For instance, the above graph shows that over the last 27 years Otago’s median house price has, on average, been 72.61% of the national median house price.

That means that if the New Zealand median house price was $100,000, on average, we would expect the average house price in Otago to be $72,610.

Right now Otago’s median house price is 86.82% of the national median house price … 19.57% above its long-term average. That suggests that for long-term buy and hold investors, Otago is not the right region to invest in right now.

Let’s look at the other side of the coin and say a region’s house prices are below their long-term average.

Over the medium term (3-7 years) we’d expect house prices there to increase more quickly than the national house price.

Ideally, you want to invest in a region that is at the bottom of its property cycle. The data we’re using here can be used as a proxy for determining which areas are at the most appropriate points in their cycle.

These graphs are all available within the regional property market section of the Opes website, which you can find in the "Where to Invest" section.

Right now, Canterbury, Auckland and Taranaki appear to be at appropriate points in their property cycles.

Find the right suburb ... the one that has a mix of growth & yield

Once you’ve selected a city or property market to invest in, you need to get even more specific.

For instance, if you might decide you want to invest in the Auckland property market. If you were to go straight to a website like realestate.co.nz then you would find over 10,000 properties currently for sale … and that doesn’t include every property available to invest in, such as new properties.

It would be a waste of time. Since realestate.co.nz primarily caters for owner-occupiers, many of the properties shown on the website will not be suitable for investors.

That’s why you need to pick a few suburbs you want to look into and conduct research on those.

You can look at hard data like projected population growth; estimates of income per person, or the level of education within a suburb. However, we often find maps like the one below most useful.

This one shows the median gross rental return for suburbs in Wellington.

And this one shows the historical house price growth of Wellington suburbs over the last 20 years. This can be as a loose proxy for future house price growth.

We created maps like these at Opes Partners for our own use – when we look for properties on behalf of investors. We’ve now made them available for all investors to use.

Using both these maps, investors can locate suburbs that have a mix of good rental yields and good historical growth. Ideally, long-term investors will want a combination of both.

These maps are available for the Auckland, Wellington, Hamilton and Christchurch property markets.

As part of your additional research, investors should also look at soft data, such as news about businesses moving into the area, or a sense of whether a suburb is becoming gentrified.

This will add weight to the data you’ve collected and will help you make a more balanced investment decision.

Find the right properties that meet your buying criteria

By now you will have picked a region or suburb that you want to invest in, and it’s time to look for actual properties.

You can either do this yourself or work with professionals who can source properties on your behalf.

For instance, if you want to run this process on your own, you have two options:

You can look online on websites like trademe, realestate.co.nz, or specific real estate agents’ websites.

The next option is to build a relationship with developers and real estate agents, asking them to let you know about future opportunities.

This can work well for the serious investor who has the capital to make a decision and purchase a property quickly before it gets released to the broader market.

Be aware, though, that if you’re a first-time investor you don’t want to come across as a shopper. That’s where you take information from real estate agents or developers, but never take action or invest in property with them.

In that case, you’ll quickly find agents and developers taking longer to get back to you or not returning your phone calls. If it is going to be a genuine relationship there has to be value added on both sides.

If a developer or agent knows they’ve got a good deal, they’ll first talk to investors and companies they’ve worked with in the past.

The alternative is to work with a professional property partner or property finding agency to find properties on your behalf.

For full disclosure, this is one part of the service we offer here at Opes.

The benefit of this is that you can partner with on-the-ground experts, who know and understand the local market.

In addition, by partnering with a property investment company you’re more likely to get access to property deals you wouldn’t otherwise get directly from a developer.

That’s because property investment companies work with a wide range of investors, which gives them the scale to form deep relationships with developers and the broader property industry.

That wide client base makes them serious investors in the eyes of the industry, which avoids the ‘shopper’ problem mentioned above.

Say a developer needs a quick sale of properties so they can get bank funding. In this case, they’re likely to approach a property investment company first.

That’s because the property investment company has access to a large number of investors. Only one or two of those need be in a position to act quickly to get the deal and give the developer the sale they need.

Out-of-town investors can, therefore, get the benefit of having relationships on the ground by using a property investment company, without:

1. Having to build the relationships themselves, or
2. Having the capital or scale to be taken as a serious player.

Talk to professionals on the ground ... they'll know something you don't

Once you have put a property under contract, you’ll go through the due diligence process.

This is where you have already agreed to purchase a property at a given price, with a few conditions. Things like a solicitor approving your sale and purchase agreement; you getting finance from the bank; or a builder’s inspection coming back with no issues.

As well as working with a solicitor to review council documents, it is highly advisable to talk to a local property manager.

To be a successful property investor, you need a tenant paying rent, so you can pay your bills and service the investment mortgage.

However, many investors will purchase an investment property without talking to a local property manager who will find tenants on their behalf.

Each rental market is slightly different.

For each specific property you invest in, you’ll want to know:

• What sort of tenant you are likely to get in the market
• How long the average tenant might stay in your property
• Any concerns the property manager would have about the ability to rent out the property you are buying.

As an investor, if you are purchasing a property outside your city, you’re unlikely to have a deep understanding of that local market. So, it’s essential to lean on the expertise of people who are active in that market day-to-day.

Conduct a site-visit or pre-purchase inspection ... make sure it stacks up

All these steps, up until this point, can be completed from the comfort of your home city. The next step is to go and see the property.

Even if you are investing in a new property that hasn’t been built yet, you should still go on a site visit.

Bear in mind, that when you turn up to inspect a property that has been bought off the plans, it might just be a vacant plot of grass.

However, you can use this opportunity to view a property that is going to be similar to yours. For instance, a show home or a recently completed development. This is also the time to build a relationship with the developer you’ll be purchasing from.

However, if you’re living in Christchurch and buying in Auckland, it’s understandable if you don’t want to make the trip to look at something that hasn’t been built yet.

That’s where you can ask a property manager or the developer to walk through a show home or similar property to give you a virtual inspection of the developer’s quality and previous work.

Key things to remember

Investing outside the city you live in is an essential step for long-term buy and hold investors. It can help spread your risk, and gain access to property markets that are at a different stage of their cycle.

But because you won’t know the lay of the land the same way you do with your home city, it’s vital to either:

• Engage in research before you look for properties or
• Work with people who operate in that market.