Forum Replies Created
The KPI magazine certainly is biased.
I attempted to advertise my software in their magazine but they refused to let me. Richmastery has their own software package and so they told me it was not in richmastery’s best interest to advertise a competing product. If this was an independent and useful magazine the readers would have the freedom of choice. It makes you wonder how much other content is or is not there based on what is in the best interest of richmastery.
Andrew
http://www.rentmaster.co.nz
Software for LandlordsInvestment related books in general are tax deductions.
Your last question goes into a bit of a grey area. I suppose you have to ask yourself if you did not run this investment business, would you have still purchased the book? If you wouldn’t have, then the purchase of the book was relevant to the business and is tax deductible. Best to confirm with your accountant though.
Andrew
http://www.rentmaster.co.nz
Software for LandlordsHi Guys
I am a software developer by day and by night when I choose to be. I am 29, and have 3IP’s plus my own PPOR.
I also support the All Blacks (oops – maybe I should have kept that bit quiet).
Andrew
http://www.rentmaster.co.nz
Software for LandlordsIt is a shame this forum does not have surveys like I have seen on some other forums.
Surveys allow you to answer the questions without identifying yourself. It is great to see a quick graph of results.
Maybe an idea for the future?
Andrew
http://www.rentmaster.co.nz
Software for Landlordsummmm – thanks doogs – I think. I knew I should have gone to those maths classes.
Andrew
http://www.rentmaster.co.nz
Software for LandlordsHi Kierra.
The concept that you can own as many as you like as long as they are positively geared is true.
If your property is left vacant for a long time it will switch from a positively geared property to negatively geared. Positively geared means income exceeds outgoing, so servicability is no problem. But what you have to remember is that just because a property is positive today, does not mean it will remain that way if circumstances change (interest rates go up, tenant leaves etc). Just like your negative property will probably one day become positive if you keep it long enough to completely pay off the mortgage.
That said, the general philosophy is still true. If the property REMAINS positive, servicability is no problem.
Andrew
http://www.rentmaster.co.nz
Software for LandlordsI for one would be interested to see the formulas you used.
In NZ the top tax rate kicks in at $60,000.
Andrew
http://www.rentmaster.co.nz
Software for LandlordsWow J!! I get the idea. You make a good point.
The original numbers are very theoretical and only really points to the idea that over time interest only costs you more in interest and total costs, whereas P and I costs less in total. My numbers are by no means a conclusive comparison. There are all sorts of what if scenarios you could use to alter things.
In reality you are not likely to take out a P and I loan over 10 years. It is more likely to be 25 years. Also if you are like me you get to make lump sum payments which shortens the term and pays it off quicker.
The other thing I like about P and I is that if you pay off lump sums you increase your equity in the property which you can then use as collateral towards your next property while at the same time saving total interest. If all you pay off is interest, then when it comes to getting your next property, you either need a cash deposit or rely on capital gains in other properties.
Is you top tax rate really 48.5%? In NZ the top rate is only 39%. 48.5% makes interest only a more interesting proposition because of the increased returns.
Andrew
http://www.rentmaster.co.nz
Software for LandlordsI have just done a few quick calculations for a comparison.
Assume you have a 200,000 loan, for 10 years at 7%
For interest only…
per month pay 1166
total interest paid = 140,000
total payments = 340,000P and I….
per month pay 2322
Total interest paid = 78,000
Total payments = 278,000So you can see interest only is very good for monthly payments and there cashflow, but overall you end up paying a lot more. Depends on your circumstances as to which is best for you.
Andrew
http://www.rentmaster.co.nz
Software for LandlordsPersonally I prefer old semi-do-up properties. By that I mean properties which are structurally sound, but look ugly. A fresh coat of paint, new carpet, a new garden etc. It might set you back 5k but the value you can add to the property could be worth a whole lot more than that. Requires you to purchase the worst house in the best street to get your money back on it though. Also works best if you do most of the work yourself.
With brand new properties there is no room left for improvement.
Andrew
http://www.rentmaster.co.nz
Software for LandlordsOf course if the floating interest rates went down……
If we all knew what was going to happen property investment would be no fun would it?
Andrew
http://www.rentmaster.co.nz
Software for LandlordsThat is another reason to always look for positive cash flow properties. If the interest rates go up then you have a bit of room to spare before the property becomes negative cash flow.
If you have a number of properties then one option is to sell one of the properties, use the cash to pay lump sums off the other properties to get the total size of the mortgages down – reducing the interest bill. This is only useful if you have a decent amount of equity in the property though.
A similar scenario to look out for is if your property is vacant for a long time. The property becomes very negative for a while.
If it all turns VERY bad you could just sell up the whole lot.
Andrew
http://www.rentmaster.co.nz
Software for Landlordsdiv43 – if you want to record depreciation against your property then my rentmaster software will do that as well as tracking depreciation on the fittings as well.
Unlike PIA and ez-rent this software does not record hypothetical future predictions for your properties but instead records the actual rent income and expenses as well as tracking rent arrears, tenant details, property repairs etc. i.e. it is used for record keeping.
Sorry it is not free but costs from $79AU to $129AU.
Andrew
http://www.rentmaster.co.nz
Software for LandlordsOne thing to remember is that if you dont put money into your own house, and rent instead, that money can be reinvested into something else which is earning money e.g. shares, your own company etc.
By investing elsewhere you will pay rent, but save mortgage payments on your own house, plus earn the alternative investment income. Very much depends on what else you could do with that additional cash.
Andrew
http://www.rentmaster.co.nz
Software for LandlordsBasically banks require a certain % ownership by you. e.g. 20%. They will lend the other 80%.
If you have a property worth 400K, and only owe 180K, then you effectively own 55% of you assets, and the bank ‘owns’ the other 45%.
If you purchase another house worth 200K for example, and dont use any deposit yourself, then the bank will give you 200K more mortgages. The total value of houses is then 600K, and you owe the bank 380K, which means the bank still only ‘owns’ 63%. The bank should have no problem with that at all. The bank will use both houses as security for the loan.
You could then purchase another house worth 200K. Total houses worth 800K, total mortgages is 580K, which is still only 72% The bank should be happy with that too.
The limitation will be your ability to repay the mortgage debt from rental income and your own pocket if necessary. This is why you want positive cash flow properties to make sure you dont hit this limitation.
Hope that helps you.
Andrew
http://www.rentmaster.co.nz
Software for LandlordsPersonally I use my own software – rentmaster. More of a management package than analysis.
Andrew
http://www.rentmaster.co.nz
Software for LandlordsHi Michael
I hope this is not seen as spam – but you did ask the question so I am answering it.
You could try my software at http://www.rentmaster.co.nz. PIA software seems to be more of an investment analysis software. My software records the actual daily income and expense transactions which I think is what you are looking for. It can therefore tell you your actual rent arrears at any time. There is a free full 60 day trial download.
It is made in NZ but I have an Australian office and a large percentage of my sales are to Australians.
Andrew
http://www.rentmaster.co.nzAnother reason the second property is easier is because you can use your equity in the first property to purchase the second one. Sometimes without needing any cash deposit. The third one gets easier again. The more capital gains you are getting the better for this.
Andrew
http://www.rentmaster.co.nzHi Jonny
There is a standard tenancy agreement form which is used in NZ. On this form you specify a fixed term where you specify an end date (does not have to be 6 or 12 months – could be 237 days if you wish).
If you want to have a look at the form it can be downloaded from the tenancy services web site at
http://www.tenancy.govt.nz/tenancy/Forms/MOH-res%20ten%20agree.pdf
The term is specified on page 2, 4th box down.Andrew
http://www.rentmaster.co.nzIf you want some actual stats for Huntly (mining town 60km south of Auckland).
My brother purchase 2 properties there for about 95K each renting for about 150pw about 4 years ago.
The average tenancy term was about 6 months, after which the tenants left owing a whole lot of money and no forwarding address. It took about another 6 to 8 weeks to find another tenant to move in and also not pay rent.He sold the 2 properties for 62k each and they were on the market for sale for about 2 years.
All in all not a good experience. But maybe he just had a run of bad luck?
He has now purchased a property in west Auckland for 199K, renting for 310pw. Personally I would not look outside the major cities. I personally recommend south or west Auckland outer suburbs or you could try Hamilton which is about 1 hour south of Auckland.
If you want to know actual rental info in NZ you could try this site
http://www.tenancy.govt.nz/tenancy/Market-Rent/market%20rent%20region.asp
This is actualy stats from tenancy services in NZ.Andrew
http://www.rentmaster.co.nz
