Home and Income Rental Property

It was a memorable moment last week when one of my clients took possession of a home and income. I fondly recalled the time I purchased my first property for rental in November 2002, it was a home and income located in Karori (Wellington suburb).

My sole reason behind purchasing a home and income as my first and second property was to generate a healthy cash flow. Today most property investors are focused on creating equity as opposed to creating cash flow, however one can’t retire on equity alone.

I have come across many property investors who generate very little cash flow income from their property investment.

If you want to attain financial freedom and prepare for an early retirement the key elements for property investors to observe would be cashflow and equity - in that order.

It’s desirable that your property investment strategy aligns with your short, medium and long term goals. You need to be aware of how much is sufficient for your financial retirement.

It’s imperative that you have a good measurement and management of your property portfolio debt, income and equity. In order to gain maximum financial gains from your property investment, it’s pertinent that you ensure a regular maintenance program and be proactive with your tenants.

It took me 10 years to achieve good cash flow from my property portfolio - it required hardwork, discipline and tenacity. When you are looking at investing in a property, it’s important that you do your research and take calculated risks.

home and income 2


Just like other types of investment, you need to study the risks and prepare yourself for the worst case scenario. You need to place yourself in hypothetical situations and have an alternative plan in place to counter some of the issues you may face. Do ask yourself questions such as what would one do if the interest rate rises to 7% or if your investment property is vacant for 3 months?

You need to prepare sufficient access to credit facility to cover interest rate, insurance and all your fixed living expenses for at least 3 months in the event your income and rental ceases.

The interest rate is currently in its all time low so when you are planning your property investment portfolio do incorporate an interest rate risk management strategy.

Interest rate averaging is a method that experienced property investors use to manage interest rate risks. 

If you need more information or help with “interest rate averaging” speak to your financial advisor, broker or a loan officer.

I hope my clients will reap the best from their property investments


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