Astute investors need to investigate thoroughly to see whether the investment is truly structured in their best interests.
The classic example is the serviced apartment sold with an attractive short-term guaranteed lease rental.
Although the income may be good for a year or so, when the guarantee period ends, the return often drops by 50 per cent or more, and the property is hard to re-sell.
Also, the GST component of the purchase price, ignored at the time of buying, may make an ugly reappearance at the time of re-sale.
Investors need good grounding and knowledge to apply a rigorous set of criteria whenever assessing an investment opportunity.
And at the outset you have to decide how actively you want to look after your property.
You can try the good old Kiwi DIY approach and train yourself up, or you can use a specialist firm like Charta Property Investments which deal with investors and their needs on a daily basis.
In the case of one of Charta's recent developments, The Unicentre Wellesley Apartments, investors have 21 years of guaranteed revenue to meet their ongoing funding costs.
Auckland University of Technology (AUT) is the tenant and they pay the property's outgoings and long-term maintenance costs.
Investors can sleep easy at night - they don't need to worry about vacancies or a drop in rental income.
Another key factor is being able to manage tenancies through good and bad times, and that comes down to the overall management of the complex or building.
Charta's philosophy is to always manage the buildings that we have developed, so we remain in control.
One team is able to manage the physical property, the tenancy, and do the on-site management. This group can also put in place a plan to lease each project and keep them fully tenanted.
Diversity of property type and location is another part of minimising risk. Most investors prefer three-bedroom brick and tile houses in less expensive suburbs of Auckland, close to shops, schools and transport.
Housing NZ leased stock is gaining popularity due to the 10-year nature of the tenancy.
Investors have to balance the advantages between houses, townhouses, gated communities, serviced apartments, student accommodation and CBD apartments.
Similarly a balance of location helps to spread risk. Charta recommends properties that are in Auckland, Hamilton, and the Bay of Plenty - the main growth regions for infrastructure and capital investment over the next decade or so.
Investors are still active in the market but they are looking for better information and advice, and are assessing the risks and returns more completely.
