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  • Profile photo of eljay1eljay1
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    @eljay1
    Join Date: 2014
    Post Count: 7
    May 19, 2015 - 9:38 pm

    Hi

    We own a few cheap houses in NZ (a couple around $100k) and have rented them successfully for years. I’ve looked at some of the ones around the sub 100k range and you really do need to do your dd. Just because someone is living in it does not mean that it is fit for habitation i.e. standards in rural NZ can be extremely poor in terms of property condition. You may be shocked at what you see. It is likely to be either in an area that has been in serious decline for many years. So if you have problems with this tenant that are undisclosed, or they leave you may have issues getting someone else. This may also be an issue if you need to sell it in the future and find that you can’t. A quick look on trademe will tell you that many have been on the market for absolutely years in rural NZ with no sign of a sale.

    You’d need a trustworthy builder to do an inspection. I can assure you that repairs and maintenance in rural NZ are anything but cheap and this can eat all of your income if you select the wrong property. $125 pw is not a lot of money gross. By law you need an RE to manage rentals if you’re living overseas, so you need to build in that cost if you can’t get someone you know to do it. Agree with you that other than that no major cost other than ongoing maintenance. I’m not saying you shouldn’t do it, but you need to go and look at the property yourselves (if you haven’t already) because if you buy it there may be no going back for a good number of years. Personally, I have found that it’s worth paying more i.e. $100k upwards and for that you can get a house in a good condition, you could aim for brick rather than board (have you seen the cost of paint in NZ?!!)less maintenance, possibly in an area with better future prospects for growth and ongoing tenancy and better chance of selling on if needed.

    Profile photo of eljay1eljay1
    Participant
    @eljay1
    Join Date: 2014
    Post Count: 7
    July 28, 2014 - 8:35 pm
    ChrisA1 wrote:

    Just food for thought. It’s good to work through all the options before jumping in. If you are looking to use the equity in your PPOR, you might like to think about the CG of the area, so you can keep pulling equity out (I say that, keeping in mind that you don’t want to overcommit the PPOR).

    There’s another property investing forum – somersoft.com.au. I think between these 2 forums you should get a number of recommendations of accountants who are savvy in how to deal with investing funds

    $100K income is $1.7m invested at 6% yield – very achievable from a $1m base. If you keep active in learning new techniques and how to manage the IPs, $2+ should be achievable in 15 years. Just keep active on the forums and read lots (Steve’s newest books are a good starting place, but there are a number of books, techniques and authors)!

    Hope I’m not hijacking this post. I’m trying to understand the calculation ‘$100k income is $1.7m invested at 6% yield.’ I have about $1.1m invested in property, about $400k is debt. Does the calculation above rely on tax deductions on $1.7m debt. I’m just trying to get an idea of my own cashflow from investment.
    thanks and sorry for pushing in!

    • This reply was modified 10 years, 4 months ago by Profile photo of eljay1 eljay1. Reason: error
    Profile photo of eljay1eljay1
    Participant
    @eljay1
    Join Date: 2014
    Post Count: 7
    May 19, 2014 - 7:06 pm

    Thanks Benny, I’ll have a look.

    Profile photo of eljay1eljay1
    Participant
    @eljay1
    Join Date: 2014
    Post Count: 7
    May 18, 2014 - 10:34 pm

    Hi Richard,
    Thanks I’ll take you up on that.

    Profile photo of eljay1eljay1
    Participant
    @eljay1
    Join Date: 2014
    Post Count: 7
    May 18, 2014 - 9:13 pm

    Hey Richard

    Thanks so much for your motivational comments. I need them as have no one else to talk IP with, and I love it as much as you.

    I have a problem with numbers which isn’t great for an investor (:/) but I pay my accountant a lot of money so hopefully have that covered and he does have his reasons for current structuring. I’ve used ANZ for all my loans so far, which had positives and perhaps a negative that you referred to. I’ll go with a broker for future ones. I’m really interested in the concept of splitting IO and PI on the mortage and know others who have done this, but it sounds complex for someone with a brain that doesn’t grasp figures. I’m trying to work out the whole IO vs PI vs a split at the moment, being old fashioned and only ever having gone PI. I saw an example on a $200k loan where the IO loan was about $260pm cheaper than PI. This doesn’t seem a lot of money for me, when the loan isn’t being paid off. However, perhaps if you had a few properties on IO then the $260pm per property would add up? I guess if you’re recommending to split the loan then it must free up some cash flow in real terms. I’ll try to find an example for dummies of how this can make money.
    Thanks again, would love to hear more about your story one day :)

    Profile photo of eljay1eljay1
    Participant
    @eljay1
    Join Date: 2014
    Post Count: 7
    May 18, 2014 - 8:02 pm

    Hi
    Thanks for your replies. Sorry the figures are confusing and I wasn’t clear. I was confusing myself with some properties paid, some not, and currency conversion. Possibly not that much detail is needed. One of the properties is a UK one bought years ago, that we couldn’t sell due to GFC. Its worth about $370k. The system there has been kind to landlords and tenants pay the rates. Its was a new build and has not needed any maintenance. That one returns $1200pm after all costs and some contingency (agent and insurance). The other two are regional, they return $1360 pm after rates and insurance (only one of them needs an agent). Of course there is then income tax too. So sorry, not as great as I first said but I’m planning to wipe out the agent costs by managing the local ones myself next year.

    The other 3 are long term holds the moment returning 8-10%.

    We’re in employer provided rental at the moment but will either rent in the future or move into one of the IPs.

    I didn’t really plan to buy so many properties but my interest has developed as things have gone well. I think 9 or 10 would be my max but just on the edge of doing it all over again with number 7. I’m paying the taxes and trying to pay down debt to keep it all on a secure base. I understand the argument a little about using income to buy more, rather than pay off debt but there is a balance and that’s where I am at the moment I think. Basically we’ve been fortunate to have some income to pay off a lot of debt but this won’t be the case in the future so I want to maintain some caution.

    thanks again I really appreciate the comments. Daniel, I’m not specifically targeting anywhere, just properties that fit.

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