Leverage can enhance returns, but it also introduces additional risk—particularly in commercial property where lending is typically short-term and highly sensitive to interest rate changes.

At Mates Invest, we take a different approach. By investing without bank debt, we remove the cost of financial intermediaries and reduce exposure to refinancing risk, interest rate volatility, and forced asset sales. This allows more of the underlying property income to flow directly to investors, rather than being absorbed by interest expenses.

In New Zealand, commercial property loans are commonly structured on short review cycles of around 2–3 years, with interest rates that can reset frequently. As a result, increases in the Official Cash Rate can quickly impact borrowing costs, cash flow, and ultimately property values. Investors who rely heavily on debt are therefore more exposed to market cycles and may be forced to sell assets at unfavourable times.

By remaining debt-free, we retain full control over our investment horizon and are not subject to lender constraints. This positions us to take advantage of opportunities when leveraged investors are under pressure, while continuing to provide stable and sustainable income to our investors.

There is a natural balance between deposit rates, mortgage rates, and commercial property yields. Our model is designed to sit within that range, capturing the benefits of property income without the risks associated with leverage. In simple terms, removing debt allows for greater stability, stronger control, and a more direct return to investors.