Forum Replies Created
Freedom!
I would definitely continue renting in Aus for the time being and buying CF+ve in NZ like Tokyo Joe says.
Do the numbers. If you do, the answer will be obvious! And in the end buying an own home is an emotional purchase and for a lot of people emotions are more important. Not that you’ll LOSE buying your own home and living in it for a few years, but it will slow you down significantly
I reckoncheers-
MiniThanks for that Waz
Yes it was a while since I talked to Bradley come to think of it
But glad to hear Ron and Mark are on the case
Good to hear they could help you out Seafire!Hi AusProp
I am crazed on tilt-slab over brick for various reasons.
I am not doing tilt-slab for my first development, but looking at it for the next – I think it suits the slightly bigger development such as six townhouses on a city block kinda thing. But in the end it will depend on the site and so on, and that’s months down the track anyway. My Project Manager does quite a few different construction types.
Stoneman Financial Services in Wanganui are my insurance brokers. I am sure that if you call them and talk to Bradley Sturzaker the broker there, by the end of the call you will be sorted out! I was! I am with NZI for some properties and Tower for others.
The other thing is just to ask your bank, I am with one of the major banks in NZ and offer insurance too just through your regular banking contact, the one I have got is a sort of combo between comprehensive and landlord’s insurance
Good luck
cheers-
MiniHi Everyone,
and thanks for your vote of encouragement.>… end product, I am sorry to say you dream is unrealistic.
Ooh, goodie, a throwing of the gauntlet….>At some stages of the property cycle your “mission” is possible.
Yep and I didn’t actually disclose that me development is in NZ which I daresay is a completely different kettle of fish compared to where/how you do yours.> BUT….
> At this stage of the cycle with high building costs, rising interest rates,
> flat or falling end values and banks and valuers that put low figures on your
> end product, I am sorry to say you dream is unrealistic.If I was developing down the road from you I’m sure you’d be correct but where I am doing it two of those don’t apply. The other two risks I have mitigated if not completely eliminated.
I wouldn’t be silly enough to risk being a first-time developer in a market where end-values are falling – and I am not surprised you sort of red-flagged me for that. Also I am not really into negatively geared investments, however I have been known to make deliberate and speculative exceptions to this rule (just don’t tell Steve McKnight, OK!) and bought for capital gains alone, when according to my research and comparitive analysis the market is my analysis heading in only one direction which is UP.
Yes, neg gearing has it’s place – but I so wouldn’t do it in the market conditions you describe and I certainly wouldn’t develop, especially when the market is flooded with developments sort of maybe with a risk of going down in value, an oversupply, and developers of long experience such as yourself with the market basically covered. I reckon if I tried to do that it would be a fatal mistake that could wipe me out.
> I have my own construction company
me too!
>and a team of seasoned professionals behind
> me.Me too! I mean, I won’t be on site with a hard hat on, put it that way – I don’t think that would suit me somehow (and read that last remark to be as shallow or as deep as you want!)
> Our best projects are returning 20% equity and still some negative cashflow.
I don’t want to say that I am going to out-perform the best project of a company with 80 developments and 30 years of experience under it’s belt in case I fall flat on my arse with banana skins, egg on face and the whole bit – but I will say that it is my MISSION to do this!
However I am keen to pick your brain some time and I would be more than happy to pay you for an hour of your time as a consultant if you do that sort of thing.
There is a ‘certain construction method’ that I am just crazed and itching for information on.>> It’s our once a year property development workshop with 8 top property
>> experts
>> teaching you all you need to know about property developmentI will check it out for sure
cheers-
MiniHi guys, here’s another really good one (I reckon!)
When you’ve got your builder’s report and there’s the inevitable structural ‘something’ that you sometimes get, some defect revealed, and it is time to negotiate, I strongly recommend negotiating verbally with the vendor through the agent, rather than committing anything to writing through your solicitor to the vendor’s solicitor – well, at least not prematurely and before you have a verbal agreement.
The way that I tend to get the best result is ‘I’m happy to go unconditional, I just have a concern about this and this so if you agree to this this and this, then I will go unconditional’. This usually seems to work pretty well…unconditional is a word with great meaning to vendors and agents!
This is because the agent gets paid if the deal gets across the line, so they have a vested interest in a win/win outcome. The vendor’s lawyer, on the other hand, doesn’t have the same $$$ at stake if the deal goes ahead or not!So hopefully, you can negotiate through the agent, who can then draw up a ‘variation’ to the contract, which, when signed by both parties is all good and now what you have already agreed verbally is also agreed in writing. The other benefit is of course you didn’t incur so many legal fees instructing your solicitor to write the vendor’s solicitor, and vice versa – and everything is much quicker.
There is another reason why you don’t want to put too many demands in writing until you have sussed it out verbally. In a hot market, the vendor may have another offer in the wings as a back-up. Sometimes a better one than yours, so the vendor might be waiting for yours to fall over. Once you put something in writing through the solicitors, the vendor could view it as a ‘counter-offer’ and cancel the contract. It doesn’t happen too often but it does happen.
And of course if the vendor says ‘no’ to what you are asking it may still be worth proceeding to unconditional anyway.
On my most recent purchase there was a roof issue and I asked for $1000 discount and the vendor still said flat out ‘no!’ I still went ahead with the purchase anyway as it was still an incredible deal for the price. But I did try, and yes, I will have to spend money on the roof – and yes, it’s still a good deal even taking that into account!
So yeah, to sum up my tip of the day, when negotiating, do it verbally first through the agent. Another reason why this can work well is that the agent also usually has a much more personal relationship with the vendors then the vendors’s solicitor and you can usually get a good ‘vibe’ through them if the vendors will come to the party.
cheers-
MiniKiwifulla,
damn! we are so on the same page…
cheers-
miniAre you kidding, fish and chips in NZ is loads better than Aus, in general – I think. Now if you have ever tried Kumara Chips with garlic sauce, THAT is a taste sensation. However Ozi yes the Taumarunui fish and chip shop combo chinese takeaway is the worst in the world, but the places to eat there are….the copper kettle ‘down the one way street, for plain old workman home cooked cozy cafe no frills cheap decent stuff, or else Rivers II for the smoothie and foccacia type thing, and Flax Cafe being the most super awesome with food as good as I’ve had anywhere. Auckland, Sydney, wherever. Just high quality cafe menu, delicious and neat ambience and decor, but not overly ‘prinked’. Nigella would approve. Some of the best fish and chips I have ever had are at Mangonui in the far north on the wharf (wins awards most years) and also in the back streets of Castlecliff, wanganui near the campsite, is the best value fish and chips not to mention the freshest fish I have ever had. Stupendously good, and really a nowhere kind of location in suburban back streets.
Good for you KiwiFulla. Yes I would say that there are still, well not plenty, but enough higher priced multi-unit CF+ve properties over in NZ. Like once you get over say 300k you have a lot less compeition. what is thin on the ground is the bottom price-range.
trademe.co.nz
is also quite good for private sales, with a word of warning! there are a lot of people FLIPPING properties on trade-me…who won’t disclose it upfront. (which makes it dodgy in my opinion.)
Nothing wrong with a flip per se, but sucks if you get down to checking the certificate of title and finding out the person ‘selling’ you the deal is not the person on the title!
There was a quite good Tokoroa deal on there that I was trying to get for 45k, bit rough, but liveable to long term tenant (asking price 53k) it went for 53, silly me, I should have just grabbed it for 53, it was rented for 120 a week and was about 30 seconds walk from town. Doh!
But then again it is also worth saying that there are a LOT of tyre kickers on trade-me. Believe me, it is NOT worth the grief! List it with an agent and leverage your time!
I try and lay my NZ eccent on really thuck when I am talking to NZ real estate agents and so on and they STILL think I sound like an Aussie. Damn 9 years here!
Can’t name check towns as we are already out there making offers on every likely contender as it is! Good luck!
cheers-
MiniTip #9:
Make loads of offers!
These days, I find I am making about seven offers to get one accepted. It’s a hot market, and if some greater fool than you is going to pay more for the property you want, with less or shorter conditions, then there’s nothing you can do.Make a formal written offer for the best price you are prepared to pay on every property that you think is a contender. Sometimes, you never know! Make cash offers, not subject to finance, but give yourself an out in the form of a builder’s or ‘subject to satisfactory’….
(your lawyer will advise.)Don’t worry about being ‘in a multi-offer situation’ – just put it in anyway. And give your offers an expiry (say a week or perhaps more.)
Then leave it, mentally, until you hear! And meanwhile keep looking and making more offers!If you end up with too many contracts accepted and they’re CF+ve, email me! I might be able to take them!
cheers-
MiniIt all comes down to yields, as westan said.
Yes, Hawera, Marton, Waverly, were fantastic places to buy, and I bought a fantastic rental property in Waverley on a 24 percent yield 18 months ago (just for cashflow, not expecting it to go up in value – so the rest of the world told me -) and just sold it on a 9.9 yield – todays’s ‘still a great deal’.This doesn’t mean I am not keen on the area or I had any probs with the tenant, on the contrary, I had a great long term family tenant who works at the local school. It’s just that if I could make, er, what is it…8 years of cashflow in two, you have to weigh that up versus just keeping it for rental income. 106 percent capital gains is just not gonna happen every year in the same area. So I am moving my investments to areas where I can buy on a higher yield, where I am expecting capital growth. The same sorts of areas that people may say ‘you are nuts buying there’. Ironically, once it catches on, and if I am right, then it will be sorta too late, again! meanwhile, if I am wrong, the cashflow makes it a painless speculation!
if I can cash up and again use the money to reinvest in something that is again going to zoom, this is the way I intend to again triple my equity within the next few years too. Also using ‘improving the property/rent’ as a strategy.
I would rather buy in other better quality areas for a 10 percent yield or more *now* than a place like Waverley at 10. Or Hawera at 9. Even though Hawera is cute town. So yeah, all those places in South Taranaki, used to be the cheapest area in NZ, undervalued, so what happened? well, New Plymouth is going through a renaissance as is wanganui…there is natural gas, mega employment prospects, and so on. So, if you buy at 9 percent today in Hawera, who knows, you may still get capital gains. Rents may also go up. Then again…i wouldn’t bet my fortune on it, certainly not over other areas in nZ. Now we can’t buy in the past, we can only buy NOW. Although there is nothing wrong with the area, it’s great! – I am still constantly looking in the South Taranaki area – I just feel that everything is extremely overpriced at the moment for what you can get in more quality towns and cities in NZ.
The market changes, and yesterdays’ place to buy is yesterdays’. Today’s places to buy where I am looking in and actively buying in, are either ‘the next South Taranaki with the same market conditions as were found there 2 years ago’ and, strangely (or not!), an area that 2 years ago I wouldn’t have touched, way overpriced, but now is looking extremely attractive.
You just gotta not get hung up on one area as whenever the ‘buzz’ catches on, you are maybe too late.
cheers-
MiniAroha Mai e hehu ata pai. Kio iwi e tangi atu nei. Ma o tonu e whakamarie.
cheers-
MiniTokyo Joe,
good luck,
yes I knew of the property you bought.cheers-
MiniHi Ritch,
Yes, indeed, Ruapehu was where I learned to ski, pashed a spunky ski-instructor or two by the fireplace at the Chateau, ate the worlds cheesiest pizza at the powderkeg, (where Orlando and Viggo stayed while filming Mordor scenes on Ruapehu) – rocked out at the Hot Lava in various bands..tramped up to the crater at the summit…such an awesome awesome place…ah memories!
re: rental market, best is to touch base with as many local rental managers as there are. not just to get a good idea of the rental sitch but to vibe who’s gonna manage for you when you buy.
ditto the questions about rules and regs.
Insurance – my houses cost around 300 bucks a year to insure, but they are cheaper houses than in Ohakune, but just get an idea from an insurance broker, I can give you the details of my one in NZ, if you want, email me.I suppose if you are renting furnished as for holiday rentals there may be extra insurance and management issues.
cheers-
MiniYes, you can own the land as an Aussie. There are guidelines. I posted this a long time ago here. I can’t be bothered digging it out, it is all there for you to find and read.
The average investment property or commercial property is fine to buy.
I think you might be talking about crossleased land schawel, which is a kind of subdivision. Instead of dividing a piece of land onto 2 titles, you OWN a half share of the TOTAL land, so it’s a combination of a freehold land title, and a 99 year lease. Now I don’t understand why owners don’t just subdivide properly, but I can only guess that it was some kind of cheaper option, or you could do it with smaller bits of land, because it’s very common in NZ. The cross lease thing is because there is quite often a shared area such as an accessway which all pieces that have a chunk of the larger title share the rights of access to.
You can do a google search on crosslease and you will find some info.
I also think it’s a bit like if you own an apartment in a block, here, you own your apartment plus a share of the land.
“I love it. For a fee I will find you great investments that are cash flow positive. I don’t want them because ……. well that is the question isn’t it.”
Torachon, good point, and believe me, I do pick through the deals first as does my business partner, and still, we can’t buy everything (yet!) – we have to choose.
Yes, we have ‘spare deals’, but less than we used to – and yes, they are good.
Now if you compared three deals we might find, some are a bit more expensive with a worse yield but in a good area. Some are cheaper with a high yield. Some need a lot of work done, but with rewards such as yields in the high teens achievable. They are all ‘good deals’ based on being negotiated at fantastic value compared to recent sales in the area for that type of deal. You wouldn’t know this if you didn’t know the market as we do, but if you did, you’d appreciate it. Who can get CF+ve in an area where there isn’t any for sale? Me! How? Well, just before Christmas, I signed up for two properties from the same vendor – who needed to sell BOTH. Although there was no guarantee, the chances were that – for the right price – I could get two clients (or one to take both) to grab a great deal that was possibly sold to me 5-10k too cheap per house, just because I was able to take both. That was worth – to me- the 10k discount off a 100k purchase price which I needed to make the numbers stack up, and to be able to present to my clients two 10 percent yielding houses in an area where – you can’t even buy ten any more and even nine is hard! And 7, 8 is the norm! Those weren’t deals I would buy- for myself – they didn’t have enough problems! And I didn’t have the cash. And besides, I already own property in that street! *grin* ! Can’t be greedy now! So my money is very much where my mouth is. But I can’t be expected to buy the whole street, now, can i!??? But, for our Australian clients, they were perfect. People that had been watching that particular market KNEW they were a fantastic deal – as did I.
Now out of those three deals I mentioned before, I am sure that for anyone our there reading, that one of those deals would ‘speak to you’ as being more desirable to you than another. That’s because each investor is different, and just because I don’t buy ‘that sort of deal’ (whichever sort) doesn’t mean it’s not a fantastic deal for someone else who DOES buy that sort of deal.
I hope this makes sense!
Hi Mark,
great to see you posting on the forum. I had a question – would a spotter’s fee be tax deductible for an Australian?
Also, would an ‘educational’ trip to NZ such as a seminar or training day, even if you didn’t own property there yet, to learn about property investing over there – be tax deductible?And if so, how would the tax department decide if if was ‘education’?
cheers-
MiniEntrepreneur, Strategist, Problem-solver, Creative
