.

Instead, you pay the landowner ground rent.

And that rent can skyrocket.

One family bought a house beside Auckland’s Cornwall Park for $375,000.

Their ground rent was around $2,000 a year. But after a review it jumped to $30,000.

Another nearby owner saw their ground rent rise from $8,300 to $73,750 a year.

That’s why leasehold properties can lose so much value. The more expensive the ground rent becomes, the less buyers may be willing to pay for the property.

How can I avoid this mistake?

Check whether a property is leasehold. Ask your lawyer how much ground rent you will pay, when it can increase, and how those increases are calculated.

More from Opes:

• Top 5 places to invest in New Zealand [2026]

• Best and worst places to invest in NZ (all 67 areas ranked)

• What's happening with NZ house prices right now?

#4: Leaky homes and monolithic cladding

A house might look perfectly fine from the street, but behind the walls it could be rotting away.

That’s the risk with some homes built between the late 1980s and early 2000s.

Many had plaster-style exteriors, known as monolithic cladding.

But the problem wasn’t just the plaster; some homes were built in ways that allowed water to get inside the walls and rot timber.

And fixing it can be eye-wateringly expensive.

One 5-bedroom home in South Auckland, reportedly worth around $1.5 million, sold for just $900,000 because of concerns about its construction.

Recladding a leaky home can cost anywhere from $150,000 to $600,000, depending on the damage and work required.

Not every plaster home is leaky, but it’s a risk worth investigating.

How can I avoid this mistake?

Check when the property was built and what materials were used. Get a building inspection from someone experienced in spotting leaky homes.

#5: Apartments with body corporate problems

Imagine buying an apartment only to discover you need to pay another $200,000 to fix the building.

That’s the sort of bill some apartment owners can face ... even when they don’t want the work done.

One friend of mine owned an apartment in a leaky building.

The repairs were so expensive she ended up selling her three investment properties to pay her share.

That’s the danger with apartments and townhouses that have a body corporate.

A body corporate is the group responsible for looking after shared parts of a building.

And when something goes wrong, owners have to share the cost.

If major repairs are approved you can be required to contribute, even if you voted against them.

And sometimes the problems go beyond repairs.

Body corporates can also end up in court over disagreements. That can cost owners more money and make their apartments harder to sell.

How can I avoid this mistake?

Get your lawyer to review everything. That means the body corporate minutes, money coming in and out … and plans for future repairs. 

Look for upcoming repairs, unpaid bills or legal disputes.

#6: Hotel rooms

Buying a hotel room sounds like an easy way to make money.

You buy the room, the hotel rents it out, and you collect the income.

But it’s not always that simple.

Some banks require a much bigger deposit for hotel rooms than normal investment properties, sometimes as much as 50%.

So, you could have $100,000 saved and still struggle to buy a $220,000 hotel room.

If tourism slows or your room isn’t rented, your income could disappear.

Meanwhile, you may still be paying body corporate fees, insurance and other costs.

Some hotels pay owners a set amount of rent, which can suit investors looking for regular income.

But for investors wanting long-term house price growth, hotel rooms would not be my first choice.

How can I avoid this mistake?

Check the deposit requirements, how rental payments work and what fees you’ll pay. Also, find out how easy it will be to sell.

#7: One-bedroom and tiny apartments

A one-bedroom apartment might bring in good rent, but what happens when you want to sell?

Small apartments can be harder to sell because banks may require buyers to have bigger deposits.

For example, some banks may require deposits of up to 50% for apartments smaller than 38m².

That rules out a lot of buyers.

That doesn’t make small apartments bad investments; they can still suit investors looking for rental income.

But if capital growth is your goal, I would be cautious.

How can I avoid this mistake?

Check the apartment’s size, the bank’s deposit requirements and how easy similar properties have been to sell.

#8: Properties in flood-prone areas

Just because a house has never flooded doesn’t mean it’s safe from flooding.

And even if the water never reaches your front door, you could still end up paying for the risk.

One Napier family reportedly saw their home insurance increase by around $2,500 in a single year because their property was in a flood-prone area.

I learned about another risk when I lived beside a river in Christchurch.

My house was raised above the ground, so I wasn’t worried about flooding.

But one night the river flooded and destroyed a friend’s $200,000 sports car I had parked on the street.

Luckily, insurance covered it.

Not every home in a flood zone is a bad investment; some have been built to manage flooding. But older homes sitting low to the ground can be particularly risky.

How can I avoid this mistake?

Check the council’s flood maps. Ask your lawyer to check the council records and get an insurance quote before buying.

And don’t forget to check where you’ll park your car.

#9: Coastal properties at risk of erosion

Buying a bach by the beach sounds like the Kiwi dream.

But what happens when the beach starts eating away at your section?

That’s the risk with coastal erosion.

In some parts of New Zealand, the sea is slowly wearing away the land.

One home in Hawke’s Bay was bought for $160,000 in 1997.

It sold in 2018 for just $135,000.

That’s a $25,000 loss over 21 years, while many other homes in the area had increased in value.

And the problem can get worse.

As the sea gets closer, insurance can become more expensive or difficult to get.

Without insurance, buyers may struggle to get a mortgage. And that can make your property much harder to sell.

How can I avoid this mistake?

Check the council’s coastal erosion maps and order a LIM report.

Get an insurance quote before buying, and ask your lawyer to check whether the property could be affected by future erosion.

#10: Retirement village units

Retirement village units aren’t usually investment properties in the traditional sense.

But they are worth including because buying one isn’t the same as buying a normal house.

You could spend $650,000 on a retirement village unit and walk away with less than $500,000.

That’s because, in many retirement villages, you don’t actually own the unit.

Instead, you pay for the right to live there. This is called a licence to occupy.

And when you leave, the village usually takes a fee.

For example:

You also may not receive any increase in the unit’s value.

So, even if the village sells it for more than you paid, you might not get any of that extra money.

And depending on the contract, you may have to wait for your money to be returned.

Of course, retirement villages can offer lifestyle, security and support a normal home does not.

But they’re not usually designed to build wealth like an investment property.

How can I avoid this mistake?

Get your lawyer to explain the licence to occupy, the fees, whether you receive any increase in value and when your money will be returned.

Which investment properties struggle to grow in value?

Some properties can be hard to sell. Others can be hard to make money from.

And those aren’t always the same thing.

You might think a three-bedroom standalone house in a nice part of Auckland is a safe bet.

But not necessarily.

Imagine paying $1.5 million for a house that rents for $750 a week.

That’s just $39,000 a year in rent, before paying the mortgage, rates, insurance and repairs.

Or a rental yield of just 2.6%.

That’s a lot of money tied up in a property that doesn’t bring in much rent.

So, even if the house grows in value, you could spend a fortune keeping it afloat.

And it’s not the only property type where the numbers can disappoint.

A hotel room might bring in good rent but be hard to sell. A leasehold apartment could lose value as ground rent rises. And a retirement village unit might not give you any of the increase in value.

The lesson? A property can grow in value and still be a disappointing investment.

How can you avoid buying a bad investment property?

Just because a property is on this list doesn’t mean you should never buy it.

But before buying, make sure you know what you’re getting into.

Check the council records, get a building inspection and understand all the costs.

If you’re unsure what type of property you should invest in, you can book a free Wealth Plan meeting with Opes Partners.

We’ll help you work out what you can afford and what type of property suits your goals.