Positive/Neutral Geard Property Everywhere?

I am looking at a property in a regional city ATM. 9.1% straight up with potential for rent increase. They are out there.

Current investment rates are less than 5.81% so might want to re-work those figures as the deal will be more attractive.

go under asking price and buy it

Hey well done getting in there, fancy posting the link to the next one ?what was the contrarct price on the one you missed out ?

question questions

I think I will get another mortgage before infaltion sets in

water,
          keiko makes a valid point, of course his numbers will change for every house and every interest rate change and every different deposit and everyones tax rates etc, he is pointing out that you have to consider all the costs. Most beginners just say its $250,000 costs at $250 per week so that's a profit of 5%. It's not that simple.
ps You need more rental % return for cheaper houses than more expensive houses to end up with the same % in your hand after costs.

devo 76,

yes those fhog are getting in on anything thats cheap, but have patience their numbers are dwindling, soon you will be the only one buying.

As a side issue – has anyone besides me noticed that most of the first home owners are going to leave their houses after 6 months and go back home. This is going to create a lot of empty cheap houses as time goes past, maybe dropping the rentals on cheap houses??

I'm of the "buy now" camp if it is already positively geared, it's only going to get better as rents rise.

The problem with waiting for interest rates to drop further is how will you know when they've bottomed out?  You wont' know until they start going up again .   Same for house prices.

I reckon if it's positive today, BUY.

Vicky

I'm speaking only of NZ here ….

• Less people flooding to Ozzie
• Foreign immigration to NZ is still positive
• Kiwis returning home due to world economy

I'm finding a lot of properties that are $50+ a week positive cashflow.

For example:  I  have 2 x 3-bed properties on a freehold cross-lease title available for NZ $282K  (AUD $221K).  Rents are $535/week for the pair.  With 80% gearing and funded at 6.5% interest rate for 5 years (standard Bank mortgage) they are $60 positive a week on P&I or $129 a week positive on interest only.

So, even if rents pull back by $30 a week per house, this property is neutrally geared on P&I.  

As Warren Buffet would say:

Be fearful when others are being greedy
Be greedy when others are being fearful.

Greedy Vicky!!

Fair call gmh454.  I am primarily speaking of people buying who have positioned themselves to be in a good place to take advantage of the great deals we are seeing, people that are happy to buy with a 4% spread from interest rate vs. yield, people that presumably are not out of work or working less hours.

My buyers list is growing in leaps and bounds, not unlike the 2004-2006 period where we were last seeing 10% plus yields, even though interest rates were 7-8% back then, but people were happy to buy anything on a 10% yield.

From what I can gather, the ones that are buying are not the people out of work, those working less hours, or those unloading their deflating assets because they have over borrowed on them.  The people buying have carefully positioned themselves and are not over-leveraged, so they are comfortable putting 20% into own a property which in effect makes it even more positively geared.

Interesting times we are seeing!!

Vicky