Latest news with #rentalincome
RNZ News
2 days ago
- Business
- RNZ News
'Topping up $300 a week': How much money do property investors actually make?
Last year more than 50,000 property investors were making losses on their portfolios. (File photo) Photo: Unsplash/ Artful Homes A big chunk of property investors do not make money from their investments - and those who do are pulling in an average of less than $16,000 a year. RNZ revealed last year, more than 50,000 of the roughly 120,000 property investors in the country were making losses on their property portfolios. Now, new data released under the Official Information Act has shown even those with a profit were making a limited amount. In the 2024 tax year, the average rental income made across all entities reporting a profit was $15,680. Based on the average house price, that is a return of 1.7 percent. Individuals were making $13,240 and trusts $26,490. The year before, the average income was $15,590. A year earlier, it was $16,680 and in 2021, $14,800. Simplicity chief economist Shamubeel Eaqub said it highlighted people were not investing in property for cash yields but for other reasons. Simplicity chief economist Shamubeel Eaqub said capital gains was a motivator for investors. Photo: Supplied Those included being able to borrow from the bank to invest in property in a way that other investments were not able to, and the lack of tax on properties not captured by the bright line test. "The real motivation is capital gains - because the cash return means tenants aren't the main business, the house is. "Roughly, if your cash earning yield is 1.7 percent, and let's say the cost of equity is 10 percent - probably a bit higher in NZ, then investors are assuming house prices will increase by over 8 percent a year forever. "So we have this weird setup, that encourages people to make a pretty serious financial bet, through tax and banking regulation, and cultural norms." Including capital gains, investors would have made 6.6 percent a year on average over the past five years. In 2022, they would have had a 19 percent return, and in 2021, 15. percent, before recording total losses in the most recent two years. He calculated investors would have made an average $179,672 in the 2021/22 year, thanks to capital gains, and $111.464 the year before. But they would have lost almost $85,000 in the 2023 year and another $21,362 in the 2024. NZ Property Investors Federation spokesperson Matt Ball said he was not surprised by the data. "We have one rental property ourselves and I'm putting in $300 a week at the moment because I'm stuck on an interest rate of 6.65 percent. "But we've been doing that for the last year, 18 months. We'll make a loss just because that's how it is." He said property investment was not "winning Lotto". "It's hard work and to make money out of it you have to put in some effort. You can't just buy a place and sit down and watch the money roll in. "That's why if you can add a bedroom or upgrade it so you get a bit of rent of rent or whatever, do some work to it, that's the goal." He said 85 percent of property investors had another job. "I think if you could put the money into other investments you'd probably be getting a strong income… the leverage is the difference, I can't borrow $1 million to put into shares." Sarina Gibbon, general manager at Auckland Property Investors Association said some investors would be operating across multiple entities. "Since FY22, when interest deductibility started being phased out, the IRD hasn't been privy to the economic reality of investing, let alone reporting it accurately. It has been reporting legislated distortion. In FY24, landlords could only deduct 50 percent of interest costs. Cash-poor portfolios got pumped into the system and spat out as paper-rich operations. "So, no, the numbers are not surprisingly low; they are deceptively high. We are taxing revenue, not profit. This sort of tax distortion is nothing else but political theatre. Here's the irony, though: flawed as the policy was, it did rewire investor behaviour from accumulating to improving. "Sure, more deductible repairs and upgrades led to better-quality housing, but also higher rents. So the adversarial policy borne out of flawed design and bad leadership cornered investors into action to benefit their tenants and no one else." She said now investors could claim their home loan interest against their income again and interest rates had fallen, there was some breathing room. "In the long term, I expect investment to be more dynamic, yield-focused and taxable income from the investor cohort to grow." Property investment coach Steve Goodey said investors starting out would usually make losses but people who had been investing for a while would often have properties without mortgages. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
Associated Press
07-07-2025
- Business
- Associated Press
Liberty Supports Property Investors with Free-Thinking Solutions
With Australian investor activity on the rise, Liberty offers investment home loans to help borrowers realise their property potential. MELBOURNE, AU / ACCESS Newswire / July 6, 2025 / New data from PropTrack reveals a steady increase in new loans for investors across Australia over the past 18 months. As investor activity grows, leading lender Liberty says flexible investment home loans could help borrowers capitalise on current market opportunities. Communications Manager, Bernadine Pantarotto, says those looking to start or grow their property portfolio could benefit from the non-bank's free-thinking solutions. 'For borrowers on their property journey, an investment home loan could be a smart move to help enter the market, build equity and generate rental income,' says Ms Pantarotto. Liberty offers flexible property investment solutions to support a variety of customers, including those new to the lending process. 'From first-time buyers to seasoned investors, our investment home loans are designed to help borrowers achieve their property goals,' says Ms Pantarotto. With a proud history of supporting customers to access free-thinking home loan options, Liberty strives to provide solutions tailored to the needs of each individual customer. Unlike traditional lenders, Liberty takes a holistic approach to lending, combining risk-based assessment with personalised service to support more customers. 'We understand no two borrowers are the same, which is why we look beyond just the numbers to assess a customer's financial circumstances,' says Ms Pantarotto. 'Whether a borrower is self-employed or working with a smaller deposit, we have flexible solutions to help keep their investment property plans moving forward,' says Ms Pantarotto. Liberty offers free-thinking options including low doc and low deposit investment home loans to support borrowers to unlock their property potential. Beyond investment loans, Liberty has solutions across owner-occupied home loans, as well as personal, car, business, commercial and SMSF loans. With close to 30 years of experience, Liberty continues to help more people say 'yes' to their plans. 'We have proudly supported over 900,000 customers with our free-thinking solutions and remain committed to helping more people get and stay financial,' says Ms Pantarotto. About Liberty As one of Australia's leading non-bank lenders, Liberty offers innovative solutions to support customers with greater choice. Over more than 27 years, this free-thinking approach to loan solutions has seen more than 900,000 customers across a wide range of home, car, business and personal loans, as well as SMSF lending and insurance. Liberty remains the only non-bank lender with an investment-grade credit rating offering custom and prime solutions to help more people get financial. Approved applicants only. Lending criteria apply. Fees and charges are payable. Liberty Financial Pty Ltd ACN 077 248 983 and Secure Funding Pty Ltd ABN 25 081 982 872 Australian Credit Licence 388133, together trading as Liberty Financial. Contact Laura Orchard Media Coordinator P: +61 3 8635 8888 E: [email protected] SOURCE: Liberty press release
ABC News
01-07-2025
- Business
- ABC News
Rental investor numbers fall for only third time in 25 years, ATO data shows
Thousands fewer investors declared rental income in 2022-23 than a year earlier — only the third time annual falls have occurred, according to Australian Tax Office (ATO) data. The other occasions coincided with the 2008 global financial crisis and the COVID-19 pandemic reaching Australian shores. There were 7,081 fewer rental investors in 2022-23, equating to a modest 0.3 per cent reduction. However, it was a noted reversal to the general trend in records going back to 1999-2000, when an average year saw the number of investors declaring rental income increase by about 47,000. While the overall number of investors shrank, the decline was concentrated among those with multiple investment properties. An ABC analysis of different groups of investors showed a general trend that the more rentals a group owned, the more the size of that group shrank between 2021-22 and 2022-23. The number of investors declaring income from only one rental actually grew by 2,337, while the number with two or more fell. Investor groups blame interest rates, less investor-friendly tax and policy settings, and increased tenants' rights for the drop-off of investors. Landlord Glenn Langdon agreed with the assessment — similar factors had led to his decision to sell his only Victorian rental, in Greenvale, last week. He was using the money to buy a third rental in Queensland, where he said taxes were lower and there were fewer demands on investors. "There just seems to be constantly more and more cost to own a rental property in Victoria than in other states," he said. A ban on no-fault evictions, hikes in land taxes for investors, and increased renter rights had all contributed to his decision to sell. "There's no protection for the landlord, I feel," said Mr Langdon. Eliza Owen, head of research for property data firm Cotality, told ABC News it might seem surprising investor numbers have fallen when residential real estate was "so often heralded as a safe investment". It became less surprising when you considered that the 2022-23 financial year was characterised by falling home values and rapidly rising interest rates, she said. "Between June 2022 and 2023, the average outstanding investor mortgage rate rose from 3.88 per cent to 6.6 per cent, increasing the repayment on a $500,000 loan by $830 per month. "By comparison, median monthly rent values in Australia increased by $316." Ms Owen said there were advantages and disadvantages to a smaller cohort of investors — one being that it might free up more stock for home owners to buy. However, it was unclear if this had come to fruition, with no reliable home ownership rate data since 2021. Australian Bureau of Statistics (ABS) lending data showed investors made up between 25 and 30 per cent of home borrowing between late 2019 and late 2021, before beginning a slow recovery to make up around 38 per cent of borrowing in the March quarter of this year, suggesting investors were returning to the market. Ms Owen said it was hard to say whether the investor cohort has grown since 2022-2023 but, with housing values back to record highs and interest rates stabilising and now beginning to fall, it was possible investor numbers would grow again. Property Investors Council of Australia chair Ben Kingsley said changes in the investor cohort were heavily influenced by government policy and interest rates. He pointed to 1999, when the Howard government introduced the 50 per cent capital gains discount — triggering a period of investors buying in (which was also a period of rising house prices) followed by a blip around the global financial crisis, which followed a period of high interest rates, and then renewed growth from low interest rates after the GFC. Then, in 2017, Mr Kingsley pointed to the ban on travel and depreciation claims on existing properties, followed by a raft of reforms to lending rules and state tenancy laws over subsequent years, which appeared to dampen investor interest. He said over the five years to mid-2023, the average annual increase in investor numbers sat at around 10,600 — well below the 53,000-64,000 experienced during the three five-year periods preceding it. "Add these numbers to the exodus we are seeing in Victoria, and it's blatantly clear we have a housing supply problem, partly because investors running their private rentals are tapping out," he said. While the ATO data showed slowing but still positive growth in Victorian investors, more recent rental bond data indicated an investor sell-off, with the state losing more than 24,000 rentals during 2024 — or 3.6 per cent of the state's entire rental stock, which has proven a boon for first home buyers trying to get into the market. Mr Kingsley said property building would suffer without willing investor money. However, building investment is difficult to track. Cotality's Ms Owen said it was "quite possible" subdued investor activity has resulted in less construction activity than otherwise. "CBA has reported in a previous economic note that about half of off-the-plan demand in new apartment buildings comes from the investor cohort," she said. Richard Temlett, national executive director of Research at Charter Keck Cramer, advises developers and government on housing policy. He said he had never come across reliable data that showed whether domestic investment in new-builds had fallen, but investment figures from NAB showed foreign cash going into building had dropped since 2018. "Foreign investors have a very bad wrap, people keep thinking they are buying established dwellings, driving up property prices, stealing properties from locals," Mr Temlett observed. "That's not the case at all, especially with the legislation that mainly says it has to be for new supply of dwellings. Urban Development Institute of Australia (UDIA) chief operating officer Peter Sherrie said flagging investor demand, driven by higher taxes and construction costs, had resulted in many approved medium density and high-rise developments around the country sitting unstarted. UDIA represents the property development industry, with more than 2,500 member companies. "When the feasibilities aren't working, the developers aren't able to achieve their construction funding, and the project doesn't start," he said. While investors could once increase rent to make investments work, that option seemed to have dried up. "It's reaching that ceiling now … tenants just cannot afford to pay more, it's just beyond their capacity," Mr Sherrie said. He said building continued at greenfield developments, which had a lower entry cost and greater capital gain potential, the build-to-rent market, and developments that sold directly to home owners, where apartments were generally larger, finished to a higher standard, and more expensive. Rayna Fahey, who is director of advocacy at pro-land tax non-profit research institute Prosper, said a fall in investors declaring rental income did not necessarily mean rentals were sold, and may mean investors simply left the property empty, satisfied with waiting for capital gain. "Our tax system rules so heavily rewards speculation over production, speculation really distorts the property market," Ms Fahey said. If investors did sell, she said it would likely be to a home owner, who would live in the home, or possibly to another investor who would rent it out.
News.com.au
01-07-2025
- Business
- News.com.au
What to consider when you are planning to build a granny flat
Whether you're looking to house elderly parents, earn income from your own backyard or increase the yield on an existing investment property, building a granny flat is an attractive option. But there are several things to consider before you start contacting builders and comparing quotes. WHAT ARE YOU TRYING TO ACHIEVE? PIPA board director and managing director of the ASPIRE Property Advisor Network Richard Crabb says when it comes to planning granny flats 'the devil is in the detail.' While it can be a great way of earning rental income, from an investment perspective, it might not be the best choice depending on the person's strategy and where they sit on their financial journey, he says. He suggests people consider their strategy first before assessing the planning considerations and site feasibility. 'Every council has its own rules.' he says. 'Some allow granny flats as a right on R2 zoned blocks but others also require a DA approval. It's very important to get the right advice.' INVESTMENT CONSIDERATIONS Build quality and design is another thing to consider, especially if you are planning on renting out the property, he says. 'The next bit is really delving into the financial and investment perspective,' he says. 'Granny flats can significantly boost rental yield, especially in the metro fringe, in those growth corridors where there's that rental shortage and housing demand. 'But it might not necessarily increase the capital value of the property proportional to the costs. The capital value isn't going to increase in line with what they spend, necessarily.' This is why strategy is so important, he says. If you are only building a granny flat as an investor to increase rent and you are doing so in an area where you aren't likely to see any capital gains from the outlay of cash, there could be better ways to maximise your investment. 'They could be better off going and buying another completely brand new property separately and using that (money) as a deposit,' he says. 'Rather than trying to overcapitalise on an existing asset that might not get the returns.' On the other hand, says Propell Property managing director Michael Pell, granny flats can be a very useful investing strategy for those with existing properties who can't take on a 30 year mortgage in order to generate a passive income. It may suit older couples who may not have the income to service a loan for an investment property but do have a backyard they don't use anymore. 'The costs are relatively minimal to be able to create an extra $500, $600, $700 – $800 a week in rent,' he says. 'You're talking about a $700,000-$800,000 purchase versus a $100,000-$200,000.' BUILDING CONSIDERATIONS Hipages trade Martin Nguyen from Kubra Building Services says it's important to consider both the size of the block and the site conditions, including soil type, slope, and access, before planning a granny flat. While minimum land size varies across states, you generally need to have a block size of at least 450 sqm, he says. hipages cost guides put the average granny flat between $80,000 and $160,000. 'However, if you're after an incredibly high-end finish with top-of-the-line materials and prices, you can expect this to increase,' he says. 'Keep in mind that these costs don't just include the physical build. Preparation of the site, choice of materials, permits and compliance are all items you'll need to factor into your budget.' 'Unfortunately, not all properties are suited for a granny flat. 'If the site has challenging terrain, poor access, or protected vegetation, homeowners may face higher preparation costs or even building restrictions.' When it comes to the build, time frames can vary, but generally it takes three to four months for council approvals to go through and another three to four months at a minimum for construction to be completed, he says. 'Site preparation, the complexity of the build, and how quickly approvals are granted will all impact the timeline of a build,' he adds. 'However, conversions of existing garages or sheds may be completed faster.' GRANNY FLAT CHECKLIST Consider these things when researching the viability of a granny flat. * Your strategy – why are you doing this? Is it to house relatives or to make money? Is there a better way of investing? Seek advice from the experts * Council requirements – what planning restrictions are in place? Check with your local council * Site feasibility – is your land big enough? How will you divide it? Are there easements or slopes? * Financial considerations – how much will it cost? How much can you afford? Should you invest in better quality to attract tenants? Should you buy a prefab home? * Market conditions – what demand is there for rentals? How much rent will you likely earn? If you are housing relatives, will you rent it in the future? If you plan on selling it in the future, will it add to the value or detract from it?
Yahoo
26-06-2025
- Business
- Yahoo
Is Realty Income Corporation One of the Best Monthly Dividend Stocks on the Market?
Realty Income Corporation (NYSE:O) is one of the Best REIT Dividend Stocks to Buy in 2025. An aerial view of a bustling financial district, showing the strength of financial institutions. The company is widely recognized as a monthly dividend stock, distributing dividends each month. In June 2025, the company declared its 660th consecutive monthly dividend and marked its 131st dividend increase since it began trading on the NYSE three decades ago. Realty Income Corporation (NYSE:O) earns highly predictable rental income from a broad and well-diversified portfolio that spans retail, industrial, gaming, and data center properties. More than 90% of its rental revenue comes from tenants in sectors that are either less affected by economic downturns or largely shielded from e-commerce disruption. These properties are typically leased on a net basis to financially strong tenants under long-term agreements that often include built-in annual rent increases, supporting consistent growth in rental income. As of mid-2025, Realty Income Corporation (NYSE:O) maintains a conservative dividend payout ratio of under 75% and boasts one of the most robust balance sheets among REITs, with a leverage ratio of 5.4 times. This financial strength allows the company to continue acquiring cash-generating properties. Realty Income Corporation (NYSE:O) expects that a mix of rising rental revenue and ongoing portfolio growth will increase its funds from operations (FFO) per share by 4% to 5% annually. This growth outlook supports the REIT's ability to keep raising its already attractive monthly dividend. The company currently offers a monthly dividend of $0.269 per share and has a dividend yield of 5.57%, as of June 23. While we acknowledge the potential of O as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: and . Disclosure. None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
