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Invest in property

To hold or flip?

If you’re considering property investment, one of the things you need to decide is if you want to buy and hold the property, or buy a ‘do-up’, renovate it and then sell within a much shorter timeframe.

There is no right answer, just the best one for you based on your skills, time and financial situation.

Buy and hold

This is the simpler and longer term of the two strategies. This involves purchasing the property, finding the right tenant/s and holding the property over a long period of time, this could be a decade or more. You are relying on your investment returns coming from rental income and capital gains.

What else do I need to think about?

Self-manage, or hire a property manager

If you decide to hire a property management company, they will charge between 5-10% of the weekly rental amount. This weekly commission amount normally covers rent collection and managing required maintenance. There are likely to be extra fees to find tenants and conducting inspections.

If you are going to manage the property yourself, while it takes a little of your time, it will save you the cost of the weekly commission fee. You’ll also need to manage the relationship with your tenant, making sure rent is paid on time, managing any tradespeople to do maintenance (or doing it yourself). Even if you manage the tenant yourself, there are some property managers where you can pay for one-off services such as finding a tenant.


Buying the right property, in the right location and finding the right tenants are key to making sure this strategy is successful, some might say the key to any property investment! If you manage to find the sweet spot of all these 3 factors, you’ll be able to ‘set and forget’ your investment rather than spending time (and money) constantly finding new tenants, having a vacant property in between tenants or unnecessarily spending money on maintenance and capital expenditure.

Value Appreciation

Any asset, including real estate, can go up or down in value. If your property increases in value, you will be able to sell it at a profit (when you’re ready to) or use the built-up equity to borrow more to purchase another investment property.

Do up and flip

Another strategy with property investment is to buy a property that you’re able to add value to, spend some money doing it up, and then sell it at a profit. This is a shorter-term strategy because the longer it takes you to resell, the more your holding costs are, think mortgage repayments, rates and insurances. This will also ensure that you are buying and selling in the same market.

This strategy requires a bit more time and skills. Questions you should ask yourself if considering a do up is:

  • How can I add value to the property
  • Do I have the time, and skills to manage the intricacies of managing, or even doing, property renovations? (if you’re not a DIY-er, then can you manage trades people and services).

What should I factor into my decision to buy a do-up?

Your skill set (or ability to project manage materials and tradespeople)

Are you a DIY-er and would be able to gib, sand, paint, landscape and build fences? This is where most of the cost savings will come from if you’re looking to do simple renovations. If you’re not inclined to do the renovations yourself, then you’ll need to be able to manage tradespeople, and other contractors, if this project more on the meatier ‘development’ side rather than a simple renovation.

Purchase cost

Make sure you don’t overpay for the property - the main profit is made when you buy the property. Especially if it’s a ‘do-up’ property, aim to get it for a good price, below the value you’d normally have to pay if it was a tidy, modern property. Remember, you’re trying to buy cheaply, add value to it and sell it for a profit.

Renovations costs

For various reasons, New Zealand currently has a shortage of tradespeople. If you’re relying on them to do the work, you need to make sure you plan accordingly as, not only are they more expensive because of the high demand, but there are longer wait times to get work done. Remember, the longer it takes you to complete the project, the higher the holding costs.

As well as tradespeople impacting build times and costs, the current shortage of raw building materials is also affecting the build times and costs. This shortage is causing delays, in some cases doubling build times; and the product you can buy is significantly more expensive than it has been historically.

Tax/Brightline implications

A tax will be applied to capital gains on any properties bought on or after March 2021 and sold within 10 years (or 5 years if it’s a new build property). This is called the Bright-line property rule. Obviously, this is an additional cost that you need to account for in ensuring that the profit you expect to make on reselling a renovated property is worth it.

So which option is better?

As we mentioned at the start, there is no right answer. But ask yourself if you’ve got the time and skills to manage renovations on a do up, or if you’d prefer the set and forget type of investment. While no strategy is risk free, your personal risk appetite does come into play here as well as how hands on you want to be with your investment.


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