Forum Replies Created
“NZ seems to have somewhat higher interest rates than Australia at the moment.
“Matt B, yeah that’s right, so at the moment if you could get a LOC secured against an Aus property and go buy a NZ CF+ve property with the cash, you’d be winning.
However i did read an article on dolf de roos’s site (lots to read there, dolfderoos.com) that he recommends hedging against currency fluctuations by getting finance in the same country as the property. (apart from deposits.)
So i figure you could go for it here in the meantime while it’s working for you, fix the rates here or whatever, but if it starts to work against you , you could always refinance in NZ after the fact. that’s the great thing about LOC’s which is the flexibility.
As far as investing in NZ as a foreigner, there are restrictions only above 10 million, for beachfront or islands, on lifestyle blocks. For residential property it’s fine.
from
Q3. When is consent required?
An overseas person requires consent to acquire or take control of 25 percent or more of:
* businesses or property in New Zealand worth more than $50 million;
* land over 5 hectares and/or worth more than $10 million;
* any land on most off-shore islands;
* land over 0.4 hectares which includes or adjoins certain sensitive areas (for example, on specified islands, reserves, historic or heritage areas, or lakes);
* land over 0.2 hectares which includes or adjoins the foreshore.
NZ does actually have CG tax if you are trading, but not if the tax dept thinks your intention was to buy and hold.
“At present neither stamp duty nor estate duty apply to residential property in New Zealand. Because of the difficulties in distinguishing the intention behind the purchase of a property – income or capital gain – effective taxation has been impracticable.
“…” relative to other activities, residential property in NZ is lightly taxed. As a result this asset class is advantaged compared with other – and potentially more productive – activities.
……
here’s a good link about tax and property in NZ
TAXATION IMPLICATIONS OF INVESTING IN NEW ZEALAND
http://www.queenstownproperty.com/taxation_information.html
cheers-
MiniI totally disagree that +ve geared properties don’t go up in value. they do. I can’t believe you said that, SIS!! I have proof.
*calls westan to the mic….*OK glad we got that straight.
You also said ‘you will begin to lose money’.
and that ‘you hate to say it but it is true’.Sis, sorry, but baloney. *let the debate commence.* Having said that, sure, convince me, but explain what you mean better.
Ok the other thing i really disagree on is that ‘now is not the right time to buy’.
Here’s the irony. When 90 percent of people are sitting around agreeing that “it’s not a good time to buy”, in fear of interest rates rising, “we’ve peaked, the bubble’s burst, it’s downwards from here”, and starting to look at other investments like shares again,
it automatically makes it the *perfect* time to buy, because the unpopularity of property (thanks, media) means it’s now officially a buyer’s market. Be thankful to all the throngs saying it can’t be done staying away in droves and just go on right ahead and go for it. you’ll be able to not only find loads of deals, you’ll be able to put all your conditions on the contract, get long settlements, pick and choose, not be gazumped, get great service from agents, and really it will be heaven. rents will rise. yields will rise, prices will drop…ahh! bliss!
Actually you can already find CF+ve deals now.
Even in NSW. I’m so bored these days with proving people wrong who say ‘they’re not out there now’ – but last time i felt the urge to prove it was only about 3 months ago. I just surfed NSW property listings under 100K. Found quite a few which were close to CF+ve like 9 percent, and they could be negotiated to CF+ve easily. Just find some that are close and make some offers.I can’t remember all of the suburbs that had deals but I remember Kempsey was one of them.
And that’s on the coast, isn’t it? So how bad can it be?Also try Darwin. I hear that’s got some great infrastructure and planning stuff happening which will mean CG as well.
to sum up, there will always be people who say, look, you might be right, but I’d rather stick with the 90 percent. We may all be wrong, but at least we’ll all be wrong together.
Sure, and cool. but if you want to be in that 5 percent of the population that retire with a bit of moolah to their names, you obviously won’t get there by doing what 90 percent of people do. geddit?
cheers-
mini“+ve C.F IP’s really takes out the seasonality factor of the Real Estate industry (boom-bust cycle) as capital appreciation is really a bonus… However… unless you wanted to buy a property just for the sake of it, be happy with your maginal return”
I just re-read this. I like the first bit you wrote, up to the word ‘however’.
i reckon 10 percent yield after costs (make that 20 gross) is not to be sneezed at. i mean people get excited about 6 to 8 percent yielding commercial properties and mine make more than that, plus they were a tenth of the price and therefore accessible to me right now. The other thing that people forget is that rents rise. A cash return of 10 percent for a term deposit in the bank, say you stick 100K in to make 10k a year, is only going to seem lamer over time as next year inflation means it’s worth less. but rents will go up over time.
i’ve seen data that proves this, for example a house bought in 1991 for 5k rented for $20 a week is now worth 40-50K and rented for 130 per week. the individual returns from one isn’t great, but once you have ten or twenty, and because they don’t cost much, it’s not such a big deal to buy another one quickly, you can get going quite quickly. And then later you can sell 10 of them or whatever, and get into apartment blocks or commercial property. sounds like a plan…
I think the idea is like Russ says to build a portfolio. Just CF+ and you won’t get the growth to go fast, and just negative gearing Cap growth properties, and you’ll max out and won’t be able to service any more. So the way i figure it, you need both, but i think you need about 3-5 CF+ve properties to one neg geared property to balance out, because neg geared properties are usually more expensive; it’s cause of the land, which is what goes up, anyway, not the building.
hopefully my property portfolio will always remain positively geared overall – more so the closer i get to stopping working completely.
Sis, i agree, buy in doom!!!
Bill, “the recent decline in British R/E”…
meaning, a great time to start looking there for deals?
penguin, i call cap rates ‘yields’.
The properties i buy and have helped others find (10 to date all up) all have yields of over 15 -20 percent and should break even at 9-10 after holding costsI know this sounds like a myth to the non-believers but it’s absolutely possible, and right now!!!
Wrappack, if low yields and capital gains usually go together, then so do high yields and little or no CGs.
but at the moment in Sydney, you have low yields and capital loss or no gains, and where i’m buying – small town, NZ – you have 16 percent plus yields and capital growth. Surprise surprise. Cafes going in and all the good signs.
Think ‘Berri, NSW’ for the vibe.So if rental yields in Sydney are at an all time low, and there might be no capital gain or capital losses for a while, then investors shouldn’t be buying in Sydney and the like for now, right?
As far as developments go, the millionaire couple i mentioned before who aren’t brenda Irwin, however they were in api magazine recently i think, said that new developments being offered at new development prices push the prices of the surrounding existing housing up. So in other words it can work to buy near where you hear developments are going to happen.
cheers-
minikay,
Dolf de Roos says, fall in love with the deal, not the property.
Also, a low-ball is not a low-ball if it’s accepted. but how do you know unless you ask?
9 contracts this week!
*aaargh*
runs screaming back to it
“or just bomb the smithereens out of”….
No matter what you end this sentence with it’s not OK. i regret to inform you that you have been brainwashed by George Bush, AKA the Antichrist,
a fellow who has been going around marketing ‘war’ as ‘peace’ and spreading FEAR to make egotistical people thing it’s OK as long as WE are all right -.Remember Hitler? Well, it seems he’s back.
GB’s been desperately trying to stop his currency devaluing for a while now, and it’s linked to the oil buck. Nations breaking the ‘rules’ and trading oil direct with Europe (i.e. venezuela, Iraq) made the Euro rise and the dollar fall. Major mayhem if the US economy crashes. ‘but how can we stop those buggers trading with Europe directly?’ ‘By muscle’. ‘but we need a reason’. And one was created. Retaliation for terrorist attack. but who’s payroll were the ‘hired actor baddies’ on anyway?
And why didn’t they catch them? They had them…
It’s just being SEEN to be chasing them.whoever they are chasing this week is the same person that was helping them waste some other nation last week.
GB’s in debt up to the eyeballs nation is in the shit, and has been since he started a war for bogus reasons, many of which have since been exposed.
I do so love a debate!!
Yeah, Pisces, I hear ya.
speculate- highly geared – wanna go fast! Excitement…close to the edge…just gonna go for it! Well, that’s an ’emotional’ description of a type of investor.
I think i’m more of a ‘solid foundation, risk mitigation’ investor and I’m in no rush. i’ll go as fast as I can be bothered to, or as fast as I want to. Or when the good deals scream out to be snapped up. or when the dividends need re-investing. but not really for thrills, i don’t think.
the thrills come when you are reaping extra money from your investments, and you can have fun thinking of emotionally satsfying ways to spend it. Whether that is on yourself, gifts, or charity. or more investments!
Sure it is emotionally satisfying to watch something grow. !
“If one’s commitment is small enough it won’t be likely to cause emotions to come into play.”
So you have assessed my deals as ‘small’? On what basis? Compared to what?
how much is ‘small’? And how much is ‘big’?>Like in your situation where you don’t owe any money on the properties there is >less (or no) reason to feel fearful.
compared to who? you? An overgeared person who ‘fears’ losing their job?
‘who moved my cheese?’ springs to mind….
Says who? you? Why?There is never any ‘reason to feel fearful’.
it’s all just a hoax!!! Sure, there might be reasons to read the fine print, do the numbers, move some assets around, change your budget and spending habits, sell, buy, get a good lawyer, eat your greens, watch the traffic carefully, constructive stuff, but fear?I reckon the only people who want us to fear is politicians and bullies.
but thanks for telling me i have no reason to be fearful. You are right!!
And I’m sure you and the rest of the world, fingers a-wagging, will also be sure to let me know when it’s time i should be fearful. let me guess: a property crash, interest rate rises, terrorist attack, big brother, the tax man, broken toilets in the middle of the night, what your brother’s accountant said, what a current affair said, what the news said, what Today tonight said, what Neil Jenman said, what the stars said, what Pauline hanson said, what whocares say, what the predictions say.i reckon i’m all but immune now. And i reckon it was breaking that board in two, that did it to me….
yack,
the issue is..(debating-speak-)
‘that seminars are not worth the money and can’t teach you anything you can’t learn just as well by doing it yourself. That people who go to seminars are no more successful than people who do not’.
I am arguing against …ok here we go…
“What most of us dont understand is what you get out of a high priced seminar that you dont get out of doing it yourself and by reading a few books on the subject.”
seminars aren’t a substitute for doing it yourself, but they are great if you haven’t done it yet, are a bit scared or clueless. like I was a year ago and look at me now. Wahey!
saved a bunch of mistakes by leveraging off someone else that’s done it. seminars are not the only way, but a quick way.
‘We dont need to be told we are jealous or not successful in what we have done. Ve+ is just one of many property stratgies.’
Yeah, I know, I’m actually using two other property investing strategies myself Steve teaches, apart from buy and hold +ve CF.
Steve teaches at least 6 strategies, but just not negative gearing.
>All the successful property investors, builders, >developers, renovators I know never attended a >seminar.
Builder, without attending a seminar? That’s splitting hairs. They have to do a long apprenticeship and training to become builders.
Renovators?
I’m not saying you have to do a reno seminar before you can renovate, just that I bet if you had two people who’d never renovated and one did a 2K reno kings seminar first and the other didn’t, the time and money the seminared one would save I BET would be more than the cost of the seminar itself, because they would be more organised, time efficient, and they’d just me more ‘briefed’ than the other person, who I bet would be slower, and less organised and have more things they hadn’t counted on happen, and be more likely to overspend.The seminared people could have probably even called up the reno kings if they had a spot of bother and got advice.
And besides to further disagree with you, many of the gurus I know of did seminars. tony Barton did. Steve and Dave did. Robert Kiyosaki did.
Phil Jones and David Hows did. Brad Sugar did.
henry Kaye did. (well i don;t know that, but i figure, he must have even just as ‘market research!’) And of course having done the seminar myself and met 120 odd property investors there as well, many of whom are now friends, all of them did.oh blah blah.
i predict you will reply with your usual ‘I just don’t think that there’s anything a seminar could teach me, and I so don’t think they are worth it’
and the reason that so gets up my nose, is that it’s the voice of a know-it-all. and when i meet one of those i am just so tempted to…hassle the hell out of them.
Are we still all having fun? *claps hands in glee*
I so love a debate!mini
Oh here’s another argument for my debating team:
Let’s say you want to learn origami. Sure, you can read a book, following the diagrams and read the theory. A bit slow and painful though. Sure you can just grab the paper and make it up. Lots of fun but heaps of crumpled ‘mistakes’.! But one hour with someone that knows a few moves and shows and tells you, and you’re likely to be sooooo much further down the track than others. Playing the piano, ditto. Sure you can teach yourself. but a session with someone who actually knows how to play and shows you, priceless!
Take those couple of licks you learned home and build on them…Yack, you’re just such a non-believer. if i put all your collated thoughts in one place it’d be like, ‘they are making way too much money from seminars! Why should they be making more than me? i work hard! Their seminars aren’t worth it! I’d only pay $30! They couldn’t teach me anything! i know it all! And anyway their strategy doesn’t work anyway! It can’t work! Everyone knows there is no such thing as a CF+ve property, because I haven’t been able to find one! it’s a rort! I know they are selling! The reason it can’t possibly work is because they were never making very much money in the first place! blah blah blah’
What hurt you as a child, that you are so….un-allowing (is that a word?) of others to go and shoot goals?
mini
I don’t do property investing with emotion. That is, it’s impossible to turn it off. but it’s the least emotional aspect of my life. I haven’t even been to see two of my properties. I don’t have an emotional reaction to the rent coming in, other than, good, it arrived. Much like you do your wages or salary. You just expect it, because you put the effort in. My houses couldn’t make me cry. I did get some satisfaction from renovating them (by remote control) but even the colour choices weren’t emotional, like what colours do I LOVE? because it was more like, which colour is practical, will appeal to the most people, goes with the most things? What colour can we paint the feature wall to jazz up this bland cream decor? OK, navy blue it is.
I guess, I use other parts of my life for emotional satisfaction. Music, friends, family, fun, travel, sharing ideas, writing. Walking. thinking. Loving. painting. photography. Whatever. But property investing is just a strategy. And strategies aren’t emotional, they’re strategies.
they weigh up things like risk and returns. I certainly didn’t start property investing because i needed some more emotion in my life. i did it because i had some money, i didn’t want to put it on a term deposit, and shares etc bored me and seemed way too time-consuming to bother with, though i did try for a good six months, reading, learning about it -yawn – I have a full-time emotional life and really I – hang on – I just realised that there was emotional satisfaction involved, bill, maybe you have a point –
I think my emotional satisfaction came from going out on a limb and being independent to the ‘herd’ by analysing my own deals, making my own decisions, in the face of opposition, and seeing it working, and my wealth increasing, but not only that – helping others get into it. One friend has already overtaken me and now has 4 IPs (all +ve CF of course!) and is about to buy three more. And i remember being there and helping her put her first offer in. Yeah, that felt good.
Cause in the end it’s all very well to be rich and free, but it’s no fun if you’re all alone and all your friends are broke and still slaves. One wants all ones’ loved ones to come along for the ride. To have people around you to have fun with. There’s the emotion.
Yeah, that’s what the financial independence of property gives me – time and ‘means’ to have happy emotionally satisfying times, rather than having to ‘work’ for earned income just to survive.
mini
“with the long term aim of reducing debt,”
basically to buy IPS you’d be increasing your debt and therefore risk. So I am wondering if you mean reduce consumer debt, or what? But yeah. castle dreamer is correct.
Don’t even look at anything under 10 percent yield, to cover you if interest rates rise some more.
cheers-
miniI know that a) I’m not SIS and that b) you could accuse me of being a serial compulsive thread-crasher, but consider the possibility that SIS has cable modem and stays logged on even if not actually using the site.
Wow, Lucifer_au, who knew? Satan is an Aussie….
Castledreamer, I have been buying up the cheapo high yieldos in NZ as most of you know as I’ve been banging on about them with evangelical fervour for the best part of a year.
Anyway, I’m a dreaded self-employed freelance type who quite often manages to tax-deduct quite a bit of my life as I work from home, in an industry which makes it kind of doubly more likely that I’m the bank’s worst nightmare.
Having said that, I’m fully legit, have a good income, plus my 3 IPs which i own outright freehold. Then there;s no/low docs. So lu was right, a bit of an LOC is what I’m thinking. Probably have to cross-collateralise as my properties are so cheap. And they might want extra security because of the freak-factor as outlined above.So i should be able to get at least 50 percent of 80K (what I spent) and get a fourth one around 40K. Overall i will still then have 75 percent equity. then the rents of four properties (20k a year) minus holding costs of 4 properties (10 k a year) minus borrowing 40K per year (4k) leaves 6 k left over. So I reckon I can get a second one kind of almost immediately, i mean, a fifth property, then I’ve borrowed two, but own five.
it’s diluting the equity a bit, but still OK. I would still have 3/5ths equity. what’s that, like, 60 percent equity.
I am not accounting for capital gain here, because my numbers work out even if i don’t get any. if I do get some, well, that will just be a nice surprise, but then it will be more expensive to buy, so it’s all relative…So let’s say I have 5 rents coming in now, then the combined income is all going a lot faster now and probably it’ll only be a few months until the surplus can fund the deposit for a sixth property probably around the 50-60 mark.
And so on, I guess.
I came to a bit of a standstill because i took 8 weeks holiday ( no holiday pay for the self-employed!) over Xmas, and I did a bit of a ‘let’s pretend I never have to work again’ and just lived off my rents instead of saving them up to buy more properties which is what I’m supposed to be doing. So minor setback to plan that I didn’t buy a property every three months, I missed a quarter. But I’m going to catch that up and try to buy 4 properties this year. i think I will have a little more earned income anyway to fund some deposits.
I’m going to stick to the ‘small deals’ for a bit longer because I like them, they’re working for me, and I think they’re going to go up big time, to boot.cheers-
MiniPS westan, do you hate me? I’m SOO crashing your thread. hehe
Hi John,
> other countries such as NZ? At what point in time throughout the negotiation
> process does it become necessary for you to actually go there and inspect the
> property for yourself?I used to schlepp around and look at zillions of properties, but in the end the perfectly tidy little old lady owner occupied one I loved turned out to be structurally crap after I had a builder’s report done (and it didn’t look it at ALL!!!)
Conversely the ones I’ve bought have looked that crap on the surface, (i redecorated) but turned out to be structurally sound super-solid after building inspection.
So i make offers based on pictures and numbers, subject to satisfactory LIM report, builder’s report, and a bunch of other things such as tenant due diligence within 10 working days.
When the offer is accepted my lawyer does title search, the building inspector checks council, code compliance of fireplaces, garages, extensions, and does the BR, and if it’s all good then I go unconditional and proceed on to settlement a few weeks later. often in that time between settling you can gain access to do your thing to it so by the time it settles it’s ready for a tenant.
> Also, with regards to certain questions one has to ask about the area,
You can ring the local police and say i’m a property investor interested in this house in this street. Any problems in that area? Where do the gang members live in this town? What’s the worst area? How bad is it?
you can also ask a rental manager not associated with the agency selling you the property if they would manage it for you and how much it would rent for. they go and look at it for you. often for free to try and get your business. Once, the rental agent said ‘we wouldn’t touch that house, we’ve had nothing but trouble there.’ So obviously I didn’t get that one!
basically if you don’t live there you rely on other people to give you the info about what’s the neighbourhood like?
i would also suggest using a local lawyer to do the conveyancing. The more on the spot locals you have on your team to chat to you, the better.
>apart
> from prices of nearby comparable properties,I do a fancy ratio calculation so I know what to offer in a town I don’t know. i get a print out of recent sales in the area back about 6 months in the price-range. on the sheet it has the address of the property, the government valuation and the sale price. there should be a pattern to the relationship between the Gv and the sale price. So you work out an average ratio for the area at the time, and make your offer based on that, the yield, and the list price. But it will enable you to spot the good deals more easily. For example if in one town you find the trend is that properties in the price range 50-80K sell at approx. 120 percent of GV and then you find one selling under GV, it’s probably a bargain (or trashed! hehe!)
>rental growth,
Yep – there’s a lot of movement in NZ small towns at the moment, I know a town with 3500 people with two Rental agencies on the main street, one with a ‘sever shortage of rental properties’ and the other with a waiting list of 70 people.
Vacancy rate in one of the office was 8 properties out of 300 they manage ‘and they’re all shockers’.
this coincidentally (not!) happens to be where i have some properties and also where I bird-dog for others.
>agentpopulation, are
> there any other important information to gather?Don’t be scared of declining population, up to 1 percent a year. Worldwide the population is increasing, and as air travel gets cheaper and more common, people can’t help but spread out. Auckland gets crowded, and more people decide they might get a little weekender in the country 2 hours away, and then decide they like it and retire there. Hmm, funnily enough, it’s already happening. the cafes and lavender farms are going in like mad.
cheers-
miniHey james,
a friend’s mum who lives in Q’land was telling me she had a huge vibe for Logan about a year ago, which was a place people would warn you against, like, bigtime, and seems she was right. Her husband wouldn’t let her invest there though.
*sheesh*but you should have heard the people slamming Logan around here, a year ago.
they would all be laughing all the way to the bank if they’d bought a year ago – it was quite cheap then, is it still or has it moved? i bet it’s moved.What i get from all of this is that you have to be a leader, not a follower. it takes confidence to be ahead of the pack, you will for sure get detractors if you go out on a limb away from the munters.
but just do your numbers and go for it anyway, I reckon. Most of the detractors in my experience don’t know how to do the numbers anyway.
cheers-
miniand when the ‘herd’ figure out it was actually a bloody good idea and try to do what you did it doesn’t work as well because prices rose already…
hi Peter, although I am not westan, i’m going to have a crack because I think I know the answer to your question – how you keep your serviceability up is you buy positive cashflow properties. Then the income eventually replaces your job income. It gets better over time, too as rents increase. you are quite right that negatively geared properties by nature lose you money so you have to pay after-tax dollars in to keep them afloat, and stay in your job. And the bank won’t lend you any more because you can’t support another neg. geared property even if you have lots of equity. OK I know neg geared properties make you equity fast in a boom (and we’re not in one now, BTW) but that’s not cashflow and doesn’t buy you groceries or pay the rates, unless you sell. then you have CG tax. And if you want to retire you’ll still need an income.
There are blocks of flats available in NZ from as little as 60K up to about 250K with high yields around 14-15 percent or potentially more if you renovate first, and lower holding costs proportionately than 3 bedroom homes. Westan is an esteemed person I respect who could bird-dog you one.
cheers-
Minimogul(who by a strange and tacky coincidence is also a bird dog for NZ properties!)
