The top 9 reasons kiwis invest in property (in their words)

“What’s your why?” ... it’s a cliche you’ve probably been asked by business or motivational speakers right through to dating articles (and even property investment).

But it can be hard to put a finger on why you want to invest in property.

That’s why we asked real Kiwi investors their reasons for investing in property as part of the NZ Property Investor’s 2022 survey.

Just under 1000 responded – and there were three main themes that kept surfacing.

In this article we’ll go through the top 3 reasons Kiwis invest in property. Then we’ll go through an additional 6 reasons other investors put their money in property.

1) To have a comfortable retirement

“... it seemed a good way to take care of future income that largely paid for itself, and has” Otago-based investor with 2-5 rental properties.

By far the most common answer was along to the lines of “… to fund our retirement”.

Another Auckland-based investor with 2-5 properties said they put their money in property “to create a nest egg for retirement and possibly stop working for a boss sooner than age 65.”

Kiwis like to use property to fund a “comfortable” retirement because then they won’t have to rely as much on the government’s superannuation.

Latest research by Massey University finds a “choices” retirement lifestyle will cost a couple $1,470 a week if living in the main centres.

But superannuation is currently $672 per week for a couple. This means the average retiree will be $798 a week short if they’re just relying on the pension.

Of course, comfortable means different things to different people. Some in our survey said they didn’t want “toys” like boats and cars.

“To support our retirement we are also older parents and will need to support a child through the early years of our retirement. A note here - we do not want flash cars or boats, but to have enough to live comfortably” Auckland-based investor with 2-5 properties.

This investor just wanted to live comfortably while others flat-out admitted wanting all the boats and planes money could buy!

“I don’t want to have to worry about money. I want to live my life travel/spend time with loved ones/do what I love doing/then have a nice home and toys” Wellington-based investor with 2-5 properties.

Several answers referred to investing as a “compulsory savings plan” and many expressed the desire to retire earlier than 65.

For instance, this person said: “I was wanting to retire by 50 with a portfolio of property that will keep me going for the rest of my life. Retired at 48 … so the plan worked” – Hawke’s Bay investor with 10-19 properties.

2) To build a passive income

The next common theme was the desire to build a passive income where they could live off their rental properties’ income.

One investors said they “… wanted to replace my 9-5 income with passive as fast as possible” – Wellington-based investor with 5-10 properties.

Passive income is when you continue to get paid once the work to set it up is done.

From reading through the property investors’ submissions, the overall theme was: passive income = freedom to work flexibly.

One investor with 5-10 properties said they invested to build a “passive income for a life of freedom of time!”

Another answered: “I wanted to live a life with choices when I retired early from my day job (at 56) to live off our property investments” – Auckland-based property investor with 10-19 properties.

They also said: “My wife wanted a flexible ‘job’ (which is what she treated our property investing as) while she brought up our children.”

This is a great example of how property investment can be a vehicle towards financial freedom, providing options outside the 9-to-5 grind.

One other investor said they invested “for passive income, to raise capital for investments, and to raise money for our son to inherit when he's older” – Wellington-based investor with 2-5 properties.

3) To generate wealth & gain financial independence

The final main reason Kiwis say they invest is to generate wealth and gain financial independence.

But those 2 words “financial independence” mean so many different things to people.

For instance, one investor said “... I did not want to struggle to pay bills, nor did I want my children to struggle as I did. I just wanted options” – Auckland-based investor with 2-5 properties.

Another common reason given in our survey was to have more money to offer children – either as an inheritance, to help them get on the property ladder themselves, or to pay for immediate things like health care or university.

For example, one person answered: “We have a disabled son and need to provide for him financially as he's unable to. This needs to last once we aren't here so property investing is a long-term vehicle to do that” – Manawatu-Whanganui investor with 5-10 properties.

For others, financial independence is the freedom to give back to others, or to look after themselves after a big life change.

For instance, this Bay of Plenty-based investor with 10-19 properties said: “I wanted to be free from the treadmill so I could do charitable work and also leave an inheritance for my 3 children and theirs.”

Another said: “I wanted to keep on the property ladder after my divorce but couldn't afford to live in any house I bought. I was introduced to the concept of property investing as a long-term, relatively low-risk way of finding financial security” – Waikato-based investor with 2-5 properties.

6 Other reasons kiwis invest

Here are 6 other reasons people invest in property.

#4: “… to help house people I knew that struggled to get rentals” – Auckland-based investor with 2-5 properties.

Too often property investors get stuck with the “greedy landlord” label, which can be an unfair assumption most of the time.

Some said they genuinely liked to invest in property to help others into nice, warm rentals.

#5: “Because we read Rich Dad Poor Dad!” – Wellington-based investor with 5-10 properties.

In total 3 investors within the survey said they started investing because of Robert Kiyosaki’s book, Rich Dad Poor Dad.

#6: “My Grandmother invested in property and the family have done so for a hundred years, just thought it was a good investment” – Nelson-based investor with 2-5 properties.

A lot of young investors within the survey said they were encouraged or helped into investing at an early age because older family members had explained the value in it.

#7: “… I see myself as a collector rather than an investor. I just like owning stuff” Auckland-based investor with 2-5 properties.

Who doesn’t love owning stuff

#8: “... too dumb to start a business or restaurant” – Auckland-based investor with 10-19 properties.

Now, we aren’t saying property investors are dumb … but we get what this person is saying.

Starting a business takes a lot of gumption, hard work, energy and intellect. By comparison, a set-and-forget, long-term rental can seem like a much simpler option to gain wealth.

#9: “... I enjoy property” – Canterbury-based property investor with 5-10 properties.

A lot of people who said something along the lines of just enjoying property also said they enjoyed the process of renovating old homes. It’s a fun and tangible way to increase their wealth.

What’s your reason for investing?

While these tend to be the main reasons Kiwis invest, there’s nothing stopping you investing for more than just one of these 9 reasons.

One Bay of Plenty-based investors with 1 rental property (at the moment) said they invested to: “Build up an asset base through capital gains over time.This will provide a passive income in retirement and provide leverage for my kids to borrow against for their first home.”

I mean, why limit yourself to one reason – when you could aim for it all.