Forum Replies Created
I got my first property at 21 or 22. I did not know what I was doing, but I was lucky that the first one has turned out to be quite good. I still own it.
I have also read Rich Dad Poor Dad, and that is what really got me started. Since those days I have spent quite a bit of time reading other books and learning from property forum web sites like this one. They are a good resource.
However it is easy to over analyse and end up doing nothing.
Andrew
http://www.rentmaster.co.nz – Property Management Software
http://www.RentalAnalyst.com – Property Analysis SoftwareHi jaineyb
You can access the equity in your existing properties, but you should also look at the yield and cashflow being achieved.
If you sold the existing properties, took the selling costs hit, would you be able to make a higher yield and/or cashflow with some other properties? This really requires getting out the calculator and comparing the different scenarios.
It probably makes more sense to keep the one without the mortgage. Just get a new mortgage on it and buy some more.
Andrew
http://www.rentmaster.co.nz – Property Management Software
http://www.RentalAnalyst.com – Property Analysis SoftwareI agree – diversification does not always work. I think it was Robert Kiyosaki who said that by diversifying you become knowledgable in many areas and an expert in none. He argued that you are better off becoming an expert in one area and then invest in that.
Although at the same time if that one area turns bad, then you stand to loose a lot more. So there are advantages and disadvantages both ways. But houses tend to be pretty safe anyway.
Andrew
http://www.rentmaster.co.nz – Property Management Software
http://www.RentalAnalyst.com – Property Analysis Software– Create a really good web site and then sell advertising space on it.
– Invent something and get a marketing person to sell it for you.
– Create something which can be downloaded from a web site, and charge per download.
Andrew
http://www.rentmaster.co.nz – Property Management Software
http://www.RentalAnalyst.com – Property Analysis SoftwareOriginally posted by vyaw2003:ok i understand, pay the depoist as the amount which tilts it to +CF and then i dont have to worry about it. Until it is paid off and funding my retirement. sweet.
This might depend on how much risk you are prepared to take. If you are prepared to risk more then you could go for cash flow neutral after tax, which means you could afford to purchase more properties. If you dont like risk, then larger deposits and fewer properties would be safer.
Andrew
http://www.rentmaster.co.nz – Property Management Software
http://www.RentalAnalyst.com – Property Analysis SoftwareHi Assad
My opinion… the investment property worth 400K and renting for only 200pw is not a particularly good return. If you sold it, could you do better? You say you want to have 5 cashflow positive properties, and this one is negative. Does that mean you would need to buy 6 to counteract the current negative one? Maybe this property is holding you back?
Needs more number crunching.
Andrew
http://www.rentmaster.co.nz – Property Management Software
http://www.RentalAnalyst.com – Property Analysis SoftwareMaybe look at it from another perspective – where is the money being spent? Can some costs be reduced? Is there credit card debt which is generally bad debt? Maybe keep a journal for a few weeks and analyst exactly where the money has gone. This can sometimes be quite enlightening.
Andrew
http://www.rentmaster.co.nz – Property Management Software
http://www.RentalAnalyst.com – Property Analysis SoftwareSorry if this sounds a bit commercial, but you could try my software. http://www.rentmaster.co.nz . Does everything you mentioned above.
Andrew
http://www.rentmaster.co.nz – Property Management Software
http://www.RentalAnalyst.com – Property Analysis SoftwareMy thoughts….
I like the idea that the govt is not just throwing money at people – they want them to take responsibility for their savings first, to prove they are worthy, and then reward them for their savings.
It has been suggested that quite a few people who were considering buying their first property might wait until 2010 to take advantage of the handout, which may remove some people from the market temporarily. Reducing demand.
From 2010, there might be a heap of buyers coming into the market again – increasing demand.
Andrew
http://www.rentmaster.co.nz
Software for LandlordsWe dont have it yet… but it is a discussion topic with the current government.
Andrew
http://www.rentmaster.co.nz
Software for LandlordsI think that all depends on whether you have a large enough deposit without it.
If you can come up with 20% or so deposit, then it is probably best to leave the other property out of it. But if you dont have a large enough deposit, then the bank will probably require the other property as security.
Andrew
http://www.rentmaster.co.nz
Software for LandlordsGood advice G7.
Maybe when the property is transferred to your name they tell you that you are not allowed to sell it (without their permission). With an asset like that, it would be tempting to sell it, take the cash and spend it. It would also be tempting to get a mortgage on it, and then spend the cash on a new car or a holiday.
Resist the temptations.
Andrew
http://www.rentmaster.co.nz
Software for LandlordsIn the end it is all a numbers game. The numbers may work out better selling.
Of course selling and buying again does cost you CGT and agent fees and bank fees and lawyer fees and stamp duty etc. So the perceived benefit needs to be large enough to counter that.
Maybe if you have a ‘problem child’ property it might be better to get rid of it as well.
Andrew
http://www.rentmaster.co.nz
Software for LandlordsI also have a similar product available. Trial version available http://www.rentmaster.co.nz and it has depreciation as well.
Andrew
http://www.rentmaster.co.nz
Software for LandlordsI have never done any wraps, so this may not apply, but you might like to know this anyway.
In New Zealand, you can put the name on the purchase agreement as ‘Chris Holt or nominee’
The ‘or nominee’ bit allows you to transfer the owner of the property prior to settlement. It is also useful if you are looking to set up a company or trust structure, and dont have a name for it at the time of writing the agreement.
Personally I would always use ‘or nominee’, just in case. You dont have to nominate anyone if you dont want to, but it gives you that flexibility.
Andrew
http://www.rentmaster.co.nz
Software for LandlordsSelling and buying again always costs a lot of money. So if you choose to do that, then you need to look at the long term result and work out if the long term savings is going to offset the short term costs.
It might also depend how much you can rent your existing properties for, and how much rent you will be paying to live somewhere else. You may find that the income is more than the expense.
Andrew
http://www.rentmaster.co.nz
Software for LandlordsAnother option is if the mortgage on the property is P&I, then maybe switching to an interest only mortgage for a few years will improve the cashflow and allow you to hold into it for a while, until the selling conditions improve.
Andrew
http://www.rentmaster.co.nz
Software for LandlordsYou are right. +CF is difficult in NZ, but not impossible (especially with some creativity).
Prices have gone up a lot over recent years, but rents have not increased with the same pace. So margins have been dropping. But that cant continue. If it keeps going, nothing will be +CF, and a lot of investors will be loosing money.
As is normally the way, those areas with the best cash flow, tend to be the ones with the lower long term CG, and areas with better long term CG tend to have lower cash flows. Those that have been hoping for good CG over the last few years will have done well, but the property cycle will not continue like that.
Andrew
http://www.rentmaster.co.nz
Software for LandlordsAbsolutely!
Unless you are paying cash or a large cash deposit, the banks will require you to get a valuation anyway. The banks are not dumb. If they are going to give you a lot of money, then they are going to ask you to do their due diligence for them.
So if the banks thing it is important, then it should be important to the investor as well.
Andrew
http://www.rentmaster.co.nz
Software for LandlordsI have got some other free software which you may be interested in, but it requires a pocket PC or a PDA phone device.
This software does simple cashflow and returns analysis, and is really handy while viewing homes because it is portable.
It can be downloaded from http://www.rentmaster.co.nz/details_pocketanalyser.aspx
Andrew
http://www.rentmaster.co.nz
Software for Landlords
