Property Investment: Why Strategy, Structure and Split Lending Matter More Than Ever
Investing in property is one of the most powerful ways to grow long-term wealth, but only when it’s done with the right strategy and structure behind it. It’s not just about finding the right property; it’s about setting yourself up with a lending approach that helps you scale, manage risk, and adapt as the market shifts. At Know How Property, we help you think long-term, with a focus on leverage, structure, and smarter lending strategies, including one of the most underrated tools for property investors: split lending.
Strategy & Structure: Set the Foundation:
Before diving into an investment purchase, it’s essential to have a clear strategy and the right structure in place. Without this foundation, you could quickly find yourself stuck, unable to grow your portfolio, access equity, or make the most of your borrowing potential. A strong strategy starts with defining your investment goals, whether that’s capital gain, passive income, or long-term portfolio growth.
Your strategy involves choosing the appropriate ownership structure, such as buying in your name, through a trust, or via a company. Separating personal and investment lending is a key step, helping to manage risk and keep your finances organised. And finally, your structure should support both tax efficiency and borrowing capacity, setting you up for success now and in the future.
Using What You Have to Get More Leverage:
Leverage is one of the most powerful tools available to property investors, and it’s the key to expanding your portfolio without needing to save a full deposit for every new purchase. By tapping into the equity in your existing home or investment property, you can unlock funding for future opportunities, an increasingly valuable strategy as property prices continue to climb. This approach allows you to build momentum and grow your portfolio faster, rather than waiting years to save from scratch.
With leverage comes responsibility. It must be used strategically, with safeguards in place to protect you against unexpected changes. That means ensuring your lending can pass a stress-tested loan servicing check (where banks assess whether you could still afford repayments at higher interest rates). It also means maintaining emergency buffers (a few months’ worth of mortgage payments tucked away in case of vacancies or repairs).
Focusing on strong rental yields helps keep your investment cash flow positive, even if rates rise. And finally, having clear exit strategies such as selling down, accessing equity for your next purchase, or paying off debt, ensures you stay in control of your investment journey no matter what the market throws your way. Done well, leverage can accelerate your investment journey. Done poorly, it can tie your hands when markets shift.
Avoid the One-Bank Trap: Why Split Lending Matters:
A recent story from an RNZ article told of a property investor whose bank declined to release a mortgage, even after selling a property, due to lower property values and doubts about her ability to service the remaining loan. This is a real and growing risk in today’s economy. When all your lending is with one bank, you give that institution full control over your portfolio structure, your access to equity and your ability to pivot if things change
Why Relying on a Single Bank Can be Risky:
Banks often revise their rules. If yours tightens up, you're stuck. If values drop, your available equity might not be enough to support future lending. With everything tied together, you have fewer options to restructure or refinance.
Our Approach at Know How Property: Diversify to Protect and Grow:
That’s why we strongly advocate for a Split Lending Strategy. This means spreading your lending across multiple banks instead of relying on one. We also work with your accountant to ensure your lending supports your broader financial and tax strategy.
Why it works:
Split lending reduces your risk by ensuring you’re not putting all your eggs in one basket, as the saying goes. By spreading your loans across multiple banks, you gain greater flexibility to restructure and negotiate terms that suit your evolving needs. It also improves scalability, making it easier to grow your property portfolio without unnecessary roadblocks or restrictions from a single lender. Most importantly, it protects your assets; issues with one property or loan won’t automatically impact the others, helping you maintain control and stability across your investments.
Ready to Build Smarter?
Property investment isn't just about buying property, it’s about smart planning, informed structure, and protecting your ability to grow. Reach out and let’s take a look at your current setup and explore whether a split lending strategy is right for your next move.
