The 3 Biggest Property Investment Mistakes – Part 3

When the Wrong Type of Property Turns a “Deal” Into a Drag

If you’ve followed this series from the start, you’ll know the pattern by now.

In Part 1, we looked at how investors misread cashflow.

In Part 2, we unpacked how strategy mistakes can derail portfolios.

Part 3 is about the final piece of the puzzle: the property itself.

Because most failed investments don’t collapse because of timing or suburb selection. They fail because the asset was structurally flawed from day one.

Not overpriced. Not unlucky. Just the wrong type of property for the job it was meant to do. Let’s look at the categories that consistently turn “good deals” into long-term headaches.

Leasehold Properties: Cheap for a Reason

Leasehold apartments are a masterclass in how numbers can lie.

On the surface, they look brilliant:

• Low purchase price

• High advertised yield

• Prime location

  
  

But underneath that, the investment logic breaks down.

You own what depreciates - not what appreciates

When you buy a leasehold property, you’re buying the building but not the land. And land is the component that historically drives capital growth.

So even in a rising market, leasehold owners can watch values stagnate or fall. The structure itself caps long-term upside.

This is why leasehold works differently in places like the UK or Hong Kong. With 999-year terms and strong demand, those properties behave like a virtual freehold. In New Zealand, shorter lease terms and weaker buyer demand mean the model doesn’t translate.

Ground rent turns yield into fiction

Most leasehold agreements include scheduled ground rent reviews. Those reviews are not tied to your rental income; they’re tied to contractual formulas.

What begins as a manageable cost can become a material expense that eats into cashflow and resale value.

And when that happens, three things follow quickly:

• Buyers pull back

• Lenders restrict lending

• Values disconnect from the wider market
  

This is why leasehold doesn’t usually fail suddenly - it fails structurally.

It’s not that no one should ever buy leasehold. It’s that it only works under very specific conditions, with a very clear exit strategy.

A recent example in Auckland Central illustrates the problem clearly. An apartment purchased for around $150,000 was later listed for approximately $90,000 just five years later.

On paper, nothing dramatic had changed:

• The building was still standing

• The location was still central

• The rental income had not collapsed
  

What had changed was investor understanding. As ground rent reviews approached and holding costs became clearer, buyers began pricing in:

• Rising lease payments

• Limited capital growth

• Tighter lending criteria

• Fewer future buyers
  

For investors relying on long-term growth, it’s usually the wrong tool entirely.

Ageing Homes: Where Uncertainty Becomes the Risk

Older properties attract buyers with charm, space, and renovation potential. But from an investment perspective, their real risk isn’t age - it’s unpredictability.

Common issues include:

• Electrical systems that need full replacement

• Plumbing that is nearing the end of its life

• Moisture damage hidden behind linings

• Asbestos in ceilings, walls, or under old flooring

• Foundation movement that absorbs renovation budgets
  

The danger isn’t the presence of these problems. It’s not knowing which ones exist until you start work.

That turns budgeting into guesswork and timelines into moving targets.

When renovations stop being strategic

The best renovations improve livability and value at the same time. The worst renovations simply fix what’s broken.

Replacing wiring or drainage rarely lifts rent or resale value. It just prevents the property from becoming uninhabitable.

Older homes can absolutely be great investments - especially where land is scarce, and demand is strong. But the margin for error is thinner.

Success comes from:

• Conservative budgeting

• Thorough inspections

• Clear scope

• Financial buffers

Without the right safety protections in place, your risk goes up substantially.

Complicated Ownership: When Control Leaves the Room

Some properties look simple on the surface but carry structural or legal complexity underneath.

This includes:

• Cross-leases

• Apartments with rising body corporate levies

• Buildings with deferred maintenance

• Homes in flood or erosion zones
  

The common thread is not condition. It’s control.

Friction compounds over time

A cross-lease might seem harmless until renovations require neighbour consent. An apartment might feel low-maintenance until a special levy lands. A coastal home may feel idyllic until insurance premiums spike and lending tightens.

These issues don’t always show up immediately. They emerge slowly, then suddenly.

What makes them dangerous is not cost alone - it’s unpredictability combined with limited options.

You can’t easily fix:

• Body corporate decisions

• Insurance market changes

• Environmental re-zoning

• Neighbour disputes

  
  

And when you go to sell, these risks don’t stay hidden. They narrow your buyer pool and cap your upside.

The Real Lesson: Risk Lives in Structure, Not Just Price

The common mistake investors make is treating property types as interchangeable. They aren’t.

Each structure carries different:

• Growth constraints

• Cashflow volatility

• Exit risk

• Financing risk
  

And the wrong structure can turn even a well-located property into a poor long-term performer.

That doesn’t mean:

• Leasehold is always bad

• Old homes are always dangerous

• Complex ownership should never be touched
  

It means these assets demand:

• Strong justification

• Clear strategy

• Higher margin of safety
  

Most problems don’t come from bold decisions. They come from misunderstood ones.

Why This Still Leads to Optimism

If all of this sounds cautious, that’s intentional. Because when you remove structurally weak property types, what’s left is your top-tier investments.

Property remains one of the most effective wealth-building tools available, not because every deal works, but because the right assets combine:

• Long-term demand

• Tangible value

• Leverage

• Time

  
  

The mistakes we’ve covered in this series are common. But they are also avoidable.

And that’s where things get exciting.

Coming Up Next: What Great Investment Properties Actually Look Like

Now that we’ve explored:

• Cashflow traps

• Strategy errors

• Asset-type risks
  

The next series shifts focus to the upside.

We’ll break down:

• The property types that consistently grow in value

• What “good bones” really means in practice

• How to identify properties that attract strong tenants

• The fundamentals that support long-term performance
  

In other words, we’ve shown you what to avoid, and next, we show you what to look for.

And that’s where the real opportunity begins.

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