Don't Ask For a Discount, Ask For a Cashback On Your Property Investment
- Ryan Smith
- Aug 16, 2022
- 5 min read
Updated: Aug 5
In a buyer's market, the investor holds the power. Use this advantage to negotiate cashbacks on your property investment to maximise your position.
In 2021, when the New Zealand property market was booming, developers didn’t need to offer incentives to close deals. Demand outstripped supply, and buyers were lining up to grab whatever was available.
Negotiation? Forget it.
If you didn’t want the property, someone else did, probably before you’d even finished looking at the documents.
But fast-forward to 2022 (and continuing into 2025), and the game has shifted. There are now more listings than buyers, and that imbalance puts power back into the hands of investors, savvy ones, at least.
This market shift creates a rare window of opportunity: developers are under pressure to move stock, meet funding requirements, and hit settlement targets.
To do this, they’re increasingly offering incentives to sweeten the deal, and that’s where cashback on your property investment comes into play.
Why You Should Stop Asking for Discounts
Let’s break a common myth: in the new-build, off-the-plan world, price negotiation doesn’t usually happen in the way you might expect.
Unlike existing properties, where price haggling is part of the dance, off-the-plan contracts are typically fixed-price. Developers don’t want to lower the sticker price because:
Their bank or funder requires full-price pre-sales to unlock project funding
Discounted sales lower the value of the development, which can hurt everyone, including you, when it comes time to settle and get finance
So instead of shaving a few grand off the purchase price, the smarter move is to negotiate a cashback at settlement.
What’s a Cashback, Really?
A cashback is exactly what it sounds like: you agree to buy the property at the listed price, but the developer agrees (privately) to give you a set amount back at settlement.
This could be $5,000, $10,000, or more, depending on the deal.
Why do developers prefer this approach?
Tick the box for their pre-sale requirements: Their funders still see a full-price sale
Protect development values: Future valuations are based on headline prices, not hidden incentives
Keep deals moving: They get to maintain appearances while still being flexible behind the scenes
From your end, a cashback can massively improve your cash flow position, especially in the early years of ownership.
Real Example: How a Cashback Works
Let’s say you’re purchasing a new-build investment property with an interest-only mortgage of $500,000.
The weekly cost to own (after rent) is $150
That’s $7,800 annually ($150 × 52 weeks)
If you negotiate a $10,000 cashback, you’re essentially getting:
One full year of “free” ownership
Plus $2,200 left over ($10,000 – $7,800), which you can use for maintenance, rates, or simply hold as a buffer
Now imagine doing this across multiple properties; that extra cash could cover holding costs, reduce risk, or fund the next deposit faster.
Who Should Use a Cashback Strategy?
This isn't a one-size-fits-all solution. Cashback deals are best suited for:
Investors looking to improve early-stage cash flow
Buy-and-hold investors who plan to keep the property long term
People with limited serviceability who benefit from reducing upfront outgoings
But it’s not ideal if:
You’re flipping the property quickly, and the tax implications and lack of capital growth buffer could eat into your margin
You’re relying solely on the cashback to “make the deal work”; it should be the icing, not the cake
How to Negotiate a Cashback
Cashback conversations require subtlety. You’re not demanding a handout, you’re creating a win-win. Use phrases like:
“Would your developer be open to a settlement rebate to help with holding costs?”
“Is there any flexibility for a settlement incentive, even if the purchase price stays firm?”
“What options are available for early cash flow support?”
And don’t forget: not all developers will advertise cashbacks. Many are only offered when working through investment professionals or advisors who have direct developer relationships.
Additional Examples of Cashback Use
Let’s look at two more ways a cashback can be deployed strategically:
1. Interest Buffer Fund
You buy a $600,000 townhouse with a $12,000 cashback. Instead of applying it all at once, you drip-feed $1,000/month into your mortgage offset account, effectively softening the blow of rising interest rates for the next year.
2. Rates & Maintenance War Chest
You purchase a $700,000 unit and negotiate an $8,000 cashback. Rather than using it for repayments, you put it aside to cover residents' association fees, rates, minor repairs, and any future upgrades. This keeps your personal cash untouched and improves your long-term return.
The Developer’s Perspective: Why They’ll Say Yes
Here’s why developers are open to it, and why they’ll often prefer this over a discount:
Their lenders insist on full-price contracts
They need to hit pre-sale targets to release construction funding
They want to avoid dragging down valuation comparables
They’d rather cut their margin slightly than let a deal die
They often have internal flexibility with incentives, especially late in the sales cycle
Risks to Watch Out For
As with any deal, there are caveats:
Make sure the cashback is documented between your lawyer and the vendors' lawyer
Understand any tax implications, especially if you’re flipping
Remember that cashback ≠ value. It helps cash flow, not capital gain
Key Takeaways
In today’s market, cashbacks are a powerful tool for property investors. Developers are motivated, and incentives are back on the table. They can:
Help smooth early cash flow, reduce holding risk, and maintain your liquidity
They’re better than price discounts for both parties, especially when bank funding and valuations are in play
Negotiate smart, document clearly, and use the cashback to boost long-term outcomes
How Can We Help You?
We help Kiwis build wealth through property investment. Our advisors will take the time to understand your individual needs and recommend suitable investment properties to help you build wealth and set up your retirement.
What Does This Look Like?
We use a 3-step process:
We start with a Discovery Meeting where we learn about you, your goals, etc., and you learn more about us.
This is followed by a Strategy Meeting where we model your retirement plan, understand key investment concepts, and briefly touch on some investment choices.
Finally, an Asset Selection Meeting where we discuss investment options in more detail and make any recommended adjustments based on what we now know about you.
Who Are We Right For?
We help people make smart investment choices and set up their futures. From first-time investors to experienced investors, we can cater to a wide range of people and help set up their futures through research-based property investment.
How Much Does It Cost?
Our advice is free to you! If you choose to invest, we’re paid by the property developer. This developer-paid model allows us to provide no-obligation property investment advice in New Zealand, without charging clients directly.
What Do We Do, And What Don't We Do?
What We Do
We offer end-to-end New Zealand property investment advice, helping Kiwi investors grow wealth through smart, data-led decisions. Our focus is on quality new builds in strong locations, tailored to your goals, guided by a team that knows the NZ market inside out.What We Don’t Do
We don’t do KiwiSaver, shares, cryptocurrency, or broad financial planning. Thrive is not a generalist firm. We specialise in property investment in New Zealand because that’s where we deliver the most value. By staying focused, we cut through the noise and help our clients make confident, well-informed property investment decisions.
How Do I Start?
Start the process now by booking a time to talk with our advisor by clicking here.
Comments