Property Investment
10 min read
Author: Nefe Marson
Financial adviser at Opes. Formerly a senior adviser at one of NZ largest investment firms. Owned 3 properties by 30.
Reviewed by: Louis Fraysse
Louis is a registered financial adviser with an MBA from Massey University.
Buying an investment property in New Zealand involves six main steps:
The tricky part isn't necessarily finding a house.
It's all the other bits around that. Things like, getting the mortgage approved. Or, choosing a property that stacks up as an investment. And making sure you've checked everything before you sign on the dotted line.
In this article, we’ll walk you through the step-by-step process of buying an investment property.
If you're new to property investing, you can also read our property investment guide for a broader look at how property investing works.
Buying an investment property is about more than finding the right house. You need to get the finance sorted, choose a property that fits your strategy, run the numbers and do your due diligence before you commit.
Before you start scrolling through Trade Me listings, you need to know how much money you can put towards an investment property.
For many investors, this doesn't mean having hundreds of thousands of dollars sitting in a savings account. Instead, the deposit can come from the equity you already have in your own home.
The minimum deposit you need is set by the Reserve Bank's loan-to-value ratio (LVR) rules.
As a general rule in 2026, you'll need a 20% deposit for a New Build or 30% for an existing investment property.
Although sometimes this can be lower.
| New Build | Existing property | |
| Deposit | 20% | 30% |
| Deposit on a $700k property | $140,000 | $210,000 |
So, if you're buying a $700,000 property, you'd need roughly $140,000 for a New Build or $210,000 for an existing property.
That's a $70,000 difference, which is one reason a New Build can be easier for a first-time investor to get into.
You don't necessarily need to have your deposit sitting in the bank.
Quite a lot of the investors I work with use equity in their existing home.
For example, say your home is worth $900,000 and you have a $500,000 mortgage.
You have $400,000 of equity. That’s your wealth within the home. You can borrow against some of this equity as your investment property deposit.
But the bank won't usually let you borrow all $400,000 (in this example). Instead, the bank will often let you borrow up to 80% of the value of your own home.
So in this example, an investor would have $220,000 of useable equity:
$900,000 × 80% − $500,000 = $220,000
That $220,000 could be the 30% deposit on a $733,000 existing property.
Or it could be the 20% deposit for a $1.1 million New Build.
You can use our usable equity calculator to work out your own numbers.
Once you know roughly what deposit you have, the next question is: “will a bank lend you the rest?”
Because having equity as a deposit doesn't automatically mean you'll be approved for a mortgage.
The bank will look at things like your income, existing debts, living costs and the rent you expect the property to generate.
For example, under debt-to-income ratio (DTI) rules your total debt generally can't be more than:
Let’s say you're an investor earning $100,000 a year (including rental income). A DTI of 7 means total debt of up to $700,000 under the DTI rules.
But remember, these limits don't apply to New Builds.
But DTI isn't the only thing the bank looks at.
| The bank looks at | What it means |
| Your income and debts | How much you earn and what you already owe |
| Your living costs | Your regular expenses and other commitments |
| Part of the expected rent | The bank usually counts only part of the rent you'll receive |
| A servicing test rate | The bank tests whether you could still afford the loan if interest rates rose. They do this using a higher ‘servicing test rate’ |
Each bank works these things out differently. So one bank might approve your application, while another might decline it.
But, it’s really hard to see this from the outside. That’s why your mortgage adviser can help figure out which banks gives you the best shot at getting your mortgage approved.
The main message I want you to take away from this is, just because you think you can afford your mortgage … doesn’t mean your bank will agree with you.
That's why it's worth getting pre-approval before you start seriously looking at properties.
For more on this, see how much income you need to invest in property and our guide to DTI ratios.
Now you know roughly what you can afford for an investment property. This is where the fun starts.
But don't immediately start looking at properties. First decide what type of investment you actually want.
One decision you’ll need to make is whether to buy a New Build or an existing property.
| New Build | Existing property | |
| Deposit | 20% | 30% |
| DTI Rules | New Builds are exempt | DTI rules apply |
| Maintenance | Generally lower | Can be higher |
| Adding value | No opportunity to renovate | More opportunity to renovate and add value |
Neither property type is automatically better.
A New Build can be simpler for a first-time investor because you may need less money upfront and have fewer maintenance issues.
An existing property can give you more opportunities to renovate to add value.
It's about choosing what fits your investment strategy.
Location matters, but don't just pick the city with the cheapest houses or the highest rental yield.
Look at things such as:
These factors change over time. That's why we regularly update our guide to the best and worst places to invest in NZ.
Once you start looking at properties, it's easy to get distracted by nice kitchens, good-looking bathrooms and “bargains”.
But remember, you're buying an investment, not a home. The property needs to work as an investment.
So, before you get too excited about a property, make sure the numbers stack up.
You want to know whether the property is likely to be affordable to hold and whether the potential return makes sense for you.
If you’re working with a financial adviser, they’ll do this for you.
But if you’re flying solo you need to, at a minimum, look at:
One simple measure you'll come across is gross yield. This is the property's annual rent as a percentage of its purchase price. This is before taking expenses into account.
For example, a $700,000 property renting for $700 a week generates $36,400 in annual gross rent. That's a 5.2% gross yield.
But remember, you don't get to keep $36,400.
You still have to pay your all your costs. Things like mortgage, rates, insurance, maintenance, and property management fees. But, there can be others too.
And if the property is empty for a few weeks between tenants, you'll miss out on rent for those weeks. (But the mortgage doesn’t get put on hold).
That's why gross yield is only a starting point.
You can use a property investment calculator to model the property's cashflow and potential returns.
This is where you check whether the property is actually what you think it is.
Depending on the property, you might:
The due diligence process looks quite different depending on what you're buying.
With an existing property, you can usually walk through the actual property. You can inspect its condition, look for defects and see what you're actually buying.
With a New Build, the property may not exist yet. So you're literally buying off-the-plans – lines on a piece of paper.
This means you need to carefully look at what's included in the contract and whether the developer can deliver.
| Existing property | New Build |
| Inspect the actual property | Review plans and specifications |
| Check the building's condition | Check the developer and development |
| Look for defects and maintenance issues | Check exactly what is included in the contract |
| Research the property's rental history | Research expected rent using comparable properties |
The checks are different, but the goal is the same: know what you're buying before you commit.
This is where the professionals you hire become important. For example, if you decide on a New Build you’re going to want a lawyer that specialises in New Builds.
They’re the experts at reading contracts line by line and letting you know what you need to look out for.
You don't need to figure everything out yourself. These are the people who can help you through the process:
So, you've found a property and decided it works as an investment.
Now you need to formally agree to buy it by signing a sale and purchase agreement. The agreement starts off as conditional and later become unconditional.
| Conditional | Unconditional | |
| What it means | You’ll buy the property, but only if certain conditions are met. (e.g. if you can get the mortgage from the bank) | You've committed to buying the property. No backing out now. |
What happens at this stage changes depending on whether you're buying an existing property or a New Build.
With an existing property, you might make a conditional offer first.
This gives you time to look over things. For example, getting your finance locked in, getting a building inspection or your laywer checking the contract.
If everything checks out, you can then go unconditional.
With a New Build, you may sign the contract earlier in the process. Even before you start your due diligence.
At Opes, we call this the Property Power Position.
The idea is that you secure the right to buy the property while you complete your due diligence. Otherwise, you could spend time checking out the property only for someone else to buy it before you.
Our guide to property contracts and the sale and purchase agreement explains what to look for.
When you sign the sale and purchase agreement, you'll usually need to pay a deposit to the seller.
But this isn't necessarily the same as the 20% or 30% deposit your bank requires.
For example, the contract might say you need to pay the seller a 10% deposit when the deal becomes unconditional.
Settlement is the day you pay for the property and become the owner.
By this point, your solicitor and mortgage adviser will generally be coordinating the final pieces.
Before settlement you'll need to make sure:
Your solicitor will coordinate the settlement with the seller’s lawyer and your bank.
Once settlement goes through, you own the property.
Now you're a landlord.
If you've hired a property manager, they'll take over the day-to-day management of the tenancy:
This is where the investment moves from being a property purchase to being an actual long-term investment.
Here's the six-step version.
| Step | What you're doing | Who can help |
| 1. Work out your deposit | Calculate cash and usable equity | Mortgage adviser |
| 2. Get pre-approval | Work out how much the bank may lend | Mortgage adviser |
| 3. Choose your strategy | Pick property type and location | Property adviser |
| 4. Find and check the property | Analyse the deal and complete due diligence | Solicitor, accountant, building inspector, insurance adviser |
| 5. Make the offer | Negotiate and sign the sale and purchase agreement | Solicitor |
| 6. Settle | Complete the purchase and take ownership | Solicitor, mortgage adviser, property manager |
That's the process. It sounds straightforward.
And in one sense, it is.
But there are a lot of decisions hiding inside those six steps.
As a financial adviser, I think a New Build can be a good place to start for many first-time investors.
That's not because New Builds are automatically better investments. It's because they can remove some of the hurdles that make getting started difficult.
You generally need a smaller deposit. New Builds are exempt from DTI restrictions, and maintenance is usually lower because ... everything is new.
For example, on a $700,000 property, you're looking at about $140,000 of deposit for a New Build. That's compared with about $210,000 for an existing property.
That difference can make a big impact when you're trying to get on the ladder.
Don't get me wrong, New Builds aren't right for everyone. If you're experienced at renovating and want to add value to a property, an existing property may be a better idea.
At Opes Partners, we've focused on New Build investment properties for more than 12 years. But the right first property still comes down to your goals, your finances and the type of investing you're comfortable with.
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.
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.
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