Forum Replies Created
$6,000 +CF doesn't seem like very much for all the effort required to:
1. convert the property from 3 flats to 5 flats and
2. manage 5 different single tenants randomly leaving at their whimWhat type of tenant are you going to attract to a 1-bed flat? My experience would put money on the tenant pool not being of the highest calibre!!
How readily available are these tenants wanting to live in a 1-bedroom flat in a big converted house?
Surely that investment money could be better utilized purchasing a couple of nice single 3-bedroom family homes which will:
1. be easier to sell when you want out
2. be way easier to tenant today, with a larger pool of people looking for such homes (1-beders are never the highest demand property anywhere)
3. have less damage due to a higher calibre of tenant….you get my drift!!
Vicky
Wow, what a fantastic idea!!!! But eldredni, how would you like all the other bidders to be able to see your offer?
Nah, no such luck, not in NZ anyway. Legally agents are not allowed to tell you anything about the other offers.
In my experience, I've used this with agents …. "would $XXX buy it?" I've found some crocked enough that they will give me a yay or nay based on what they know at the moment.
If you're using this kind of strategy, it's best to be last in with your offer, afterall you don't want your offer figure bandied about the office or found on the fax machine do you. And it only works if there is one agent collecting and seeing all offers, but I'd say you have to be pretty "in their pocket" to even get that much info out of them.
Personally, I don't like multiple offers as you are NEVER buying at the best price. Find a motivated vendor of a property that has been on the market for months and you'll do WAY better. If the listing isn't over 3 months old, it's probably not worth wasting your time on because the vendor won't be sufficiently conditioned, unless of course they have the bank knocking on their backdoor.
Happy hunting,
VickyHi Crashy,
Yes, solicitors charge like wounded bulls!!! They charge by the minute – every time they do anything for you the timer starts ticking. Yep, they do the searches too.
The quickest I've managed to settle is one week (5 working days) and my solicitor wasn't happy about having to work so hard! That said, he completed the settlement on the assigned day.
So, if you can't get finance, how will you be purchasing the property? If you have no money, then you're pretty much limited to doing sandwich lease options, which, even in this market are challenging to put together.
Hmmm, not sure what areas you should stay away from. I only shop in the Hawkes Bay and just stay away from a few bad streets, otherwise anything goes for me provided it's +CF at 100% financed.
I'm currently finding 8.5% + yields – I don't want to say "all day long", but they are pretty plentiful, and with the rates falling they are looking even better. And I've just sold a buy & hold with 10.6% yield, it's a renovated 3-bedroom home in Hastings with $20k of equity just sitting there for the purchaser to use on his next purchase.
I'm regularly setting up lease options with tenant buyers yielding over 12%. Lease options are definitely providing the best cashflow at the moment — it's a very good strategy for mopping up losses from negatively geared properties.
I'm also seeing subdivisable properties, but the yields are poor and you have to spend about $40K to complete the subdivision before you can realise profit from the section, all along having holding costs eating away at your profit. Personally, not a great strategy in this slower market.
Let me know if there's anything else I can help you with.
Cheers,
VickyHi Crashy,
Can you be a bit more specific about your question? I'll do my best to answer…
Building inspections – cost about $400 here (I'm based in the Hawke's Bay – Napier/Hastings area) and the person I use goes over the place with a fine tooth comb and gives a full written report (verbal for about $100 less if you wish).
Solicitors – cost about $700-$1000 depending on how tricky the deal is and whether a trust is involved. They do all the legal paperwork and register the mortgage.
Contracts – the Sale and Purchase Agreement is a specific agreement and is used for all transactions through agents or private sales. If you need a soft copy let me know and I'll email you one that you can type into.
Deposits – if an agent sale, the deposit is usually paid to the agents trust account. If private, your lawyer can hold the deposit in their trust account. Personally, I don't give big deposits these days (often zero) and if an agent is involved, only enough to make sure they are paid their 4% commission.
Settlements – not sure what you need to know.
Do you have financing sorted? I can give you a couple of names of brokers if you need help there that are experienced dealing with out of country investors.
What/where are you buying?
Cheers,
Vickydsuovann, you can purchase freehold property in New Zealand no problem at all. Funding is as easy as in Oz and there's no stamp duty.
I'm a local NZ property finder and we're regularly seeing single dwellings returning over 8% +CF and multi units in excess of 10%. For more info and to join my investors mailing list, check out my website http://www.buyersagents.co.nz
Good luck in your investing journey.
Vicky
Richard, Terrance the original poster seemed unsure how to create +CF with interest rates so high, maybe you can help him out.
I've struggled to make lease options work in a hot market, how have you got around that in Qld's boom times Richard?
Something that's working investment wise over here in NZ at present to create +CF is Lease Options.
Example:
Purchase property at $220K, with 20% deposit into a GST registered Trading Trust
onsell at $260K with a 3-year lease to tenant buyer.
Collect $5000 non-refundable option fee up front,
collect $520 rent and option payment weekly,
give $100/week rent credit.Yearly cashflow = $8,370 and
net margin at sale in 3 years = $23,850 or 128% ROI.For more info on deals like this, PM me.
If you have a job and a small deposit ($5K) for a <80K house I know a couple of people that are doing long-settlement rent-to-owns and wrap-like deals that may be able to help you.
PM me if you wish
Successful investors make their money when they buy
Hi macwa,
Mini has an awesome property I spotted on Monday in Dannevirke if you’re interested. I’m sure she’ll be happy to send you details. I also have another that I was going to keep for myself that I could pass on, awesome house, excellent location, good for a keeper. Send me your email and I’ll hook you up with the details. Mini also has another one of mine coming out late this week, so if you’re not already on her deals list ya probably want to get yourself on it!
Cheers,
PCSuccessful investors make their money when they buy
Nkibel, I wish I had a crystal ball and could see where property prices will be in 10 years! But one thing you can be sure of, there will be a lot of Aussie and Kiwi investors sitting VERY pretty and not needing to worry about what the governement coffers have to offer them!
Successful investors make their money when they buy
If you’ve ever been to one of Olly’s one-day or weekend workshops it is obvious he has been investing for a long time (40+ years I believe) and has experienced numerous up markets and his share of down markets and thus has learned the cycles and what to look for in a changing property market.
Olly is one of the few people on the speaker circuit who has actually been there, done that AND got the t-shirt to prove it!
While he is only one voice, in my opinion he’s one of the few worth listening to!
Successful investors make their money when they buy
My personal experience is that I’m “CHEAP”, i.e. way down in the pecking order!!! I’ve yet to get a single property at tender. It seems like the real estate agents use the tender process to create interest and pressure purchasers into paying higher prices than they might otherwise (a bit like auctions!)
My understanding, from a recent conference I attended, is that once the market over here starts to slow down/level off/ or fall you will see more properties with prices being advertised, so yes, tenders have a lot to do with the state of the market.
I attended an auction in Gisborne the other day where even the agents were aghast at the selling price as it climbed over $600k. In fact, they started clapping and yahoo-ing when it hit $700K. The final selling price ended up just over 800K — unheard of for the town!
The best thing to look out for on these deal is the ridiculous prices people are paying for properties… just wait a couple of years when they’re squeezed for cash and trying to off-load ’em!!!
Successful investors make their money when they buy
Redfish, it’s so cheap for us because we’re subdividing in a small town (Woodville) of only about 2,000 population in Tararua township. The surveyors were in today to the tune of $2,500 for survey and drawings. We had to wait about two weeks from giving the surveyor the go ahead after receiving the Resource Consent.
Obviously not all towns are equal!!
PC
Successful investors make their money when they buy
Aptam,
Yes, my understanding is that the bank will appear on both of the new titles created — our lawyer will see to that!
PC
Successful investors make their money when they buy
Redfish — we’re only two months into the project, but yes, the $5-6K estimate is all up including council, surveyor, lawyer. In this one-off case our accountant advised that we won’t be classed as a developer, so no tainting.
Aptam – to date we’ve done nothing with the bank. Didn’t have to run anything by them first. After the properties are subdivided and on two titles, we will have valuations done on both so we can either sell one or both, or refinance. The property is currently 60% financed by the bank because it’s commercial. Once separated the commercial will remain on 60%, but the residential portion can be leveraged to 80%.
Cheers,
PCSuccessful investors make their money when they buy
We’re in the middle of subdividing a residential property off a commercial property and the main thing I can tell you is that it is a SLOOOOOOW process.
Estimated time start to finish is 6 months, of which five months are spent with papers being shuffled around bureaucrat’s desks!
My understanding is that first you need a cadastral surveyor to take a look at the site and confirm that it can be subdivided, where the right of way will be, and where the existing sewer and water runs. Then the surveyor, at your cost of course, submits papers and a fee to council for Resource Consent. Once council gives consent the actual subdivision can happen. This is where you start throwing money at the job! The surveyor formalizes where the property is subdivided and submits drawings (and money!) to LINZ (I can’t remember what that stands for) and then your lawyer gets involved (more money!!) creating the new title documents. All up, we’re looking at something around $5-6ooo.
Six months later, voila, you now have two smaller properties where you once had one big one!!
In response to your “did we buy with the intention of subdviding” question … we always try to buy with the ability to add value!
When we purchased the properties, the house had a “gentleman’s agreement” to access it, so we knew we’d put a formal ROW in place as soon as we owned it, thus adding value immediately. In order to formalize the ROW, it made sense to chop it into two titles because the property can then be better leveraged by having it on two titles, i.e. we can sell off the house and keep the commercial, or re-finance the residential at 80% instead of the 60% it’s at being bundled with the commercial property. Having the house on a separate title magically makes it worth considerably more than bundled with the shops!
Personally, we’re not seeing any “traps”, you either can or can’t subdivide, it’s a pretty clear cut “yes” or “no” answer from what we can gather.
Good Luck!
PCSuccessful investors make their money when they buy
Where is the property? If it’s in a university town you could rent it by the room to uni students. I’d recommend paying a cleaner (built into room rent) to come in and clean the place every week though otherwise you might see your investment going down the gurgler!
If it’s in a fruit/grape area you could fill it with pickers for a good six months of the year on the same scheme as above with cleaner.
If it’s in a touristy place, how about turning it into a backpackers with resident manager?
Good luck!
PCSuccessful investors make their money when they buy
What is a “bad experience” for some may just be an “opportunity to learn” for others. It all depends on how you choose to view it! Personally, I’ve never had a bad experience, but investing sure provides lots of learning opportunities [grad]
Dump the Hamilton deal and contact MiniMogul, she’s the queen of finding NZ CF+ deals to order!
All the best!
Personally, I can’t see much relationship between the ratable value, and purchase/valuation price.
The plus side of having a low RV of course is that you don’t pay so much tax to the government!
Here’s an example of a property I own…
Ratable value
Land Value
(Sept 2003)
$2,000Capital Value
(Sept 2003)
$30,000Valuation done in September 2004 was $75,500 and purchase in December 2004 was $66,000.
If someone can shed some light on how the ratable value is arrived at and what it actually has to do with the valuation or purchase price in the buoyant market that we’re experiencing at the moment, I’d be keen to hear your opinions!
Playa Chicken
