Hi Raymondo,

judi is correct. If the rental yield is high enough then the rent will cover all outgoings (mortgage, insurance, rates etc) and still leave you some left over. What you seem to be talking about is the -ve geared, +ve cashflow model (as promoted by Margaret Lomas). What we are aiming for is +ve geared, +ve cashflow where you don’t need a your tax return to make it +ve.

These properties are currently easier to find in NZ than OZ (though they still are available here), but as mentioned earlier in the thread you need to do your homework.

regards,

Rod.

Hi all,

Westan has covered just about all the points. The one I’d really like to support is that if possible make a trip to NZ to check out the areas for yourself. They can be very different when you’re “on the ground” to how they appear over the net. Many of the towns have have areas where you probably don’t want to invest, but you’d never know without checking it out for yourself. Once you have a feel for the locations, you may then be able to make subsequent purchases sight unseen (subject to all the usual clauses of course).

Raymondo, Westan’s right, the way to get around the issue of offsetting NZ losses against Australian income is to avoid having NZ losses by only by +ve properties.

regards,

Rod.

It’ll be interesting to see how successful the Avalon flights are. Hazelton tried some flights from there about 3-4 years ago without much success. It might be a bit better now that the Geelong road is finished, and with a fast train to Geelong/Lara on the way.

Rod.

I’m looking for 4 this year, though if the numbers work out I may go for 6.

Rod.

westan,

My own experiences of Melbourne agree with your assessment.

We bought our first house in Melbourne for $84K in 1987. It was probably worth about $125K a couple of years later. It was sold in 1996 for $110K and would now be worth around $220K. This was a typical 3br suburban home.

Certain segments of the market may have seen a 30% drop but there wasn’t 30% falls across the whole market. I can see a few years of sideways movement and some “downward drift” but without some major external event I think across the board massive drops are unlikely.

regards,

Rod.

Hi diggler,

I’m sure mini will respond to this anyway but..

The merits or otherwise of buying sight unseen have been debated here several times already. It all depends on your own comfort level, personally I would buy sight unseen in a town that I knew, but not in somewhere where I’d never been. Others may be different. Having said that, no one is advocating not doing full due diligence on everything to do with the deal.

There certainly are some real dumps in this price range in NZ (yes, I’ve seen them too), but there are also reasonable, sound, tenantable properties. It’s all a matter of what suits your investment strategy.

regards,

Rod.

Mini,

I reckon you’re going to get deluged again.

I’m always interested.

regards,

Rod.

Yep, just checked.

The standard comsec margin loan interest rate (variable) is 7.9%, whereas the protected ones range from 12% to 28% [:0] depending on the stocks in the portfolio and loan term.

Rod.

Westan,

thanks for explaining what I meant about the margin loan, I was a bit brief (it was 6am after all []) when I wrote that.

Yes, I concede that there are companies which have gone from Good to Extinct very quickly. But in most cases you should be able to get out before you lose it all.

Michael, I agree margin loans (like all forms of leverage) should be handled with care.

regards,

Rod.

I hope you’re right mark, my 80% was a conservative estimate. Many have gone up quite a bit more.

Rod.