Forum Replies Created
Hi Guys,
Westan – i take the point about your reasons for leaving the NZ market. That is a strategy that you have chosen and many are taking your advice and investing with you.
I wanted to make the point that when you change your focus everything changes. The way you see the market changes.
I guess what I am saying is that if you stop looking for opportunities then you stop finding them. It does not mean that they are not there.
I have a personal opinion that real estate is something you need to be active with rather than just buy and forget. Maybe this does not mean you are on the paint and brushes yourself or organising a sub division yourself or even managing the building of a home yourself. But, someone has to put the time in.
Sadly, we are finding that some of the vendors are Australians who perhaps had the wrong idea about investing in property. IE, that it is an activity done on paper and spread sheets. This is where you start but in the end it is about people and how you communicate with them.
If these people did not learn this valuable lesson by what you could perhaps call a “failed” investing experience in New Zealand then I don’t think they will fair any better if they take their capital and invest it anywhere let alone in the USA.
You asked Nigel if he was buying? Not sure what he is doing but just to let you know I am buying and have just brought another for myself in Invercargill.
My gut tells me that over time some of the investor who follow you to the US will do well but I don’t think the solutions lies in low end (price) rentals. Perhaps some of the larger deals that you are putting together will turn out to be winners.
It just seems (i am the first to admit that most of the information I have on the usa is from reading this forum) the gross yields do not translate into anything near the type of net yield you need to make the risk worth the rewards. This is just my personal opinion.
To address another part of your arguement if investors wish to cash out of NZ property and they have invested in a trust structure then surely they would be better of the place the capital (hopefully they did well) into fixed interest or term investments in NZ within the structure. In this way there would be no tax issue for them to consider.
The trust would then tick away earning interest until better opportunities came along.
In this way the investor is not exposed to exchange rate risk ans still has an alternative source of income that if structured correctly will remain in nz.
I hate to do it but paraphrasing Robert Kiyosaki if you are not an insider you are an outsider. I think he said something like that in one of those tape sets that I borrowed from the net.
What I got out of that comment was that the further removed you are from the deal the harder it is to achieve your desired outcomes. So hear we are in Invercargill not more than 5 minutes away from property deals.
In point form I just wanted to add a few extra things that are in no way personal comments they are comments about the argument
1) It is not fair to compare regional markets to city
2) It is probably negligent to suggest that you could compare investing in the USA with investing in NZ purely based on yield.
3) None of us should make any sort of prediction about capital growth when “finding” properties for others. There should be a law against it.
4) When you change your perspective everything you see is different.
5) I truely and whole heartedly believe that investing is a long term activity. Having said that every investor should have an exit strategy and we must make the most effecient use of capital
6) Every investment has an exit cost whether it be finance or legal.
7) Every Investment has an entry cost. What I am learning from this forum is that the entry cost to investing in the usa is very very high.
Some investors for some deals need to purchase USA real estate deals with cash. Surely this is not an efficient use of gearing and capital9) One flight to the usa would eat the first year or first two years profit.
10) There is an exchange rate risk investing in the US also. Some would say it is a higher risk than nzd v’s aud historically.
11) The US legal system is far removed from that of NZ or Australia. The structures are differnent and much more expensive to set up. They would take the next two years cashflow so after set up and one flight 4 years cashflow is gone. Then a finders fee on top makes 5 years before investors see any cash at all. Surely this is not acceptable return on equity.
12) Property taxes in the US and NZ do not compare.
As you can see it is not and should never be an either or decision. Surely the investments you have encouraged your investors to buy over the last 1 or 2 years are sound enough that they need not sell them now and buy US property with the capital released.
What about the investors who have purchased properties in the last 9 months or 6 months. Are their investments sound on a macro level or should they also sell.
The thing is that basically not everyone has the same strategy so they need to act differntly to achieve their goals. There is no one fit solution and no one area, town, or country that offers the best fit for the investor.
My opinion is that the investors who accumulates quality investments over time will be the ones that accumulate serious wealth. These will be the deca millionaires who have the sort of wealth that can create employment and effect lives.
It is a shame that one of the forum members can’t put together a fund or syndicate to invest in some of these areas. Perhaps this would help with some of the management and vacany issues that some the the other forum members have complained of.
We should be pooling our resources for these high risk US investment rather than going it alone.
cheers
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Some investors for some deals need to purchase USA real estate deals with cash. Surely this is not an efficient use of gearing and capital
