Property investment is probably the closest anyone can get to a legitimate “get rich quick” scheme.
There are risks, of course.
It’s the main way that most New Zealanders get from “average” to “pretty well-off, thanks for asking”.
Of the top 20 people on New Zealand’s rich list, almost half built their wealth through property investment.
Property is such an effective route to wealth because you don’t always have to have a lot of money to start off with.
Unlike shares, you can borrow a significant amount against a property.
That leverage brings risk, but it also amplifies gains.
Mortgage adviser Glen McLeod, of Edge Mortgages, said there was a “direct correlation” between property investment and wealth creation.
“I believe that property has been for a long time the best way to build wealth. When the market has dips and recedes, the investor can ride it out with time and continue to grow the asset value.”
He said the most important thing was to reduce debt and have strong cash flow to enable the portfolio to continue to grow.
McLeod said he was unconvinced that a capital gains tax, as recommended by the Tax Working Group, would mean any fundamental change.