Forum Replies Created
hmmmmmmmmmmmmmmmmmmmmmm.
bill, sometimes I SO don’t get you.
how can you say that ricky should buy a negatively geared PPOR which will give him no tax benefits, and which he is buying at (according to you Bill) the top of a boom and which (also according to bill) could go down in value by up to 20 percent?
(ironically, this sounds like something most of the world would go for, actually, keeping them in their jobs and poor at the same time…)
I did the numbers on either buying the house where we rent for $400 p/w worth 800K with 70K deposit versus buying
3 NZ IPs for 70K returning $300 per week in my hand. (22 percent return.)i’m about a thousand bucks a week better off to rent someone else’s negatively geared liability nightmare getting my landlords a measly 2.6 return on today’s value – (plus they have to maintain it) –
– than buying it. that’s not even taking tax advantages of an IP which you don’t get for your PPOR into account which makes the difference even bigger.
this is only my situation, but i would advise doing the numbers on your own situation. i would be extremely surprised if you would find that buying your PPOR would make you wealthier unless you negatively geared it for many years. i.e. ten years, enough time for the market to dip, recover to where you are now, and gain enough for you to recoup what you lost over the years negative gearing and through inflation, and another few to (finally) make up your losses
the thing is, your PPOR has to be where your life is, where you want to live, but your IP can be anywhere – where the yields are, where the capital gain is, where the deals are.
cheers-
minitotally. Anyway, this lawyer only charges $55 an hour NZ, which I find incredibe value anyway, especially as my lawyers in Sydney cost $400 and $280 per hour.
yeah ange – read, read, read!!
go for the threads with lots of replies first.!
a lot of us have been posting for a year or more so there is rather a lot here already!hi fudge, I resent you the email i wrote (long!!!) so hope you get it this time! ditto dom!
> Dear Mini,
> Thanks for your comprehensive answer to my question :o)) I know this would
> have been answered elsewhere and I could do an archive check, but… does one
> get the same tax benefits as one might in Australia if one buys in NZ?yes as far as I know. haven’t done my first tax return there yet but i think depreciation is 4 percent on the building. I think that’s better than here?
You would do a tax return in NZ as a non-resident and then your NZ accountant would send that to your Aus accountant and it would come in as tax-paid dollars or input credits or something. i think 2 trips a year to NZ are tax deductible here also if you have property there.>and
> does one have to pay CGT etc upon the selling of IP’s in NZ?
i think that if you hold for one year or more and your intention was to buy and hold then no CGT. There was a document on the net
http://www.investnewzealand.govt.nz/common/files/50%20Things.pdf
50 reasons to invest in NZ.> kay henry
> Thankyou for that, i am going in NZ in june to visit friends in invacargal (i
> think thats how you spell it) for two weeks and hoping to purchase sight seen.
> I prefer to buy that way as i have a friend whom bought sight unseen and had
> $8000 to spend including his own work just to make it liveable.bummer. i mean, i can relate, because i spent 10K on two of my properties – however i knew that beforehand. sounds like your friend didn’t do due diligence. I get builder’s reports as well as photos, rental assessment, LIm report and the offer is accepted subject to everything being OK. So i know EXACTLY what i am buying, at least from a cost point of view. Harder to do due diligence on the street, good area or bad, neighbours, etc? but it can be done. just make a lot of calls and talk to people. I chose to buy cheap and renovate because to get a house with nothing to do i would have to have spent double. it was a way of maximising my cash by adding a bit of work.
>I know the
> population has not increased very much at all in NZ and thats why i will be
> cautious.no true – AFAIK immigration grows every year and record numbers of people are NOT leaving NZ at the moment. Significant differences. 37700 more people in 2001 than in 2000. that’s growth of around 1 percent PA.
some info about houses
http://www.real-estate-nz.com/home-styles.cfm>I also know that a large part of the country is bought up by
> overseas investors and tht they are starting to clamp down on this problem.
http://www.scoop.co.nz/mason/stories/PA0311/S00190.htm
http://www.stuff.co.nz/stuff/0,2106,2727981a1861,00.htmlat the moment, there are restrictions on buying over 10 million worth of property and lifestyle blocks, beachfront etc
http://www.oic.govt.nz/faq.htm
> These are not bad things but i will step in lightly.I have not been their but
> what i have heard is all good, hope its all good for me.
> Dom
well if that’s all true, get in now!!> PS I also have arthritis all over
>
> Mini,
> Another question for you :o) If the costs of the houses are so low, and the
> tenants are paying around 20% rent, why don’t they buy it themselves? A loan
> for them, over 25-30 years, would see them paying similar rental as mortgage
> repayments.i don’t know why they don’t. Certainly, in a town where houses are 20K, and even if the average wage is 13.5K per year, that makes houses more affordable than here in Aus. i don’t know why a lot of people want to rent, not own. I’ve never owned a PPOR myself, (only IPS) and I only know why *I* still rent – because a house where i want to live worth 800K in sydney only costs me 400 bucks a week to rent and it would cost me 1200 per week to buy (interest only) and I’d need a huge wad of cash to plop in like 100K. i’d rather buy five IPs with the money that would only get me a deposit on this Sydney house, which would return me $500 bucks per week, so i could live ‘rent free plus spending money’, if you like.
hey, that sounds a lot like what i’m doing right now…hehe
i’m not saying that NZ is the only place to invest. It’s just a place i found with houses at the right price, with the right yields, and lots of capital gains legs left.
And there are still plenty of deals left so get in now!
yeh interesting about the psychology of rating yourself.
“Some people might have 100 properties and give themselves a 2/10. For some, it might never be enough, but I think it’s good to be satisfied and proud of oneself- whatever one has achieved- because it isn’t easy for many of us. “
yeah – totally. and I gave myself a big old back-slapping look-how-far-i’ve-come-in-6-months 10, even an 11 – and yet the legendary westan was worried about appearing conceited with 9.5.
transcript of inner-dialogue while reading and re-reading this post over the last few days (just call me bridgette jones!)
eek! self-esteem-alert! should i have rated myself lower because westan has many times more properties than me? should steve be the 10 benchmark with which we all compare ourselves? was i really only a 2-3?
hang on self,
because the question was ‘rate your achievement’. *i* know what i achieved and how much i sacrificed to do it. this is a psychological barometer of self-esteem! who cares what they think, westan? who cares if someone would rate you lower than you rate yourself?
The question was rate yourself. not, rate yourself based on what you think people will accept without thinking you’re a w@nker.
why do I now feel like I have to justify scoring myself as a 10-11 when westan who I respect and think of as more experienced than i only rated himself a 9.5 and is worried that was too high? should i edit my post and take myself down a notch or two in case someone else might have a problem with it and think i am full of myself? Do I think i am up myself? no.
so if someone thinks i am, i won’t care, because i am not, right?blah blah blah blah
result: i didn’t edit my post.
it reminded me that Steve’s answer to people’s reasons for not investing such as ‘i might look stupid’ was TO WHO? WHO CARES???mini
i’m only going to mention the good ones as they’re the ones i remember!
Australia’s Money Secrets of the Rich.
John R. Burley
My Rating 9
I agree with muppet. one of the best books on ‘wealth creation’ to quote an icky jargony termReal Estate Riches
Dolf de Roos 8
as well as educational, it reads quite well tooFrom 0-135 in 3.5 years
steve mcKnight
my rating – 9
very readable bits interspersed with hard-core diagrams and calculations sections. it may be daunting to people who don’t like numbers, but then again if you can’t do the numbers, you shouldn’t be investing.
and besides, there are these new-fangled gadgets called calculators these days….The NZ InvestorÕs Guide to Making Money in Residential
Real Estate
Dolf de Roos and Jan somers
9.5although a slim book, it was the first one i read, after watching an interview with some all-black who’d suddenly got pots of money after being low-socio economic all his life. it was a money programme and the guy was talking about how he’d just started learning about investing and the best book he’d read which explained how it works simply was the above book. i raced out and bought it the next day and I loved how it gave a case study of an average family with some equity in their own home who leveraged it into a million dollars in 8 years (i.e. after eight years they owned property worth 1.8 million bu only owed 800k.) it was the first time I started to really get how property investors use the banks’ money to make money.
Rich Dad Poor Dad
robert kiyosaki
rating 10
i could go on and on about this book – but the main thing i feel is that reading this book ‘re-programmed’ me for financial success, considering that I was pretty much the opposite at the time of reading the book. As soon as i finished the book the world seemed different, and full of opportunities which i started to see everywhere, and which i had never seen before. What i got out of the book was a state of mind I call ‘entrepreneur consciousness’ . Life-changing? well, life is more than $$$. but it was life-changing to me in the $$$ department.The one-minute millionaire
Robert Allen and Mark Victor Hansen
rating 10So much more than a $$$ book. On one of the first pages, they say ‘the object of this book is to create one million enlightened millionaires (who give 10 percent to the community.) we believe this has the potential to change the economic future of the entire world.’
After reading about the number of jobs the average millionaire creates (6) and thinking about the increased energy to the economy, I can totally see that being possible. they further explain this ‘butterfly effect’ as it’s called.
the book also aligns the ideas of wanting to be wealthy with living in integrity with the world and doing only good, which was a biggie for me.
Also, it’s just plain old empowering. the rubber band trick alone (put a band on your wrist and snap it every time you have a negative self-image thought, wearing it every day for 30 days without taking it off) was worth the purchase price.
I have to admit that my rubber band was a ‘virtual’ one, but it worked just as well, and i can now go for days without internal dialogue telling me I am not good enough or whatever!
i also love the two books in one thing, and you can read either or both – the novel, or the non-fiction. both present the same info in a different way.
cheers-
minimy two things that i do in order to get a good deal is make cash offers, i,e, have finance ready to go. i heard that up to 50 percent of deals fall over due to finance not working out for the buyers. cash offers don’t fall over. although you can still get out in other clauses, like if the building report doesn’t come up to scratch.
second thing i always do which as far as i know my dad and i
‘invented’ because i’ve never heard of anyone else doing it –
is ask the RE agent for a print out of recent sales in the area.
then do the numbers on them – actual purchase price divided by the GV. I know people say that GVs mean nothing but they are so wrong. You will be able to find a clear ratio for an area.
i.e. if properties are selling over GV the ratio might be 1.4. if under then .8.
Now you get the GV for your property you want to put an offer in on and apply the ratio. that will give you the actual fair market price of what you should get the property for so you can offer under that and you know how much you can come up to. you also know when you’re getting a good deal.when you go through 200 properties in an area and do the numbers like this, sure in an area where the average ratio is say 1.4 you might see the odd 1.9 or .80. you can either think the people got a good/bad deal, or there was something else about the property that you don’t know just on the numbers. but you’ll still be able to see a pattern.
every time i go into a RE agent in a new area, i ask for this data. they always say no the first time, then you say ‘XYZ office gave me this info about another area but i also need it for this area, if I am going to feel confident about investing here.’ then they give it to you.
then they tell you ‘gv has nothing to do with the purchase price’ and you don’t say anything. Just go away, work out your ratio, and come back and floor them with your knowledge of what any property will probably fetch in today’s market, accurately. they will for sure take you seriously. i don’t necessarily let them in on what i am actually going to do with the numbers. I can glance at the numbers and quickly work out in my head a rough idea anyway. Also it’s good because you can get the addresses of the houses and drive by and know how much they sold for and for how much and on what date.
In NZ I believe that private individuals can’t actually access this information, you have to be RE agent so it’s really the only way to get this data is off an agent. they get it off the net and print it for you, and you can filter it by date and price-range if it’s a big area and there’s too much data.they will also tell you ‘we’re not supposed to give this out’ or ‘we have to be very careful who we give this out to’ and you can thank them and stuff. just try to get the numbers, trust me, it’s a *really* good trick.
the ratio obviously changes if there’s movement in the market, because the GV only gets done every few years and the market is right now. So for example one area i was watching since january, the ratio used to be about .93 (so if the GV was 55 you’d get it for 51. i virtually ignore the list price, other than it letting me know if the vendor is realistic/motivated or not.
Anyway this same area 11 months later has a ratio of 1.4.
the RE agents can tell you that prices have been going nuts, but the ratio thing can tell you by how much.the other thing i could tell from this area by comparing the data from january till now is tha capital gain in that time within my price range (which i got the real estate agent to filter).
in this area for properties up to 100K, and comparing the ratios of january to now, i figured out there had been a 50 percent capital gain in that time. (it was a hot area.)
The 55 k property which in jan sold for 51K (.93) would now sell for 77 (1.4) –
77 minus 51 = 26, divided by 55 equals 50 odd percent.cheers-
miniyay the book, redwing! sooshie’s just got it too.
i think it’s brilliant that you’re networking. often it’s hard to find people in your circle of friends who are on the same page of what you want to do and aren’t negative and telling you you can’t do it for whatever (their) reasons.
through this forum i’ve met up (in real life) with some excellent people that i can chat to about investing, we are sharing information, sharing deals, and looking out for eachother.
cheers-
minihi Dom,
it wasn’t unusual for me because my parents are there and i nip back several times a year anyway. Also i know the country pretty well having toured it lots of times. I was extremely hesitant about investing sight-unseen and I was finding deals on the net for months before making a move, driving myself crazy with how good the numbers were, but not confident to buy without seeing. What swung me was two things. one was, that over summer I looked in person at a zillion houses (in nz) – found ‘the one’ – CF+ve plus three major Dolf de Roos ‘twists’ – but it turned out a dog from the builder’s report. That made me realise that as a time-money study it didn’t work for me to physically look every time I bought a house – because i couldn’t really tell a good one from a lemon (which a professional BR can.) I don’t love looking that much, find it a bit of a chore, cause you’re not looking at ‘lovely houses you can see yourself living in’ necessarily so it doesn’t give you emotional satisfaction like buying houses for yourself might, i imagine. emotional attachment and deal analysis don’t really go together in my opinion. The second thing that swung it was talking to Steve McKnight. As a purchaser of Wrap Secrets Revealed i was entitled to a year of email mentoring and boy, I had the burning question ‘am i crazy thinking of buying sight unseen subject to builders’ report?’ (i had photos.)
Steve said ‘no, if you can still do your due diligence.’ DavidU who used to post here a lot said the same thing – he owns several properties he’s never been to and probably might never. He doesn’t need to – they are fully property-managed.So that’s the confidence part. it’s still possible to make mistakes, such as i did, buying the house next door to the local gang member. hehe. yeah, watch out for that one!!
But don’t forget you have the building inspector, the rental manager (not from the same firm as is selling you the house, if possible!) and the lawyer (if you use a local one to where you are buying, which i would recommend) to bounce ideas off and who have local knowledge and brains to pick. There are ways to buy without going and seeing it. Whether everyone would be comfortable with this, i don’t know -up to you.recently I took a member of this forum over for a week of looking at properties in NZ. She is confident about buying there now that she’s been there, i think, even a house that she didn’t look at – because by going there the vibe of NZ has been demystified. I would recommend going there actually, and many from this forum have done exactly that.
It’s made me consider running a NZ propertyinvesting tour, actually, next year. Taking a mini-van or busload of people around to look at properties and get a feel for an area, using the wonderful contacts i have over there already. Maybe I’ll do it.
cheers-
miniPS there are specific things like get your money sorted out so you can fang it over when need be, touch base with a lawyer before you make an offer who can explain the legal side, LIM reports and the like, make sure you have a fax machine,
etc, but I don’t think it’s that muh different to herehi kay,
bill is right, and after doing a lot of research, i found that the more expensive the property (generally) the less the yield.the properties at the bottom of the market (actually any market) will likely have the best yields, because the rents in any area seem to be in a far narrower band than the purchase prices.
Often a house might be more expensive because it has more land or whatever, but that doesn’t necessarily compute to rental $$$.when i first started looking I had about 80K to play with and it was January. I was looking in NSW thinking at least it’s driveable if i want to renovate. There were still CF+ve opportunities for around 80K in places like Bathurst (which i’ve been to, and I loathed it – i found it ugly and and it seemed to have an unusually high proportion of drunken louts. nevertheless i know of people who have found good deals there, but i just didn’t ‘vibe’ it.) and Campsie – Kempsey – I don’t even remember now – which i’ve never been to. So i wasn’t getting that excited. then i decided to look in NZ and not only were the prices heaps more affordable but they were in places where you could get capital gain as well as CF+ve. After having heard Steve talk about investing in places such as Traralgon etc when he started out, I started looking for the NZ equivalents of Traralgon – one of which turned out to be only half an hour out of a city. there you could buy the most lovely villa in good condition (nothing to do) for 27.3 and it immediately rented for 110 per week. 20 percent return.
Next I found a lovely dump with sitting tenant for 16K rented for 90. (29 percent). Unfortunately the tenant moved on and the true dumpiness was revealed, and I fixed it up and did a total reno for 9k. A new tenant moved in and although the reno didn’t capitalise into much more rent (95 per week) the yield is 19 percent now and at least I know this house will always attract a tenant because it looks nice, plus the tenants are the kind who have planted 18 trees and refenced the property and put a new gate on in return for 2 weeks rent so i couldn’t be happier really. Also I know there’s not going to be any nasty maintenance surprises because I attented to absolutely everything off the builder’s report, as my aim is buy and hold i just want to end up with a property that lasts for many years as a rental income-producing asset.third house was 19, spent ten on it, rents for 115 per week, also a 20 percent return, and because like the second one it had everything done to it, it should last me many years as a rental.
I am probably going to pick up another one of these kind of deals in the near future as the real estate agent i bought two off is kind enough to show me all the new listings before he puts them on the web, hehe, so this whole thing just gets easier and easier!
in fact I just passed on a deal today for 36K with sitting tenant for $120 per week. that’s 17.3 percent return just on the list price, not even negotiating it down a little! A thousand people will tell you the deals aren’t out there for every one that’s saying ‘they are’ – but I would bet a thousand bucks with every single one of them that I’m right and i’d win. cause the deals are out there – zillions of ’em! they’re falling out of the sky! they’re piled up! they’re abundant!
mini
nice one Richmond.
Hey Fudge – I had a friend who had arthritis in her whole body (started in a knee, spread to the other, spread more) at around 20 too – but got completely cured within 6 months. I saw her again about a zillion years later and she never had it again. drop your email if you want me to tell you more because it might be a bit hairy for the forum.
1) What was the prime motivating event in your life that created a focus on the need to invest?
getting a lump sum and realising I had no clue what to do with it, all I knew is i didn’t want to put it in a term deposit or spend it. Also, reading Robert Kiyosaki prior to knowing i was going to get the lump sum – so I already was thinking about it. Shares didn’t interest me, building businesses i was already doing, so property seemed a nice ‘passive’ (yeah right!) way to store and grow the fruits of my labours. Realising that leverage is how i got the lump sum in the first place helped me ‘get’ the ‘physics’ of using leverage by investing to further grow the lump!
2) What have you in fact done about it since then, and rate your achievement.
Well i bought three houses in 6 months, renovated two, and all are rented to quality long term tenants, and i can live off the proceeds (albeit frugally) so i give myself a modest 10 out of 10. 11 out of ten for approaching it with an incredibly low amount of risk which suits what I want. of course I want to get more, and i can if i want, i can go as quick or as slow as i want, which i’m just figuring out. Going faster means more risk, which i hate….
3) Based on your current performance, how long will it take to reach financial independence? (Whatever this might mean to you)
have reached it. I could live on the surplus right now if i wanted to.4) What are you currently doing to improve your plans?
getting more structure and good order in all areas of my affairs, financial, health, and other.5) What is your ultimate goal; and will it make you happy?
to leave a legacy for mankind. and yes it will. I think I will leave several, actually. whether it be works of art, a book, music, or a park or whatever, i’m still creating them all. In fact i’m in the middle of one now. but why stop at just one ultimate goal, i say? I’m working on about ten! another goal is complete and utter freedom to wake up and do whatever i want each and every day. whatever i want to think, read, speak, buy, sell, create, hang, travel, etc.6) Which is more important: The goal or the journey?
both! Without a goal your journey is empty and aimless. without a journey, achieving a goal seems trite.As soon as i’ve journeyed to one goal, i’ll get the next one started. in fact like I said i have several pots on the boil at once…
cheers-
miniPS talking about leaving a legacy for mankind, i went to see neil young tonight! WOW!
dolf de roos bought his first property at 17 when interest rates were 27 percent. he looked like a kid too. You can do it too.
just identify what the actual problems are and solve them one by one.
for example using a mortgage broker would be a good start.It does seem to me that there might be bargains to be had in the future, in the Aussie market – probably when the next 0.00004 interest rate rise (hehe) snowballs into even wider-scale panic and loss of confidence than we’re seeing now.
If you are buying now, you’ve got to figure out if your property is worth it – it might be overpriced! Figure out your returns with rent – capital gain -(which you might not be able to count on) – how big your buffer is – if you have other emotional reasons for wanting to buy – if the property is rare i.e. beachfront or whatever.
personally I am only buying CF+ve properties yielding 20 percent or more which gives me comfortably enough to maintain, pay rates, pay the rental manager, and have enough left over for 10 percent actual income in my hand, or else enough to borrow and then a bit more.
I agree with the sentiment that negative gearing is a mug’s game in all but a raging bull market, and so….if you’re in that position then maybe it’s a good time to sell.
OR – buy in a market that’s still got lots of legs in it….
cheers-
minithe last agent I went looking with drove us around in a brand new beamer.
business must be good….
Yeah, actually, I saw their stand at some investing expo i went to at darling harbour. i can’t believe I took a brochure and followed it up actually, because it’s so not me. I guess i wanted to test if it could really be as good as they said it was.
So off my friend and I went to an ‘information night’ with RP vending. The returns seemed so good that at that time i thought, ‘why would anyone want to buy property when there are vending machines??? ‘
– seriously!!
however i soo didn’t want to be the vending guy. (they give you uniforms, training, etc) I was gonna do a joint venture with a mate, I’d buy the machines, he’d do the work, we’d split the diff. Didn’t do it in the end – my friend had seen second hand machines for $400 and he didn’t think it would be worth paying several times that for their machines.
however, I thought the RP guy seemed straight up. You buy their vending machines already sited, and they place them within 10 minutes of your residence. Yes you’re right about coca cola and smith crisps or whoever having the best spots, town hall station, the university, and the like.. It’s the locations the giants don’t bother about (20-40 employees) that’s Rp vending’s main niche.
i would recommend going to an information night with them. It’s very interesting, at the least – and you get to have drinks and snacks from the vending machines for free….hehe
i think it’s a good entry-level investment – slash – work for yourself type business for people just starting out.
cheers-
minito store and grow my weath – with passive income to boot
I would have thought that any sort of borrowing would be much better in the long run than a joint venture, as if you’d use a money partner you’d probably have to give away a larger share of the profits (50 percent even???) than you would if you were borrowing from the bank or a non-conforming lender…. thoughts anyone?
hey bjaw,
unfortunately I’ve been asked not to refer anyone else to him.
FYI, this is what he said:
“Following up on our conversation the other day – I am finding other persons referred to me are not working in the smooth manner that you and I progressed matters. For that reason I must decline to accept any more referrals. I have not made this decision lightly and for your information (without referring to any person or specific situation) give the following examples:
Contact is difficult as they may not be at a regular number, do not have a fax, or are travelling etc.
I am willing to contribute time to their education – recently, however, I was challenged on a bill for $100 to assist in all the pre-settlement work (4.9 hours) and the settlement fee for services of $150. Sorry, but that does not cover my secretarial time.
Contact is expected out of regular working hours – weekends, evenings, etc.
Money is advanced for reports and then not reimbursed when billed.
Toll bills are challenged – and they don’t even cover the total costs of tolls and faxes.This decision does not mean that I will not continue to do work for you if you wish – I have never had any of those problems with you.”
so….bummer eh.
I heard from a local real estate agent (completely by acciden) that he was ‘completely snowed under and not taking on any new clients’. however if this changes i will let you know.In the meantime I would say just ask the RE agent to recommend a good lawyer local to your first property. if you like them then you can use them even if you buy elsewhere in NZ no problem. You get the advantage of someone else with local knowledge ‘on your team’.
cheers-
miniPS As well as the sites that Rod C and KtKiwi posted, this one is useful too.
http://www.minhousing.govt.nz/tenancy/index.html
There is a tab on the right called ‘market rent information’ which gives you info about the current rent prices in each area in NZ based on recently lodged bonds.
