Yahoo Finance 
Q+A with Lisa Dudson, author of The New Zealand Property Guide
Personal finance expert Lisa Dudson has just released her book "The New Zealand Property Guide", a helpful manual for kiwis looking to invest in residential property.
Dudson, a regular contributor to Yahoo! NZ Finance, is an investor, author and entrepreneur, recognised as a leading educator in the property and finance sectors in New Zealand. She began investing when she was 16 years old and currently owns a broad portfolio of investments. In her latest book, she shares her resources for both those considering property for the first time and those who have been investing for a while.
1. What do you think are the biggest mistakes property investors make?
The biggest mistake is underestimating what is involved in purchasing and owning a property investment. Some people believe that it’s similar to buying a home when it fact it is quite different from the perspective of investment property should be purchased based on the financials and not on emotion. You need to understand what the property will do for your financial position both today and in the future. Im always surprised how little advice people take when making such a big financial decision and also how little understanding they have of the numbers. Another key mistake is not doing enough due diligence.
2. Is property still a safe investment?
Yes if you know what you are doing, get good advice and have a plan, clearly understand the numbers and do thorough due diligence. Focusing on the long term is also important.
3. What are the main risks?
The key risks, all of which can be minimised, are:
- The property being vacant
- Tenants not paying rent
- Damages to the property
- Unplanned maintenance
- Interest rate increases
- Over borrowing
- Low or negative capital growth
- New legislation
- Change in personal circumstances
4. In what circumstances (other than obviously not being able to afford it) should someone not buy an investment property?
When they don’t know what they are doing, haven’t gotten any advice, haven’t thought through the risks and don’t do enough due diligence. Property investment can be a great investment. However it is a huge financial commitment so it’s imperative that enough investigation is done prior to purchase to ensure good decisions are made.
5. Is it really that bad a financial decision to choose to be a lifelong renter?
It is if you have no other financial plan in place. The great thing about having a home is that it is a form of compulsory saving. If you don’t plan to own a home you need to either have an investment property and pay it off and/or another form of savings, eg a share portfolio, KiwiSaver to a similar value. When you get to retirement age you want to aim for having a home with no mortgage to live in and some extra money to supplement the NZ superannuation.
Over the next six weeks, we will be giving away copies of Dudson's new book, The New Zealand Property Guide, over on our Facebook page. Like the page for more updates on the competition in the coming days, as well as a series of informative blog posts by Dudson with further details on property investment.
