Okay, eeshole, why not?
Email me.
cheers-
Mini

Well Westan good point, and actually I admit I have never invested in Tokoroa or Invercargill to be quite honest, but I may as well have because where I was investing in ‘town name irrelevant’, people said exactly the same things about.

Also, my business partners and compadres all have properties in Tok and I monitor all the deals we have found clients there of course. Going back at least a year or more. When I first started investing there were CF+ve all over NZ of course and though Tokoroa was very much on my radar I got side-tracked more into a couple of different areas and you know what it’s like, once you have a great team in place where you start buying, you tend to want to grab a couple more, so that’s what I did and never ended up going back to Tok.
Also you know it’s as much about the team after purchase as it is the purchase itself.

However my first business partner went over to Tok and sussed it out and vibed it, over many other towns actually. He got us about 5 great deals there which is where it all started. I was in there before AD or even Steve and Dave went there, and before that ‘stamp of approval’ people back then were saying about Tok what they’re saying about it now. And look what happened to those who bought then. Magic. So perhaps people will always be down on the town. Who knows.

The only difference really between then and now is that then prices were lower and yields were higher. So it was at a different part of the cycle. I have the feeling that over the next few years, rents will gradually rise and perhaps in another 4 years you will be getting the 15 percents again. Actually not just a feeling, it’s knowing some stats on Tok as far back as 1991 and typically what happens anyway.

Now as far as deals right now in Tok. I would like 11.5 and a deent house in a decent street, 12 or more if the house was inferior. This is all we’ll offer, but this is harder and harder to ‘win’ in the current market with multiple offers coming in for each deal, and people offering more than us. So all I can comment on is the yields I’d buy on in Tok right now, but am not finding. A couple of weeks prior to the Aussies coming (steve’s group) we found our last great deals in Tok. Once the Aussies arrived prices rose overnight, surprise surprise, so no, we haven’t bought anything there since and aren’t for the time being, basically cause the yields are down and the prices are high. though always watching out of course – and of course we are also selling too this week (because we can -!) at a premium.
We are even selling properties we only bought recently intending to hold as rental properties.

I don’t think that it is so much ‘dumb’ or ‘smart’ to sell, or ‘dumb’ or ‘smart’ to buy, in Tok or anywhere, it just depends on your investment – the deal. I know a lot of people would let’s say SELL a house that needs a bit of maintenance etc but has a good long term tenant in a good street, they think ‘hey I made x YZ capital gains and I didn’t have to bother with the maintenance, too easy.’. And that person would be ‘SMART’. However the next person comes along (same house) and says ‘wow here is a great house that needs a bit spent on it, but has a long term tenant and I can buy it on an 11.5 percent return, and then tidy it up and sell it at a 10 percent return, or do the work and raise the rent if and when my tenant moves out. It’s a little cheaper than it should be because of the condition but it’s in a great street and my rental manager says ‘thumbs up, a really popular street’. then you get a valuation and you find out you made a few k on that too, Then that person is ‘SMART’ too. But it’s the same house!

And if a house in Herne Bay Auckland that you lived in all your life and you are now retired and can sell for 750k can turn that into 10 decent houses in Tok, freehold, one for you to live in, and 9 as income giving you $900 a week to live on after costs, then that person is SMART too.

But it is a bit hard to buy smart when there is so much competition such as there is right now.
So we are just waiting for a couple more weeks to see what happens there.

Also re vacancy check with a rental manager what is vacant and why it is vacant, there will be a very good reason, in fact (I don’t need to tell you this westan it is for everyone else’s benefit) there is a certain type of property that is vacant which we don’t buy and certain streets and houses in bad condition – that are vacant. Basically the same story as any other town, even Sydney. Even Paddington Blue chip Sydney suburb – price it too high, and it won’t rent! Yes there are certain places in NZ where rental demand is so strong that you will get a tenant no matter how rough your house is, tenants will put up with it because there is not a lot of choice.

But as anywhere, you make your house competitive either in the location or structure, decor, or pricing, and you will get a tenant. And don’t buy the sort that there is a vacant glut of obviously. Hope this made sense.

cheers-
Mini

for tinabell. torachan please see my previous post on the page before!

hi Tinabell

> How do we generate positive cashflow?
You have described a negatively geared portfolio which is now ‘maxing you out’.

> a) Increase rent and do up houses
yes – this is a perfect way to increase equity and income. however in the short term it is
worse because of course you can’t do up while it is tenanted, you have to fund the renovations somehow,
and so on.

> b) Do some house flips and pay off our mortgages
yes, you could sell one, and perhaps re-buy a cheaper one you can do up, if none of your
properties have room to improve.
This might actually buy you time/repayments/cash to do a renovation. Also I don’t mean ‘do’ the renovation
yourself unless you have a lot of time spare and are keen to DIY, I mean, get more in value back than what you spend on
tradies doing the work.

> c) Reduce our mortgage repayments to the bank by paying interest only (or
> another way that I don’t yet know of)

I am interest only for the first year and then P and I after that. best of both worlds perhaps

> If we do raise our rent we will only be profiting approx $13 per week per
> house!(based on paying ‘principle plus interest’)

well, at least that’s a start

> How are you supposed to make a decent income through real estate?
By using leverage and different techniques to add value (particularly when the market is flat. of course in
a boom you can twiddle your thumbs and the property will go up in value.)

> Our aim is obviously to replace our income and ensure that we are making a
> steady and regular profit NOW from our properties and also draw from the
> equity to continue buying more properties – not just have the rentals pay the
> mortgage and see the profits when we reach 65

Yes exactly, but patience, a few years, and all will be revealed!!!!!!!!!!!!!!

> a) Reduce debt and sell some houses
just selling one, it’s not a bad thing, I just did that, in order to carry on and buy more properties, actually,
not to go backwards

> b) Increase our income
> What is the solution here – House flips???

Flips are a specialist thing and if that’s your thing then sure, study it in depth and know the downside (no buyer, and you have to
settle the property)

> The other issue I have is if wise investors DON’T pay off their mortgages how
> do they sleep at night wandering if the unthinkable happens how they are going
> to meet their mortgage repayments –

My portfolio is very much CF+ve, the last property I bought every time I have to pay $340 in mortgage repayments I get
$720 in rents. So I have only ever bought this sort of property (high yield).
I think everyone that negative gears and is maxed out and on the edge is basically singing the same song as you right now.

cheers-
Mini

“Jenny at Lambertons a call she is good to deal with and won’t sell you a dud”

*red flag!!!!!*
Crikey, reading that is enough to nearly make me choke.

An agent works for the seller

An agent is not a building inspector

An agent (even Jenny) does not have your best interests at heart, she has her best interests at heart first (making a sale). Her second-best interest is to the vendor of the property, and she is trying to get the best price for *them*. Just because an agent is a very good agent, one of the best, and a nice and lovely wonderful and attractive person to boot (couldn’t agree more), and probably now your ‘new best friend’ since she spoke to the 25 Steve-coached Aussie investors, which I bet you were one of, spawning a signing-frenzy to be followed by a frenzy of Aussie investors with ‘spare’ deals all signed up overpriced, and all trying to flog off their contracts through me at the last minute (all declined) – this frenzy followed by a ‘falling over on the deals we signed up in NZ’ frenzy -but I digress.

The atomic fallout of the queueing around the block signing up anything with a letterbox like chickens with your heads cut off thing is still going on. Okay…

Oh and just by the way *and just so you know* a *certain agent* was asking around the landlords who already owned properties in Tokoroa asking if they wanted to re-list their properties for sale (at a profit) in time for when the Aussies got there. Yep. ….you guessed it….

Much as we all love certain agents none of them (not even Jenny) a running a charity which tries to help Aussie investors buy good deals sight unseen off the internet – they sell houses.

Out of all the properties listed for sale in any town at all that any agent is selling, a vast majority IS going to be a dud even if the agent says otherwise. Are they the investor or are you? If you rely on a real estate agent to make an investment decision for you, you are as much of a mug as ‘the legend’ of an offshore investor who went over to NZ for the first time and signed up 72 properties ‘leveraging their time’ by using the agent to due diligence for them, and it was not pretty when a lot of them fell over and made the papers, not nice etc etc.

As buyers agents we are still in damage control in some areas by others before us with shoddy due diligence processes all too willing to blame ‘the agent’ who was never independent in the first place.

Hi there
I use and am very happy with my accountant in South Melbourne – email me if you want the details.

Re ATO, yes indeed, I paid several thousands in tax mid last year and a few months later go a nasty demand for the amount I had paid plus interest. I called them, sorted it out, the problem was theirs of course, but luckily I also keep absolutely everything and was also able to send them the web receipts and evidence it had left my account 7 months previously and all was good.

Also my special technique is that the madder you are with government departments almost in inverse proportion how nice you should be. After all the person you speak to on the phone is not the ‘villian’ and they of course have to ‘speak to their supervisor’ to get it sorted, and I found that they were almost falling over themselves to bend over backwards for me (and other mixed metaphors) with almost *relief* that I wasn’t being the usual ‘this is a bloody cheek, I hate you’ that you just *know* they would get all day every day as par for the course.

Okay so on to the investment thing – yes bills going out faster than income coming in is a spending problem. Tax bills, I know that people do ‘spend’ money earmarked for tax and ‘use’ the money before it is due, however you need to be very disciplined to do this.

I think don’t do the cafe thing either just yet because as people have said business is a whole other kettle of fish. Consolidate first I would say.

If you are going to value and refinance your house, make sure the rent is at market, and make sure you have done any improvements you can prior to revaluing. Read Dolf de Roos’s 101 ways to add value to your property for some ideas. Who knows you may be able to squeeze an extra 10-15k out of the valuation if you did the right 1-5k things.

Well, quite.
One’s rents should be at market. If they are too low, you’re a mug of a landlord. If they’re too high, you’re a mug of a landlord.

Interest rates have nothing to do with the market rent, other than, if landlords collectively feel the pinch and with a sort of critical mass mexican wave all decide simultaneously (or through their rental managers) to put the rent up, thus the ‘market rent’ will increase and up yours goes with it.

In my experience buying properties it is the self managed by mom and pop ones that tend to be underlet, professional rental managers tend to (mostly, unless they are lazy) keep the rent bubbling ‘at market’.

Bj nailed it and chris is sorta right. But let’s simplify it further. There are only two types of properties, positive cashflow ones and ‘other’. Positive cashflow ones put money in your pocket after expenses. All properties that don’t are negatively geared. I agree that positively geared properties SHOULD be a synonym for positive cashflow, but too often it is used (incorrectly I reckon) to name a property which is negatively geared but saves you what you lost in tax so it appears to break even on paper. But this is still a negatively geared property, fair and square.

Bruham,

wow, that’s one of the nicest things I have ever heard and especially coming from you, anyone who remembers what we used to get up to will appreciate that as I do.!

“spoken to other investors and have found that a big help”

exactly, and seminars give you access to the sorts of investors (Steve, Dave, Tony, Reno Kings etc) for an entire day that you wouldn’t necessrily have in real life ‘for free’ as part of your circle of friends, especially if just starting out and didn’t have any ‘real life’ friends into investing. Also being in a room full of investors for whom it was normal to have one, two, ten, 30 investment properties, was so fantastic especially looking around and just seeing a bunch of ‘normal’ people who you couldn’t tell by looking were property investors – they certainly were’nt a bling bling crowd. Yes for me, although I had spent probably a couple of grand at that point on books and audio products, the seminar bought it all home for me and helped me actually then start investing without a doubt.

now not everyone is that underconfident and some will just go out and do stuff, learn in the field (best way, ultimately – is just go and do deals) but it’s getting to the point where you trust yourself to go and *do* those deals. For some, books are enough and off they go. For others (me) books I read and understood, but somehow I still lacked the confidence not to make a mistake. through the seminar I actually met people who were ahead of me in the game and who I could call and email and bounce ideas off. I am not sure how i could have actually met these people in real life without going to a seminar where they were all in the same room.

it was for me a breath of fresh air to get out of the ‘world’ full of people telling me it’s risky, I could lose money, what about this that and the other, and be in a room of people who thought it was very much possible and were out there doing it. In fact as someone who had not yet invested I was very much in the minority in that room and I found that a very good feeling to be amongst people that were doing it and said ‘It’s OK! Just do it!’

it was a two day seminar I think, for around $900, I have also been to one day seminars for around $500, and I don’t find that a rip off price at all. It was well worth it and it was actually FUN to go! I went again too just for the fun of it and to catch up with some people – it is just good to reinforce, re-connect. I think seminars are a great service, if it’s not for you, then fine, go invest, but don’t discount the pleasant learning, social, and fun, memorable experiential nature of the seminar which although not as cheap as a $30 book, so much more memorable. and then when you re-read the books they will likely be in a much different light too.

cheers-
Mini

fall in love with the deal, not the property.
Otherwise you’re not an investor, you’re a consumer.

the ‘nice’-ness of a property has got nothing to do with how good an investment it is. In fact quite often I look for the most horrible disgusting property (for cheap of course!) and then sort it out. Amazing what a lick of paint can do, a new door handle here, a new tap there.

OK there is a degree of safety in beachfront properties, however: there is a town in NZ where sections went from 40k to 800k in about 5 years flat. and if something happens to the market that 800 could be 200 pretty fast. however the 60k houses 14 k away which are CF+ve, they have gone up as well, they will continue to go up because the value is there.

I just think that beach houses are emotional buyers not investors. and in any downturn there are less buyers around

In NZ you can depreciate all properties, no matter how old or new. Another great reason to invest there, apart from no stamp duty, no cap gains tax, CF+ve, low entry, lots of legs in the market, strong economy, low unemployment, growing population, etc etc etc etc etc but I digress…
where were we…

bwendan you missed the fact that CF+ve properties also borrow (“gear”) it’s just that they more than break even on all holding costs.

like I said positively geared properties are just negatively geared ones in denial, i.e. you may get a rax refund down the track, but still, you have to pay into them every week so they are negatively geared properties pretending they are not, basically! and will have (proportionately) exactly the same effect on your wealth as a negatively geared property, i.e. stay in your job, you’re gonna need it. and you better be banking on capital gains, because otherwise you just have a ‘loser’ property. no matter what the tax man tells you.

hey, if paper losses are all you need to feel rich, why not just give the money to charity, tax deductible, and claim it back as a tax ‘loss’? Then you will ‘get’ the same amount back in tax.

Now do you see the error of positive gearing in that it is misleading.