Understand Your Capacity To Invest Now
WHAT’S AN INVESTMENT CAPACITY REPORT?
The Investment Capacity Report has been designed and developed to help you understand where your weaknesses and strengths lie with your current personal balance sheet (accounting speak for “what you own and what you owe”).
When we combine that with your personal and rental income, it is easy to form a picture of where your strengths lie regarding your borrowing power and the type of property that is best suited for your next purchase.
You will be stronger in one of two categories;
Income
Equity
Based on this report we can advise you on the most suitable property for your situation to prevent you from running out of buying power in the future.
INCOME - your DEBT SERVICE RATIO (DSR)
Your bank will assess your personal and rental income and use both today’s and forecasted interest rates to calculate how much debt you can afford to service. Most banks use 35% of gross personal income and 75% of rental income to calculate your DSR (maximum debt you can service with your net income). This percentage can vary for lower/higher income earners.
When we create your Investment Capacity Report, we calculate your current borrowing power using your current income and help you understand the type of property you need to buy next, based on your circumstances. If you are weaker on income (DSR) than equity (LVR), then buying higher cashflow, higher yielding properties in locations where rents will appreciate faster is a key strategy.
EQUITY - your LOAN TO VALUE RATIO (LVR)
Your bank will assess your current equity based on your usable cash savings, your KiwiSaver account, First Home Buyer Grant (for First Home Buyers), and the equity you have in both your personal and investment properties. Banks will typically lend to 80% on personal homes (90-95% for First Home Buyers), 80% on brand new investment property and 60% on second hand investment property. These percentages can vary based on how much lending you have with a single bank and the locations your properties are in.
When we create your Investment Capacity Report, we calculate your borrowing power based on your property values, mortgages and cash savings and help you understand what your buying power is. If you are weaker on equity (LVR) than income (DSR), then buying at a discount, early stage in a project or properties in locations where values will appreciate sooner/faster is a key strategy.
growing your portfolio
We take your starting position today and run 3 different scenarios to illustrate what your property portfolio and equity position will look like in 10 years, based on adding 5-15 properties over the next decade. Most of us can’t calculate compounding growth in our heads and underestimate the impact of this on rents and values in the medium to long term. For new investors reading this, 5-15 properties is an achievable target - it is as simple as:
Buying quality properties in quality locations
Balancing equity with income growth
Letting time do the work with increasing rents and values.
WE’LL STEP YOU THROUGH THE DETAIL AND EXPLAIN EVERYTHING
At The Property Factory we aim to demystify property investment to make it accessible to everyone. Once you have received your Investment Capacity Report, we’ll also take the time to meet with you by phone, online or in person to explain everything in simple, easy to understand language. It’s all part of our service and free for our members.
Fill in and submit the form above and you will be redirected to view your Investment Capacity Report online within a few minutes. A copy of your report will also be sent to you via email.
Thank You
Thank you for submitting your request for your Investment Capacity Report.
We will step you through everything
At The Property Factory we aim to demystify property investment to make it accessible to everyone. Once complete, a copy of your Investment Capacity Report will be emailed to you and you can view your report below. We’ll take the time to meet with you by phone, online or in person to explain everything in simple, easy to understand language. It’s all part of our service and it’s free for our members.
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