20 Property Investment Risks You Can't Ignore - The Definitive 2025 New Zealand Guide

We list critical property investment risks that make you aware of how expensive being a landlord can be.

20 Property Investment Risks You Can't Ignore NZ

Updated 29 March 2025

Summary:

Property investing is not a road to riches - our must-read guide explains what you need to know before investing.
Interest rates are a critical factor in property investment, and small changes can have a massive impact on cash flow and affordability.
Predicting interest rates involves understanding economic conditions, but rental properties have more risks than changing interest rates.
Beyond rates, you're dodging tenants who trash your place, cladding bills that arise and get expensive, and tax rules that flip with government changes.
Our guide, 20 Property Investment Risks You Can't Ignore, explains key considerations you should consider when buying an investment property. It is an honest explanation of 20 brutal risks, from vacancy voids to regulatory traps, that every aspiring landlord must face.
Too many landlords aren't doing well financially, topping up mortgages from their 9-5 jobs, hoping for capital gains that might never come. This guide doesn't sell dreams; it hands you the hard truths to dodge disaster.
If you're considering investing in a rental property, please read this guide carefully.

MoneyHub Founder Christopher Walsh Shares His Warning for Aspiring Property Investors and the Risks You Can't Ignore:

"I fear too many New Zealanders plunge into property investment blind to its true costs - much like those trapped by crippling car loans or endless credit card debt. Unlike a depreciating car or 'bad debt,' a rental property won't vanish in value overnight, but don't be fooled: the relentless expenses - mortgage interest, repairs, compliance, and more - can dwarf your rental income, leaving you pouring cash into a bottomless pit. It's not just a purchase; it's a commitment that can silently bleed you dry if you're not prepared.

Property investment can seem like a golden ticket to financial security and wealth - and for a long time, it has been a capital gains paradise. It's also an asset that every New Zealander understands - a property is an asset you can see, it gives you rental income and the possibility of capital gains.

However, things are changing, and the reality is far more complex. Many New Zealanders have invested in property, only to grapple with unexpected financial pressures, monthly losses, and a house of cards that feels ready to collapse and ruin their future. This RNZ report from October 2024 explains a tough situation for 50,000+ property investors. I fear a lot of property investors are going to face headwinds for a while.

Before you buy an investment property, please take some time to consider the risks carefully. This guide aims to help every New Zealander looking to invest in their future understand some hard truths that could save them from making costly mistakes. These insights are based on cases where hopeful investors were misled, underprepared, and left in dire financial straits.

While official complaints about sour property investments are, arguably, uncommon given the number of deals being done, there is a lot of grumbling and hardship among landlords. MoneyHub continues to be contacted by struggling property investors who are unsure what to do and, in some cases, considering selling at a loss. Sometimes, the investment property adviser who put the deal together has moved on or won't engage. When this happens, it's tough to decide the unique nature of every property, as few people can advise. If a tenant stops paying rent, it's stressful and a total loss of income. And it happens all the time.

Whatever you decide to do, please refrain from rushing in - the property isn't going anywhere, despite what your agent or 'property wealth adviser' may say. So many risks get overlooked - when it goes wrong, it's incredibly expensive. Please don't rush the process, and if you're buying with a wife, husband, partner, friend or family member, make sure you are aligned on everything".

Christopher Walsh
MoneyHub Founder

Know This First: Increasing Insurance Costs and Limitations

Insurance is your safety net, but it's not a cure-all. Premiums have spiked in recent years, up 15 to 20%+ annually in high-risk zones like coastal Wellington or quake-prone Christchurch per Insurance Council NZ reports.
Insuring flood zones or older homes might cost $5,000+ yearly, and some insurers won't touch properties with dodgy histories (e.g., leaky buildings). Our home insurance risks guide has more details.
Home insurance policies often exclude key risks—tenant damage, rent loss from evictions, or full rebuild costs post-disaster. Landlord insurance may help, but this brings added costs.
Zoning changes; if your standalone home's neighbour sells their big section for a six-townhouse development, your quiet street turns noisy, and insurers might hike rates or drop coverage.

Our View: Shop around for quotes and scrutinise policy fine print—ensure it covers natural disasters, tenant issues, and rent gaps. Budget for premium jumps, and check zoning plans with your council. Our guide to difficult-to-insure areas is a helpful starting point - not being aware of the risks can leave you exposed when disaster strikes.

20 Risks Explained in Detail:

Beware of Unrealistic Projections of Capital Growth

Showcasing impressive growth projections excites everyone, but ensuring that such numbers do not rely on outdated or selective data is critical. In a case reported by BusinessDesk in December 2024, one couple believed they'd have enough equity in 5-6 years to pay off their home loan. The article states that "their situation (later on) was that the value of the apartment had dropped significantly, and they were struggling to meet the top-up payments to the loan due to interest rate increases".

The issue is that this situation has impacted many property investors in different cycles - when the capital growth reverses, the 'model' the investment was based on may become worthless.

Our view: Always question the numbers and check if they're grounded in current market realities. Verify everything independently - there isn't strong law around representing property 'deals', and if promises or expectations fail to be delivered, there's little you can do beyond complaining to the FSCL (assuming the organisation that got you into the property deal is registered with them). If they're not, your options are even more limited.

When Tenants Don't Pay, Property Investment Gets Stressful

It's easy to assume rental income will cover your loan. Still, despite a law change in 2025 that helps landlords speed up evictions, a non-paying tenant will cause immediate losses that you'll need to subsidise from your wages and savings. You'll also likely face numerous tribunals while your tenant doesn't pay the rent, meaning it's a cash flow mess. Missed payments, legal fees and costly repairs (if they move out and trash the property) add to the unexpected costs.

Our view: Plan for the unexpected. Keep a rental property emergency fund ready, and don't rely on rental income as a sure thing.

A Lack of Details and Understanding Can Be Dangerous

Not all advisers dig deep into your financial situation, and there are a lot of variables. In a BusinessDesk article from October 2024, one couple allegedly relied on advice about the interest rate to model repayments and raised concerns about it being too low and unrealistic. They then, per the article, went ahead with the investment and ended up in financial distress when the market moved.

Our view: If you are going to move forward with an investment property purchase, make sure the professionals you work with personalise their guidance. If they rush you or generalise the process, walking away is best. Investment property is complicated, and every assumption, model, and detail needs to be accurate and specific to your situation and the property. Too much can go wrong if you don't have the right data.

Interest Rates Are the Silent Killer of Rental Property Profitability

Low interest rates may make a property seem affordable, but rates can climb - quickly. 2020 and 2021 saw investors buy a property with a 3% p.a. interest rate, but by 2025 and 2026, the same investors will likely have renewed (or will renew) at around 5%+ to 6% p.a. given the rise in the OCR. This significantly changes the economics and cash flow of an investment property, and it's significant.

Know This: Our research team discussed net returns with major New Zealand home builders who suggest that even the best tenants are sensitive to rental increases and, with more options on the market, will leave if an increase isn't well received. This Reddit post from March 2025 demonstrated just that point.

Furthermore, a known builder we talked to stated that, as of January 2025, the net yield on a rental was likely around 3% (or lower) across the market – an arguably low amount given the time, effort, risks and opportunity costs of deploying the capital in an alternative investment.

Our example below explains how the profitability of investment property is affected by changing interest rates:

Loan Amount: $800,000
Term: 30 years
Interest Rate in 2020: 3% p.a.
Monthly repayment: Around $3,370
Interest Rate in 2025: 6% p.a.
Monthly repayment: Around $4,800

That's an increase of $1,430 per month—an additional $17,160 annually. This jump represents a significant hit to cash flow for many property investors, particularly if rental income has not risen at the same rate. It's even worse for those who relied on interest-only loans, as their repayments are purely a function of the interest rate.

Unfortunately, there is a domino effect of interest rate increases that every aspiring property investor needs to understand before buying any rental:

Cash flow pressures: Higher interest costs mean owners may need to top up loan repayments from personal savings or salaries. This immediately voids the perceived profitability (if the potential capital gains are disregarded, which are not guaranteed).
Negative equity risks: Property values can stagnate or fall when interest rates rise as fewer buyers can afford higher repayments. Wellington and Auckland investors who bought between 2019 and 2022 have seen this link, and depending on the size of the deposit, the properties may be worth less than the mortgage balance. Our guide to negative equity explains more, and it's always a risk with every property investment.
Rental market lags: While rent increases may offset some of the costs of paying for the investment property, rental prices often lag behind market changes, meaning landlords face immediate losses. For example, a $1,000 council rates bill increase can, in time, be offset with a rental increase, but the reality is the rates bill needs to be paid now – rental increases take a long time to generate the cash you use to pay these bills.
Forced sales – mortgagee sales or a decision to limit losses: If your investment doesn't work out, either the bank will. In worst-case scenarios, those unable to meet repayments are forced to sell in a challenging market, potentially incurring losses.

Our View:
Interest rates are the biggest variable in property investment—and often the least understood. Always model repayments at higher interest rates, such as 8% or even 10%, to stress-test your ability to hold the property during tougher conditions. It will likely be sustainable if the investment remains viable under those scenarios.

Never assume rates will stay low forever. A small difference in interest rates can greatly impact affordability and profitability. A rise could become financially catastrophic if you're already stretched at the current rate. Always build in buffers for uncertainty and plan for worst-case scenarios.

Repairs and Maintenance are Hidden Costs that Add Up

Investment properties require ongoing maintenance, and unexpected repairs can affect your profits. These costs, from leaking roofs to broken appliances, add up quickly, especially if you're managing older properties or with deferred maintenance.

Our View: Budget for regular maintenance and unexpected repairs. A solid property maintenance fund is essential—don't assume your rental income will always cover these surprises.

The Risks of Off-Plan Purchases

Buying a property off the plan can seem like a smart move, offering lower prices and the promise of future growth. However, delays, developer insolvency, or changes in market conditions between purchase and completion can leave you with a property worth far less than you paid. 2024 was filled with stories about developers going bust (this being one example of many), delays in completions and many other issues confirming that anything 'off the plan' has heightened risks.

Our View: Be cautious about off-plan purchases. Investigate the developer's track record, understand the risks, and avoid overcommitting before the property is completed.

The Liquidity Illusion

Property is often considered a safe, long-term investment, but it's also highly illiquid. If you need to access cash quickly, selling a property can take months—and you might need to sell at a loss in a downturn. MoneyHub hears from retirees who reach 65 and ask if they should 'cash in KiwiSaver and buy an investment property'. Buying a rental property gives you a return but also comes with ongoing costs and hassle few New Zealanders fail to realise if they enter the market in later life.

Our View: Always have other liquid assets or savings to cover emergencies. Don't rely on being able to sell a property quickly if you need funds – it can take months to get your funds, and if you suddenly need the money for urgent nursing care, skipping the waiting list for an operation or paying for dental work, among other needs as you get older.

Tax Changes Can Shift the Goalposts: A Policy Roulette You Can’t Ignore

Tax rules aren’t set in stone and when they shift with a change in government, your rental’s profitability can take a hit. Labour’s 2021 phase-out of interest deductibility stripped landlords of a key tax break, but the National-ACT-NZ First coalition restored it from April 2024; 60% in 2024/25, 80% in 2025/26, and 100% by 2026/27, as outlined by the IRD.

For a $500,000 loan at 5% interest, that’s $25,000 yearly - under Labour’s full phase-out, you’d owe $7,000 extra tax at a 28% rate (assuming an annual $50,000 rental income); now, it’s deductible again, saving you thousands. But the pendulum swings both ways: a future government could slap it back or add a capital gains tax, as floated in 2019 by the Tax Working Group.

Our View: Treat tax rules as a wild card—plan for upheaval. If you want to be conservative, model your cash flow with zero deductibility and a hypothetical 15% capital gains tax (e.g., a $200,000 gain drops to $170,000 after tax). You may also want to get an accountant to stress-test your setup. Tax breaks fueled past property booms; future shifts could sink the unprepared.

A Warning: IRD data from 2024 showed 50,000+ rental properties lost money, as reported by RNZ, which the article said "is likely to understate the amount investors are losing though because it is after allowable deductions are claimed from income".

Emotional Decision-Making

It's easy to fall in love with a property and let emotions cloud your judgment. Many investors buy properties based on how much they like them personally rather than whether they make financial sense as investments. For example, buying a two-bedroom home you find 'cute' in Mt Eden will, in some cases, offer less rental upside than a three-bedroom home in Northcote, even though they be priced around the same. Investing in property is all about yield and capital gain, not aesthetics.

Our View: Treat property investment as a business decision, not an emotional one. It's essential to evaluate properties based on rental yield, location, and long-term growth potential- not how much you like the kitchen or the view.

Overleveraging and The Debt Trap

Borrowing to invest can amplify your returns, but it also amplifies your risks. High leverage leaves you vulnerable to rising interest rates, falling property values, and unexpected expenses. Many New Zealanders who invest in property get the money to buy a rental from borrowing against the home they live in. This is dangerous if markets reverse, such as what happened in 2022 in many areas of New Zealand, meaning equity is 'wiped out' yet the debt is still owed, given it was debt that financed it in the first place.

Important: We hear from too many New Zealanders who have become overnight landlords without understanding the financial risks that come with it. Many rentals are bought with the expectation that the rents will pay the mortgage and interest costs and deliver capital gains. However, more recent stories see landlords having to subsidise their monthly rental mortgage with thousands of dollars from their after-tax 9-5 income.

If a tenant stops paying, things get even harder and add in a roof repair, ever-increasing rates bill and insurance costs and you have a lot of headwinds to make a rental profitable even if there are long-term capital gains.

Cash Flow Crunch During Vacancies

Vacancies are inevitable due to tenant turnover, renovations, or market conditions. Property investor Facebook groups are increasingly discussing struggles to find tenants throughout New Zealand. A few weeks without rental income can severely disrupt your cash flow, especially if you're already stretching to repay loans. This means your salary will need to plug the hole in the mortgage, putting you further behind financially. Good tenants are great when you have them, but if your rental needs to be relisted every six or 12 months, you'll likely need to factor this into how profitable it will be.

Our View: It's essential to budget for vacancies. A healthy reserve fund should cover at least three months of mortgage payments and other property-related expenses. This can easily be over $10,000, but it's an essential fund to keep in mind to ensure you're protected should your rental sit empty.

The Overpromise of Capital Gains in Unstable Markets

Capital gains are often touted as the ultimate reward for property investment, and New Zealand homeowners have seen the rise for years and years. Stories like a $60,000 home purchased in 1975 and selling for $2,000,000 by 2020 are at the heart of many media stories. However, all bets are off as things change. This 2025 RNZ article explains the realities.

One media website frequently screams headlines like "vendors reduced to tears as auction price exceeds their wildest dreams" and "couple make a lifetime's wages on family home sale". However, this is an imprint of a media company that makes money from hyping a property market and getting eyes on its website.

We believe what is published here should be ignored – it doesn't apply to the mass market or, in most cases, your situation. So much is changing. Capital gains from investment property are no longer guaranteed.

Our View: Don't bank on capital gains alone. Focus on properties with strong rental yields that can sustain you through market downturns. The future is uncertain, so rentals need to make money beyond economic and housing market tailwinds.

Underestimating Property Management Challenges and Uncertain Build Quality that Requires Upfront and/or Ongoing Costs

Managing a property isn't just collecting rent—it's screening tenants, handling disputes, organising repairs and staying on top of legal requirements. It's an expensive business. Poor management can lead to higher costs, longer vacancies, and tenant issues.

There is also an issue of changes in the NZ building codes – will the property last 20, 30 or 40+ years? There are a lot of leaky buildings, and the growing collapse of developers since 2022 may, in time, lead to a discovery of poor workmanship in certain properties if they've been built cheaply and corners have been cut.

Know This: The rental you buy may not last 50 years, which means there is added risk to any investment upfront, ongoing and when you want to sell it.

Our View: Be realistic about your ability to manage a property. If you're not up to the task, budget for professional property management—but even then, vet your property manager carefully. You are relying on them to protect the cashflow of your investment - don't give that responsibility to C-grade amateurs.

Overlooking the Impact of Location Risks and Bad Neighbours and Dodgy Developers

A property's location is critical, but it's not just about a "good neighbourhood." Risks like flood zones, earthquake-prone areas, or declining local economies can drastically affect property values and insurability. Our guide to difficult-to-insure areas has more details. Before going further with any property, you need to be risk-assessed down to every detail – get it wrong, and the costs you incur to make it 'right' will reduce your rental yield for years to come.

Our View: Research local risks thoroughly. Before committing to a location, check council flood maps, seismic activity reports, and regional employment trends. If you have questions, ask an AI tool like ChatGPT, Grok and/or anything else you trust. Do not leave any stone unturned, even if you find things you don't want to - the risk of getting it wrong is too high, and the costs too unpredictable.

Ignoring Compliance and Regulatory Costs: A Costly Oversight

Ignoring Compliance and Regulatory Costs is A Costly Oversight

New Zealand's property rules are tightening, and the days of slapping a "For Rent" sign on any old house and expecting endless applications are long gone. From the Healthy Homes Standards mandating heating, insulation, and ventilation to revised tenancy laws in 2025 strengthening tenant rights (for the most part), the regulatory net is closing in.

Upgrading a rental to meet Healthy Homes can mean paying for heat pumps and insulation retrofits. If you fail to get it right, you can be fined up to $7,200 (per Tenancy Services) plus the problem of having unrentable properties as tenants increasingly know their rights.

A 2024 NZ Herald article outlined a case where a landlord was fined and ordered to compensate their tenant for $9,000 for failing to comply with healthy homes.

Our View: You must be proactive, as compliance isn't optional; it's an essential requirement to make rental property work. Audit your property yearly against current standards (check Tenancy Services and your local council website for more details), and be prepared to spend to make and keep the property compliant. Falling behind risks fines, legal battles, and a "for rent" sign that won't budge. You'll need to stay ahead of the curve and spend the money or pay the price later with a property you can't rent.

Body Corporate Risks: A Hidden Liability Minefield When It Goes Wrong

Owning a unit in a multi-unit property (e.g., an apartment or townhouse) will almost always mean you'll need to deal with a body corporate. This is a group responsible for managing shared areas like roofs, lifts and exterior walls.

While this sounds straightforward, it comes with risks and limits your power. If one unit leaks or a shared pipe bursts, you're collectively on the hook for repairs - costs can soar into the tens of thousands, even if your unit's fine. Insurance will usually cover it, but this means premiums may go up, all of which you contribute to.

If a third party owns the body corporate (common in commercial setups), they can levy steep fees or special assessments with little recourse for owners.

Our View: Dig into the body corporate's rules, financial health, and ownership structure before buying. There may be ongoing problems, and you'll need to be aware of them to know if you should avoid the property. You can request meeting minutes and past financials - red flags like deferred maintenance or legal disputes will be a hassle to anyone buying a unit. If a third party manages it, your fees could increase overnight - you'll need to plan accordingly. Body Corporates are, for many, peaceful, but they can also be very problematic. Be aware of what you're signing up to.

Relying Too Heavily on Market Trends: The FOMO Trap

When property markets boom, jumping on the bandwagon is tempting - suddenly, everyone's buying in Mangere, Lower Hutt, Christchurch and Invercargill, so it must be a sure thing. Chasing trends often leads to overpaying for properties that don't fit your goals or deliver sustainable returns.

The nationwide 2021 peak is an example of this - investors piled in, only to see values drop 15-20% by 2025 as rates climbed and buyer demand cooled as outlined with some examples by RNZ in December 2024. Trend-chasing also blinds you to the core fundamentals of any property investment - rental yield, location stability, and your financial limits. FOMO (fear of missing out) is a poor investment strategy that can lead to serious losses.

Our View: Stick to a clear, personal investment plan - ignore the hype and nonsense you may see on social media. If you are serious about buying an investment property, ask whether the property makes sense for your cash flow and long-term goals. Or is your interest just because you've read recent headlines pushing property investment as a way to become a 'millionaire'? Verify market data independently (e.g., via property valuation tools) and avoid impulse buys. Trends fade; numbers don't lie, and if you invest based on FOMO, you risk making serious losses.

The Passive Income Myth: Property Investment Isn't "Set and Forget

The dream of buying a rental and watching the money roll in hands-free is a fairy tale peddled by those who want to keep the market alive. Property investment demands constant work - vetting tenants, chasing late rent, fixing leaks and other issues, navigating tenancy laws, and so much more. Even hiring a property manager (at 7-10% of rent) doesn't eliminate oversight; you're still the boss, and their mistakes cost you.

At the back of your mind, you'll likely worry about not being paid the rent - when this happens, more hassle needs to be waded through. Unexpected vacancies or a tenant trashing the place turn "passive" into a full-time headache fast. This 2025 case of a standard trashing shows how the repair costs add up, and getting the money repaid by a tenant isn't easy.

Our View: Treat property like a business; your success hinges on active management, whether you DIY or hire a property manager. Either way, you'll need to budget time and money for the work required. Property investment will be problematic if you're not prepared to do the work (or pay someone to help) - passive income is a marketing myth; real returns come from real effort.

Renters' Price Sensitivity Mean Your 'Yield' Will Be Challenged

Gone are the days when you could hike rent, and tenants would shrug. Things have moved and we see New Zealand being a renter's market for some time. Renters are savvier and more mobile - raise the rent too much, and they'll bolt for cheaper options. This Reddit post from March 2025 illustrates how tenants have had enough of being milked.

Our research, backed by conversations with industry experts and journalists in March 2025, suggested many investors are increasingly seeing an average net yield on rentals at around a 3%. That's 3% after expenses like rates, insurance, (optional) property management fees and ongoing maintenance. This excludes mortgage repayments, but if you need to buy a rental with a mortgage, it's a very real possibility that the rent doesn't cover the costs. This July 2024 RNZ article talks about a rental yield of around 4% and the important quote that "data showed about 93 percent required the investor to "top up" the mortgage payments, assuming the full purchase price was borrowed".

The problem for property investors is that pushing rent up to offset rising costs (say, from $600 to $650 weekly) risks tenants giving notice and moving out, immediately wiping out any gain. To re-list you'll need to fork out for a Trade Me listing, arrange viewings, negotiate the rent and moving date all while your property may sit empty. The market has shifted - tenants have more choices and are unafraid to use them. We're also educating on tenant rights and plan to continue building resources to build awareness. This is not to be 'anti landlord' but something we believe is important as a money-saving and personal finance website.

Our View: Factor in tenant turnover and rental price resistance when calculating returns. A 3% net yield means you may look for capital gains, but these are far from certain. In the meantime, you'll need to test rental increases cautiously and always have a cash buffer for vacant periods. Assuming rent keeps pace with your costs is a fantasy in today's market - don't for one second believe you can keep increasing the rent to make the rental 'break even'.

Unrealistic Renovation Expectations: The Fixer-Upper Fallacy

Flipping a rundown villa into a rental cash cow sounds brilliant - until the bills roll in. Renovations often balloon beyond budget: a $50,000 kitchen redo becomes $80,000 when you find rot or need to meet Healthy Homes standards. Hidden issues like structural cracks, outdated wiring, or asbestos can double costs overnight. There are also tax considerations, as outlined in this 2024 RNZ article, This Reddit post from 2023 questions how profitable flipping can be, but as anyone who has done it will likely tell you "it depends".

Our View: Get a thorough building inspection and firm quotes from tradies before you buy - then add a 20-30% buffer for surprises. Don't assume renovations guarantee profit; they're a gamble unless you have deep pockets and expertise. Overestimate costs, not returns. And don't forget the real estate agent fees and legal costs.

Remember, potential buyers will look up the property's sales history - seeing a 20% increase from when you bought it to when you listed it is tough to sell in a flat market if all that has been done is a repaint, new floors and other cosmetic changes (which may not be to a buyer's taste anyway). Be careful - you may have to reduce the price if it fails to sell quickly.

Our Conclusion and Final Words

Property investment glitters with promise and has been a New Zealand-wide obsession for years - steady income, capital gains, and a tangible asset. But things are changing. The risks are significant. A March 2025 Reddit post is one example of tenants fighting back on rent increased with no emotion.
The market's no longer a one-way bet; headwinds are getting stronger - increasing insurance costs, rates going up, picky tenants with options and regulatory shifts mean you'll need to be cautious. An empty rental property costs money every hour.
Due diligence isn't optional - you'll need to justify investing in property in every detail. This means questioning every assumption, triple-checking the numbers, and building buffers for the inevitable curveballs. Too many landlords are financially stressed and the 'payday' of a mortgage-free house can be 25+ years away. Meanwhile, what has it cost to achieve?
At MoneyHub, we've seen the property dream lift many New Zealanders up, and drag them down with ongoing costs that know no end. The allure of a rental empire is real, but so are the pitfalls - cash flow crunches, unexpected costs, and a market that's tougher than it looks. It can be a miserable investment, and one that comes with a lot of emotion.
Our guide has not been published to scare you off; it's here to share the hard truths we wish every potential property investor knew upfront.
If you're set on investing, ensure you are not led into it - every dollar matters. Model worst-case scenarios - 7%+ interest rates, empty rentals, a $30,000 repair bill, and see if you'd still sleep at night.
You can consider diversifying your options; a term deposit or index fund might lack the tangibility of a property, but they won't call you at 2 am about a blocked pipe or electrical issue. Nor will you be annoyed that the property manager replaced a broken microwave with one that sharply sticks out of your rental's kitchen cabinet because they couldn't be bothered to get something that fits.
Whatever you choose, let facts, not feelings, guide you. Property can build wealth, but only if you master its risks first. Get it wrong and you'll struggle to escape the pitfalls of such a significant financial decision.

Related guides