Investing in property is one of the most powerful ways to build long term wealth, but many first-time investors focus only on the purchase price and deposit.
The reality? There are many factors to consider, and hidden costs are one of the biggest. If you are not prepared for them, they can significantly impact your cash flow, returns, and overall investment strategy.
If you are considering your first investment property, here is a clear breakdown of what to expect, the key costs you need to plan for, and how to avoid expensive surprises along the way.
1. Deposit & Lending Costs
Deposit
Depending on the type of investment you purchase your deposit amount will vary between 10%-30% of the purchase price. Existing homes require larger deposits compared to new homes based on the criteria set by the Reserve Band of NZ.
That means a $1m investment property could require a $300,000+ deposit on an existing property. However, most Kiwis entering their journey into property investment use equity out of their family home to pursue building wealth.
Loan Setup Costs
- Registered Valuations on the property purchase ranging from $750- $1,200 (often required by the bank)
- Mortgage broker fees (if not using a main bank to borrow from)
Even if these seem minor individually, they can add several thousand dollars to your upfront costs.
Properli Tip: A smart lending structure can save you tens of thousands over time. Our advisers work with trusted lending specialists to ensure your investment is structured correctly from day one.
2. Legal & Due Diligence Costs
Buying an investment property isn’t just about signing an agreement.
Legal Fees
You’ll need a property lawyer or conveyancer to:
- Review the Sale & Purchase Agreement
- Complete title checks
- Finalise settlement
Budget: $1,000–$3,000+
Builders Report & Inspections on existing homes
A building inspection helps you avoid costly surprises like:
- Structural issues
- Weather-tightness problems
- Deferred maintenance
Skipping due diligence to “win the deal” can be a very expensive mistake.
Properli Tip: We help our clients assess properties strategically not emotionally, so you invest in assets that perform long term.
3. Healthy Homes & Compliance Costs
If you're renting out the property, you must comply with Healthy Homes Standards.
This may require:
- Insulation upgrades
- Heating installation
- Ventilation improvements
- Moisture barriers
Depending on the property and age, upgrades can range from a few thousand dollars to significantly more.
4. Property Management Fees
If you don’t plan to self-manage (which most investors don’t), you’ll need a property manager.
Typical costs:
- 7%–10% of weekly rent
- Letting fees (sometimes equivalent to 1 week’s rent)
- Inspection fees
A good property manager protects your asset and reduces stress but it’s a cost that must be factored into your cash flow.
5. Insurance
Investment properties require:
- Landlord insurance
- Building insurance
- Sometimes rent-loss cover
Premiums vary depending on location and risk factors, but this is a non-negotiable cost.
6. Rates & Ongoing Expenses
Council Rates
Rates differ by region and property type. Investors sometimes underestimate this annual cost.
Maintenance & Repairs
Every property needs upkeep:
- Plumbing issues
- Appliance replacements
- Exterior maintenance
- General wear and tear
A good rule of thumb is to budget 1–2% of the property value per year for maintenance. The older the home the more upkeep is needed.
7. Vacancy Periods
Properties aren’t always tenanted 52 weeks a year.
Even strong rental markets experience:
- Tenant turnover
- Short vacancy gaps
- Occasional rent arrears
If you don’t budget for vacancies or have a rental guarantee from a property manager, your cash flow can quickly come under pressure.
8. Tax Considerations
Tax rules for investment properties can significantly impact returns, including:
- Interest deductibility rules
- Bright-line considerations
- Tax on rental income
- Depreciation treatment
Getting this wrong can erode profits or create unexpected tax bills.
Properli Tip: We work alongside accountants and advisers to ensure your investment strategy is structured for tax efficiency.
The Biggest Mistake First-Time Investors Make
The most common mistake isn’t underestimating one cost it’s failing to look at the full investment picture. Successful investors don’t just buy a property. They build a strategy.
They understand:
- Cash flow vs capital growth
- Portfolio planning
- Risk management
- Long-term wealth goals
That’s where expert guidance becomes invaluable.
How Properli Helps First-Time Investors Succeed
At Properli, we don’t just help you buy a property we help you invest with clarity and confidence.
Our Property Investment Advisers help you:
- Build a wealth plan using property as the Investment vehicle
- Property selection situated to your needs
- Understand the true upfront and ongoing costs
- Assess cash flow and long-term performance
- Avoid common (and expensive) beginner mistakes
- Structure your portfolio for sustainable growth
- Create a clear property investment roadmap
Whether you're buying your first investment or building a portfolio, the right advice at the start can dramatically change your results.
Ready to Take the Next Step?
If you're considering your first investment property, let’s make sure you do it properly.
Book a free strategy session with a Properli Property Investment Adviser today.
We’ll help you understand the numbers, reduce risk, and build a plan that aligns with your long-term financial goals.
Start your property investment journey with confidence talk to Properli today.