Investment Checklist

Who shouldn’t invest in the US market?

Do not be blinded by the opportunity of earning 10, 15 or 20% on a property investment as this type of investment is not suitable for everyone. 

You need five year thinking. This is not a get rich quick scheme. Property investments should be measured in years, not months. And although your investment property can be sold and turned back into cash at any time, the best returns will only be realized by patiently selling after a number of years or more. If you are likely to need your money back in a hurry or within a year or two, then we recommend you do not invest in any property. 

Nickel and dime thinking will not work. If you fret over every little expense and what it is doing to the bottom line, then do not buy properties because there are always little expenses. 

It is not the same as a renter down the road that can be seen at any time. Whilst we can do live video feeds for you to see your property, you still need to trust people because your property managers are your eyes and ears. It is not a 5 minute drive to go and see if the pipe really did need repairing! But we can assure you the US Property Managers are as good and honest as most NZ managers.

What sort of property do you want to invest in?

I.E. family homes, apartments, or commercial?

What is the demographic target of your investment?

Low, medium, or high income family homes and do you understand the positives and negatives of each?

What type of investment return are you looking for?

For example often higher cash flow will trade off the against capital gain.

If high capital gain is the requirement

Then timing is important, which is why we describe the US market and NZ economy as the perfect storm as property prices in the US have hit a 30 year low and the NZ dollar has hit a 30 year high.

Also when targeting capital growth consider that it is easier for a house price to double from $50K to $100K than from $500k to $1M.

However, whilst the US is now widely expected to experience steady to strong capital growth in the years ahead, we suggest Investors looking for the really big capital gains from their property investments to stick with NZ. Certainly, unless the NZ government and/or RBNZ intervene with some radical 'market-cooling' strategies, the NZ property bubble is likely to out-perform (in the near future) most other international markets in terms of capital growth. 


Current and historical value.

You make all your money in property when you buy, so understanding current and historical value is critical. Before buying anywhere, check out other asking prices in the area for comparable homes and ask how long does it take to sell a house in this area and what is the price history for the area. Is the asking price too high for the area?

Are you familiar with the location of your investment or will you require help and guidance?

For example, if you are in Auckland looking to buy in Invercargill you will be wise to get advice from locals who are familiar with the market. This is, of course, what Estero are offering NZ investors as we have personally visited the US markets and cities many times and formed alliances with local people who understand the market.

Basic Economics

You should have a basic understanding of micro and macroeconomics that could affect your property investment. Micro is local employment, infrastructure, city population and recent changes in population (i.e. trending up or down) and macro is the economy at large. For example an investment in Europe might be risky right now while they continue discussing the collapse of the Euro or a capital gain tax in NZ would impact on the whole property market (N.B. to stay in touch with news and events subscribe to the Estero Newsletter on the home page).

In the US market understand:

  • S&P/Case-Shiller Home Price Data
  • Areas that are impacted by cold or tornadoes etc. for repairs, heating, mould etc.
  • Property taxes and state taxes
  • ‘Word frame construction’ i.e. understand local dialogue
  • Check inventories (houses for sale i.e. stock levels)
  • Median house prices (Be careful they are not skewed by foreclosures. Try to get median house prices for any area excluding foreclosures)
  • Find the average non-foreclosure turn around for a sale 
  • Is there a wage index to check?
  • Get job/ employment data–be careful not to get the ones skewed by seasons
  • How far to the local schools? How good are they?
  • What is the primary industry / employment in the area?
  • Watch for seasonal adjustments and fluctuations that naturally occur
  • Banks will only lend on valuation not purchase price, so check that valuations are falling somewhere near purchase prices
  • Guaranteed ownership insurance
  • Average rent paid in neighbourhood
  • Median income levels
  • Employment is a) stable b) rising/falling last 2 years c) less than nation average 10%