I set a figure between 4 and 5 percent, and – as I do when making an offer -I deliberately don’t make it a rounded thousand.

it was my lawyer’s idea – hehe – so that I would appear to be this sophisticated property investor who has arrived at her figure after performing some extremely professional and tricky calculations – really, to appear as someone harder to force up in price! (Put it this way, I needed all the help i could get, cause I sooo wasn’t a soph. prop. inv…

Three houses now on between 4-5 percent deposit and never been questioned once. Oh, no, I lie, the third one I forgot completely and wrote in a 10 percent deposit (but by then they already knew I was a soph.prop.inv. hehe!! -Also wasn’t paying interest at the time, and besides 10 percent was only $1900 – wa-hey!)

Lawyer said ‘ as long as the deposit is enough for RE agents to get their commission out, they don’t care.

Banks might though so you may have to end up putting 10 or 20 percent in the property anyway but i think the idea is to pay it at settlement thus minimising borrowing costs. So therefore your deposit is due when the contract goes unconditional (ten days after the offer in my cases, as I like ten days to do my due diligence) and then you pay the rest less what the bank gives you on settlement.

cheers-
Mini

http://www.vocalbureau.com

Hi all
Kurek Ashley, there is a free DVD of him with this month’s KPI magazine. Re Dolf de Roos, I paid $500 for a ten CD recording of one of his love seminars. Really good, and second best thing to going to it live.

He’s more about buying ‘property with a twist’ than just on the numbers. He’s pretty good, got lots of great ideas, creative ways to get capital gain, more rent, etc. His books are great too as is his software – though I haven’t bought it (expensive! ) I thing it’s the best one around.

cheers-
Mini

http://www.vocalbureau.com

westan
as usual I take my hat off to you
you couldn’t be more on to it if you tried.
Was your knowledge of the SA and Hamilton industries about to go it there the thing that made you buy there? And how did you find out that info?

cheers-
Mini

alf- re due diligence, firstly use the net, I don’t know if you were talking about NZ or not but using it as an example anyway, I found out lots of info for people here using a google search along the lines of ‘new zealand property investors foreign investors’ – i found out that some restrictions apply but only for amounts over 10million.

Secondly ask you accountant here how foreign income is going to work on your Australian tax return. The advice might be to also get a NZ accountant who would just forward the tax return to your Aussie accountant.

thirdly make contact with a NZ property lawyer and just ask ‘what do I need to know?’ ?

cheers-
Mini

Hi all,

I found those figures based on 1994 figures on the net, but I can’t find them again to post them!!

I saw a video of a seminar which was last year quoting similar figures (perhaps 92 not 94.)

I have also read that only 10 percent of properties are CF+ve.
Those few investors that have more than five, they’ve probably got some +ve CF ones in their portfolio. And the Steve and Dave-s of the world of course, even being in a half-percent of all property investors, would make a sizeable dent on the CF+ve property market….

Also it’s somewhere between 20 and 30 percent of the population that rent, depending on the area. And growing, because of houses being less ‘affordable’. So basically all those figures sound about right to me.

cheers-
Mini

http://www.vocalbureau.com

Hi Crashy,

> History shows shares return 13% p.a while property returns 9%. A no brainer.

You forgot to add capital gain and positive cashflow together.

If those figures were true (hey – they may be true for the *average investor*) – I wouldn’t be satisfied with a 9 percent return. I don’t even look at a property I am buying for +ve cashflow unless it is already in the high teens based on purchase price and sitting tenant, and I think I can get it into the 20’s after negotiation. (also you can’t negotiate shares, or renovate/improve them….)
That’s 20 plus as a ‘i bought it cash’ which of course gets several times better if you leverage it by paying only 20 percent.

> Plus there are large costs and delays when investing in property.

5000 down to get into a 50K property isn’t too bad???

And the delays (like, ten days between offering and settling, at best) mean that panic, sharp drops, don’t happen.

>It is now
> possible to invest in shares at NO COST.

That’s not that much of a novelty to property people who have always had that option.

Also, no stamp duty or capital gains tax where I invest.
Closing costs of 800 bearable (500 lawyer, 300 builder’s report)

> Property has one major advantage….regular income.
yep, that’s *ONE* of the advantages

> Think back 3 or 4 years. Do you wish you had bought property when everyone was
> buying tech stocks?

My antenna were’nt up that far yet, then

>Rental yields were high then right?
> Well stock yields are high now. In 3 or 4 years there will be a share mania,
> and everyone will be saying…”gee I wish I had bought back in 2003 when every
> man and his dog were jumping into property!”

I spent 6 months studying the share-market as best I could, immersing myself in it much as I am now with property. Reading books, learning, and reading more books.

But because of things like the statement below

> Dont buy for a few weeks yet, the market is about to drop sharply.

share are something you have to constantly be on top of the market with and watch like a hawk. If you’re *interested* and have time it’s all good but I like property as a long-term investment with none of the sharp drops (compared to the sharemarket) that shares have – basically because the property market is 92 percent owner-occupier driven and once people buy a house and move into it, they usually stay put for a bit. Vote with their feet.

> i said stock yields are high right now. some are, but stocks will drop over
> the next 3-4 weeks and yields will jump. yields right now however are still
> higher than sydney property.

you keep forgetting to add capital gain in with the rental yield
Or else, think sydney is the only or ‘best’ place to buy property

soon they will be back to 7-8% as they were in
> March.

Is that supposed to be good news? *confused*

Anyway, i soooo couldn’t handle that much work to keep up with the weekly and monthly fluctuations. And day traders, my bro in law is one, forget it!! – not for me!! Also my other friend who’s a grain trader – STRESS! eventual burnout is common -Big grief factor!!!

I am not arguing with the fact that people can make vast amounts of money with shares if they know what they are doing (or are lucky) and if they enjoy it then I am glad they are doing it. In fact VIVE la difference, we *need* people to invest in the sharemarket – that’s our economy and it’s so important. If everybody stopped investing in the sharemarket, the returns would be crazy because capital would be so hard to come by.

– I just don’t see me doing it – because it doesn’t interest me and seems very time consuming. People I know with shares spend 2-3 hours a day watching them, checking in,-
i wouldn’t want to have to do that with my houses!!
I don’t have to check in more than once a month (to make sure my rent went in) or if a maintenance issue comes up. That suits me fine.

I’d like to hear your thoughts about (say) investing in funds which average the top 500 share companies, S&P 500 or whatever it’s called? How are the returns on that these days?
I mean if you said ‘that’s for boring people who don’t want to take risks and don’t really understand the sharemarket’, I’d say great sounds like me, maybe i will try shares after all?? no seriously, i’d like to hear your thoughts on funds.

> I also stated that you should gear with HIGH YIELD stocks, not rubbish like
> DVT HIH ONE et al.

I’m soo outta my depth here!!

If it was true what you said about “shares13 versus property 9 percent”, then *maybe* i’d have made more of an effort with shares, to learn the market, develop an encyclopaedic knowledge of the economy and a finely tuned nose to whiff out the merest scent of change. But for me ….
property gives me a better return
has an actual physical use rather than a ledger entry
you can improve it
the market moves less jumpily than the sharemarket
(” Hi Crashy,

> History shows shares return 13% p.a while property returns 9%. A no brainer.
You forgot to add capital gain and positive cashflow together.

If that were true, I wouldn’t be satisfied with a 9 percent return. I don’t even look at a property I am buying for +ve cashflow unless it is already in the high teens based on purchase price and sitting tenant, and I think I can get it into the 20’s after negotiation. (also you can’t negotiate shares, or renovate/improve them….)

> Plus there are large costs and delays when investing in property.

5000 down to get into a 50K property isn’t too bad???
>It is now
> possible to invest in shares at NO COST. Why waste 10% or more of your money
> in transaction costs?
No stamp duty or capital gains tax where I invest

> Property has one major advantage….regular income.
yep, that’s what I figured out and why I’m here now.

> Think back 3 or 4 years. Do you wish you had bought property when everyone was
> buying tech stocks?

My antenna were’nt up that far yet, then
>Rental yields were high then right?
> Well stock yields are high now. In 3 or 4 years there will be a share mania,
> and everyone will be saying…”gee I wish I had bought back in 2003 when every
> man and his dog were jumping into property!”

I spent 6 months studying the share-market as best I could, immersing myself in it much as I am now with property. I think because of those things such as the statement below

> Dont buy for a few weeks yet, the market is about to drop sharply.

share are something you have to constantly be on top of the market with and watch like a hawk. If you’re interested and have time it’s all good but I like property as a long-term investment with none of the sharp drops (compared to the sharemarket) that shares have – basically because the property market is 92 percent owner-occupier driven and once people buy a house and move into it, they usually stay put for a bit.

> i said stock yields are high right now. some are, but stocks will drop over
> the next 3-4 weeks and yields will jump. yields right now however are still
> higher than sydney property. soon they will be back to 7-8% as they were in
> March.

See, i soooo couldn’t handle that much work to keep up with the weekly and monthly fluctuations. And day traders, my bro in law is one, forget it!! Also my other friend who’s a big time grain trader – STRESS! burnout, I reckon!!! who needs the grief???

I am not arguing with the fact that people can make vast amounts of money with shares if they know what they are doing (or are lucky) but I just don’t see myself doing it in the way you describe, because it doesn’t interest me and seems very time consuming. People I know with shares spend 2-3 hours a day watching them, checking in,-
i wouldn’t want to have to do that with my houses!!
I don’t have to check in more than once a month (to make sure my rent went in) or if a maintenance issue comes up. That suits me fine.
I’d like to hear your thoughts about (say) investing in funds which average the top 500 share companies, S&P 500 or whatever it’s called? I mean if you said ‘that’s for boring people who don’t want to take risks and don’t really understand the sharemarket’, I’d say great sounds like me, maybe i will try shares after all?? no seriously, i’d like to hear your thoughts on funds.

> I also stated that you should gear with HIGH YIELD stocks, not rubbish like
> DVT HIH ONE et al.

I wouldn’t know what you are talking about!!!

If it was true what you said about “shares13 versus property 9 percent”, then *maybe* i’d have made more of an effort with shares, to learn the market, develop an encyclopaedic knowledge of the economy and a finely tuned nose to whiff out the merest scent of change. But for me the facts are property gives me a better return, has an actual physical use rather than a ledger entry, you can improve it, the market moves less jumpily than the sharemarket, and within property you still have a wide range of investment types to suit different target outcomes. The market is guaranteed to go up, as long as the world’s population is increasing ….and I enjoy shootin’ the breeze about it…

bye for now
cheers-
Mini

hey rod C drop your email and I’ll send you the guff I sent diamond

Diamond I will do the rest of it soon I promise!
cheers-
Mini

http://www.vocalbureau.com

Westan, Aussierogue, – about that other book. Yeah well I hate to admit I have never read the whole thing right through, though from what I have read, I think the second half nails it better.

All in all, not a bad book, I think we’d be about due for a major update – (actually I believe the author has promised an update – though it wasn’t clear whether that was going to be in the form of a book or ‘other’. – ) . But I think a lot of the information is still as current as when it was written.

cheers-
Mini

PS
Westan – Someone like Reed who wants to discredit RK and calls him a liar doesn’t make RK a liar. However by sowing the seed of doubt he’s already done damage – even if RK did come out and name Rich Dad (which he obviously doesn’t want to do.)

Actually, you know what I really think? Something like this….
Rich Dad or Rich Dad’s son says ‘please stop saying he is a real person in your books because the press are snooping and won’t leave Dad alone and Dad is pretty sick now’. Then Rich Dad dies. There could have been lawyers letters going around as to what RK could or couldnt’ say. So I think Rich Dad was real but has since passed away. That way, RK can honestly say Rich Dad is not a real living person (now) when he used to say he was….geddit

But he also can’t just explain it like that to the press.

yeah what’s happening with the MAP programme?
are you gonna announce it Steve?

BTW thanks for reminding me about wealth tips online, I just copied this part and emailed it to a friend who is the brokest person I know, to give him hope that even he too can become a millionaire for 77.5 bucks per week.
He’s not even forty either….

“Let’s say that youÕre forty years old and plan to work another twenty-five years. You earn $40,000 per year with no prospect of ever getting a pay rise. How much do you think that you would need to save per month to retire a millionaire, earning an average 15% per annum? Only 9.3% (or $310 per month) of your annual salary. You could do that! “

but will he??? Is the million dollar question. Literally.

cheers-
Mini

http://www.vocalbureau.com

Hi all,

I think if you had a brand new desirable apartment in Auckland you could definitely request with the agent that you only wanted people who would sign a lease. I think that eventually NZ will go that way, investors will introduce it, people will get used to it, and it will eventually become the norm.

I don’t know if people are ready for it in the smaller towns though. It would be something to discuss with the rental agent.
My rental agents have endeavoured to choose long-term tenants for me (that for example say they want the house from 1-3 years) but apart from a bond and payment 1 month in advance, that’s about as good as it gets I believe.

Remember that a lease is still no guarantee that people are going to pay….and it might be not as easy to get them out if they are on a lease but don’t pay. Worth asking a lawyer about as well as a RE agent.

cheers-
Mini

PS
I’ve posted this before but have you guys seen this?
it’s market rent for NZ based on bonds lodged.

http://www.minhousing.govt.nz/tenancy/Market-Rent/market%20rent%20region.asp

Hi everyone especially welcome KtKiwi

Very interesting to read your post.

I think that everything you say is true for most investors.
For the average investor.

Re: the BNZ thing if us resident Aussies want to be in the loop with things like that re: investing in NZ then subscribe to KPI magazine – I already knew about that from an article two or three months ago, and there is another bank called

http://www.kiwibank.co.nz

which is worth checking out for competitive rates but I don’t think you can go through a broker with them either (correct me if I’m wrong.)

>Be wary of small towns…

My uncle said exactly the same thing, before advising me to ‘buy vacant land’. However I didn’t necessarily take his advice,
as unlike him I’m not a multi-millionaire with tons of spare cash to buy up city blocks in San Francisco and turn them into parks, or buy up a big chunk of Queenstown by the lake. hehe

But what I DID do is run my numbers past him (he happens to also be a professor of finance to boot and BOY did he put me through the ringer!! So anyway my first purchase has worked out so well that it’s almost boring. Small town of 1500 people half an hour away from a city. Fantastic really pretty villa on brilliant corner section giving me a 21 percent gross return.
It rented after a week and recently became vacant and again rented within one week.

Second place, i got really excited because I found a place with a sitting long-term tenant with documents returning 29 percent.
Unfortunately the day it settled she left! Ah well, such is life. Brilliant, i thought, time to do it up (structurally sound but what a dump!) so several weeks and several K later it is good to go, and hasn’t got a tenant yet since it was put up for rent 4 weeks ago. Doh. However according to my calculations and including the renovation costs, I can afford to be vacant for 27 weeks of the year only getting the same rent as the house used to get when it was a dump, and STILL make 9 percent.

So yes I hear what you are saying about vacancy rates and booms and so on forcing prices up and I think that the market may have even changed in the small towns substantially since I bought merely months ago, (more sensitive to numbers of investors coming in due to the smallness of the markets) BUT, there is so much margin for error and the house was so damn cheap that I’m not crying yet. Because I am starting at the bottom of the bottom of the market even if all I get out of it is a great big lesson, hey, it was cheaper than going to boot camp!

Now really freakily, and unexpectedly, the latest KPI magazine says that the area has gone up in value 25 percent in the last year (when traditional CG hotspots such as Devonport, Auckland, supposedly went DOWN 25 percent.) And this is an area that I SOOO wasn’t buying for Capital Gain!! So maybe the boom thing is kind of when Auckland is flattening, up go the regional areas. I dunno. Anyway, if that is true, then I just made my year’s rent in CG, hehe.

>I’m just saying be wary

What I have learned is ‘buy in a good area’ and that sitting tenants don’t mean anything. (although, i thought, it gave me a realistic idea of the actual market value of a property, rather than what the agent tells you it will rent for..)

>After all who wants to own a property in a small centre with >high vacancy rates.

I think a lot of them don’t actually have high vacancy rates, one town of 1500 people, the agent was saying she hasn’t had a rental property on the books for ages and the last one she had, she could have rented out 6 times over in 3 weeks.

In the town where I am having trouble getting a tenant, supposedly, two people a week come in looking and neither RE agent in town had ANY rental properties at the time I bought.

> Huntly properties due to the mines underneath it!

eww- thanks for the warning

>And be wary of those promoting towns like Tokoroa as wise >investments!!! Tokoroa was a ghost town in the slump of >1992! I know people who lived there that were buying >properties for $5,000 (in 1992 i.e THE BOTTOM OF A >PROPERTY SLUMP) and renting them out for $20 / week. >Those properties are now apparently worth $50,000 + with >rents of @$140/week (in 2003 i.e. NEAR THE TOP OF A >PROPERTY BOOM)

Hm,,,,,,,, when is a 20 percent return not a wise investment?
(at the time of purchase). Especially one which is indexed for inflation (hence the rise from 20 per week to 140 per week over time) and in 11 years becomes a 140 percent return? Tell me if I’ve done something wrong but let’s say they managed to pay off their $5000 house by 1999 and so they have a freehold house. Let’s also assume they got 140 per week this year, 130 the year before, and 100 the year before that.
That makes about 20 K cash over the last three years. Add to that 45K capital gain and you get 65 K for your initial 5 K investment. Oh no, it was less than that, because you only put in 20 percent of your 5000 way back in 1992, and you had a mortgage. So really you only put in 1000 and a bit more for closing costs back in 1992. And now you have 65 K, 65 times your money back. what kind of cash on cash return is that? How much better does it have to be make/risk before you would consider an investment ‘wise’???
Man, if I can make 65 times my initial investment in 11 years I’ll be laughing.

>Check out the latest NZ press about tokoroas massive job >losses and heavy dependence on the forestry industry

Ipswich was the same and look at it now. However I agree actually – I didn’t end up going for Tokoroa because of this very reason.

> “newbie got rich quick” investors
so quick is good? or bad?

>But those of us that have been around for a whilst know >better than to buy in small centres whilst a boom is on!

OK, let us know when it’s ‘off’ and then we can maybe find some wise investments

>You don’t have to be too clever to work this one out…
>My attitude is to stick to the larger centres. You can still get >good returns if you are picky.

How good are the returns that a picky person can expect in the large centres??

>Check out some of the opportunities we have placed with >investors at http://www.hpc.co.nz/tool_opportunities.php
>All of these are in Auckland.

Also check out
http://www.richmastery.co.nz

this wouldn’t happen to be the ‘got rich quick’ people you were talking about earlier, would it? I noticed your site is a property finders one too, and as richmastery also offer this service, they’d be your competitors – anyway, it would certainly give your post a certain ‘angle’.

I have some friends who have done really well in Auckland, (but major sums of money involved – entry level investments almost ten times the price of entry-level investments ‘in the sticks’ – anyway, Auckland rocks as an investment mining ground. I for one will be happy if everyone follows your advice and runs screaming from the small towns (tokoroa or otherwise) – and there is a good chance that they might if in fact investors are lemmings as has been suggested elsewhere on this forum. (said with the most tongue in cheek tone, and a nod and wink to my investing compadres on this forum)

but in conclusion, I think if you don’t have much money and you wanted to get started in the game of monopoly you could do a lot worse.

cheers-
Mini

http://www.vocalbureau.com