Forum Replies Created
Have a defined exit strategy so that you know the potential profit in the deal from the start.
eg – buy and hold, wrap, reno, whatever – be able to picture the deal through to completion and you walking away with your profit ready to do the next (bigger) deal.
John.
(I believe that later this year there will be no +CF deals left in NZ, so I’ve moved here to invest full time. I can find +CF deals for your NZ portfolio for a fee, just email me [email protected])
No Allan, there is no CGT on your PPOR. Unless you have a REALLY bad accountant!
(I believe that later this year there will be no +CF deals left in NZ, so I’ve moved here to invest full time. I can find +CF deals for your NZ portfolio for a fee, just email me [email protected])
From memory, their management fee is about 16% which is high, but includes all maintenance expenses. So you know where you stand all the time, no surprises.
I believe they actually factor in the long term lease (usually 6 or 9 years) into the purchase price, that is, its higher than just the property alone would be priced at. Keep this in mind.
John [biggrin]
(I believe that later this year there will be no +CF deals left in NZ, so I’ve moved here to invest full time. I can find +CF deals for your NZ portfolio for a fee, just email me [email protected])
A quick note to Elves,
bank cheques are an option, but you will probably get a lower conversion rate than for an electronic transfer, and if you’re transferring $100K this can mean a few hundred dollars difference. So its not really the cheapest option in that sense.
Electronic is easier than manual (cheque = paperwork) for the NZ bank. It’s also faster as you dont need to get them a chq in the mail.
John.
(I believe that later this year there will be no +CF deals left in NZ, so I’ve moved here to invest full time. I can find +CF deals for your NZ portfolio for a fee, just email me [email protected])
It depends on your situation, and everyone’s different. You need to do what suits you best.
If your property has had a nice gain, and you want to lock that profit in as you feel the market has reached a peak then selling might be a good idea.
If you think the market is still going to keep going up and you have no reason to sell, then holding would be smarter.
If you have another great deal in mind that you need funds for, and can get these funds through selling, then maybe selling is the go.
There’s no rules as to what type of gain (10%, 50%, 100% gain) is the ‘right’ gain to sell.
John.
(I believe that later this year there will be no +CF deals left in NZ, so I’ve moved here to invest full time. I can find +CF deals for your NZ portfolio for a fee, just email me [email protected])
WAF, what would you do with the land? Remember Shape-O…
If you have an exit strategy in mind (i.e. how you are going to make money with this deal) then you can choose your entry strategy to suit.
For instance. Say you buy the land and then subdivide and build townhouses on it and you believe you can sell all these for $800K no problem. (I’m just making up numbers as example)
If your project costs are $200K for the land and say $400K for the development, and you stand to make $200K profit (yes before tax, I know I know) then your entry strategy can be to pay $200K for the land. Simple. (If you can see a way to make $200K in a deal, you dont have to worry too much about should you buy it at $195K, or $200K – just buy it before someone else does!)
If you don’t know what your exit strategy is (i.e. you dont have any plan in mind for the land) then there’s no way you will know what you should pay for it. All you can do is try and save a few thousand $ on the asking price.
John
(I believe that later this year there will be no +CF deals left in NZ, so I’ve moved here to invest full time. I can find +CF deals for your NZ portfolio for a fee, just email me [email protected])
Oh just another thought. When I was starting to buy property all I used was a conveyancer.
Now that I am seriously investing, I use a good solicitor.
If you are seriously investing, then you need a good solicitor as much as a good accountant.
John.
(I believe that later this year there will be no +CF deals left in NZ, so I’ve moved here to invest full time. I can find +CF deals for your NZ portfolio for a fee, just email me [email protected])
If you can find a solicitor who is also a property investor (or at least is good enough that he or she SHOULD be one) then they are great as part of your team. For example, say you are buying a property and you cant arrange the building inspection in time and the contract is about to go unconditional and you dont know what to do! What are your options? AAAAArghhhhh. Just ask your good solicitor for his advice and get him to sort it out for you.
(now imagine this in a situation twice as hard and you want to KNOW that your solicitor will have the answer for you).
John.
(I believe that later this year there will be no +CF deals left in NZ, so I’ve moved here to invest full time. I can find +CF deals for your NZ portfolio for a fee, just email me [email protected])
Hi Kitdoctor.
I am in the same situation – I have CBA account and NZ bank account. No it cannot be done online using Netbank (yet – its coming apparently).
You need to call into any branch of the CBA and complete an IMT (international money transfer) – costs about $28 (plus whatever your NZ bank charges to receive the cash at the other end, maybe $10 in my experience).
For your other question, the banks in NZ are pretty much separate to the Aust. versions. Even though there is ANZ in A and NZ (funnily enough) they are pretty much run separately. Westpac in NZ is known as Westpac Trust and is technically a ‘branch’ of the Australian Westpac (yes, NZ is a single branch… the NZ govt hate it!)
The equiv. of CBA in NZ is ASB Bank. But its extremely unlikely that your local CBA branch can open an account in NZ for you. Maybe if you were with ANZ, I have heard that you can be ‘referred’ if you are well known to the bank in Australia (its hard these days as few people know their branch manager anymore!).
You really need to make a few calls to NZ to enquire about opening an account here, and similarly for getting finance pre-approved to invest in NZ.
Give it a try and let me know if you get stuck. Part of your investing journey is to take action and then possibly learn from your mistakes.
John.
(I believe that later this year there will be no +CF deals left in NZ, so I’ve moved here to invest full time. I can find +CF deals for your NZ portfolio for a fee, just email me [email protected])
Hi Jaffasoft. The MAP is still underway, so best to wait until the end when the results are in… we’re still having a go (as you say).
One of the big things we’ve all realised in MAP is that everyone is doing something completely different to everyone else. So to be honest, there’s actually no point putting up a case study like you ask, as what you should be doing to achieve success as an investor will be different to what I have been doing for instance.
Everyone goes through a different process to achieve success in property investing. I understand your request (a year ago I would have liked to ask the same question) but here’s a tip:
Don’t look to what works for other investors, find out what works for YOU and then do it like crazy!
Steve? care to comment on this?
John.
(I believe that later this year there will be no +CF deals left in NZ, so I’ve moved here to invest full time. I can find +CF deals for your NZ portfolio for a fee, just email me [email protected])
Dean, I agree with Redwing and MortgageHunter. There seems there’s one of two things happening here:
1. You are in the lucky situation of someone being interested in your property and can make a quick $80K. Don’t kid yourself – if this is the case, take the money! I dont know how much you earn, but probably you could take a year off and still be in front with this deal (and find another place to call home). Occasionally, while rare, these opportunities do come along for various reasons. That’s why we are ‘investors’ – our aim is to make a profit, so take the money if you can.
2. The agent may be playing games trying to get a listing. They do wierd things sometimes. Just go back to him and tell him that you will list it with him if he has a buyer at that price. Ask him if he has a buyer. Ask him what terms the buyer wants in the contract (eg finance, due diligence) – try and find out how serious it is. The one with the most info wins. Probably he does know something you dont, thats why he is offering $80K more than you just paid. Be thankful!
What a predicament to be in.
John.
(I believe that later this year there will be no +CF deals left in NZ, so I’ve moved here to invest full time. I can find +CF deals for your NZ portfolio for a fee, just email me.)
Hi Tomori,
comments from others are worth considering – if you want to free up capital for more deals you could just refinance to get at the equity in your properties. However if you feel the market is changing downward, or if you are in NSW and want to avoid the new stamp duty on exit, or simply want to take some profits (which contrary to some opinion is NOT done by refinancing since you are not locking in a value on your property unless you sell) and decide to sell…
I would firstly as an investor determine what your lowest price to sell is. This is the critical part, finding an agent to obtain that sale price is a secondary issue. Ask yourself a series of “If someone offered you $x today – would you take it?” What is your bottom line for the property?
As an investor your bottom line will depend on how quickly you want to sell. For instance if you have another deal in mind that you need deposit for quickly, and there is a good profit in this deal then you may be prepared to ‘sacrifice’ a few $ selling your own IP to be able to do the new deal. On the other hand, if there is no other deal to do and your IP is doing well then you may be prepared to list it and sit it out for top $ offers. Its up to you.
Choose an agent that will help you achieve what you want to do.
John.
(I believe that later this year there will be no +CF deals left in NZ, so I’ve moved here to invest full time. I can find +CF deals for your NZ portfolio for a fee, just email me.)
For your cashflow calculations, the difference tax makes is simply another line to add in (to the examples Steve gives in 0-130 which you’ve already seen).
For example, in the book all the deals are worked out without depreciation considered (there are reasons for this but i wont go into it as you wanted to know how to incorporate a tax rebate into your cashflow calcs)
Now depreciation is an ‘on paper’ deduction meaning you can claim a certain amount as a tax writeoff for the decrease in value of the property (building and chattels). These amounts are known as special building writeoff (typically 2.5% of the value of the building each year) and chattel depreciation (which might be say 15% of the value of the chattels especially fixtures and fittings like carpets, drapes, fixed heaters etc…)
Lets say you can claim an on paper deduction of $4,000. If your husband is on the top marginal rate then he will save about $2,000 in tax as a result. Effectively this is extra cashflow that you can add back into your cashflow calculations, making the deal seem higher CoCR.
This is a legitimate way to look at cashflow, since you ARE better off by the tax saving whilst you are working. However Steve doesnt include it in his book (in most places) as he considers it a separate cashflow to the property deal itself, and one that is not available if you dont have other income to offset the depreciation deduction against (such as when all your properties allow you to retire!). He argues that a property should be +CF enough without the deductions.
Hope this helps.
John [biggrin]
(I believe that later this year there will be no +CF deals left in NZ, so I’ve moved here to invest full time. I can find +CF deals for your NZ portfolio for a fee, just email me.)
I disagree Diggler.
I base my view on:
My experience with +CF properties in Tasmania over the last few years (where prices have risen, reducing the yields in general). Now very hard to find +CF (but not impossible).
My first hand experience in NZ so far (where prices are rising and it’s all about being in the right place at the right time to get the best deals).
The level of overseas interest in NZ property from not only Australia (as seen on this forum, and the number of replies I am getting from people interested in NZ deals), but also the US and other countries.
Potential impact of Lord of the Rings movies as mentioned.
Benefits such as no stamp duty, no CGT, lower tax rates… these are attractive to any investor! Especially a NSW one who now faces two lots of stamp duty.
NZ is accessible from Australia (about the same as going to Tassie from Sydney). And people like the idea that they can invest here and get a tax deduction when they come to inspect their properties.
Whilst it may be a bold statement, and perhaps could be worded as ‘very few +CF deals’ or ‘by middle of next year’ instead – the intended message is the same – they’re getting scarcer.
I think now is a great time to invest in NZ, I’m just saying I doubt it will be as great for +CF investors next year. Make hay while the sun shines [biggrin].
John.
(I believe that later this year there will be no +CF deals left in NZ, so I’ve moved here to invest full time. I can find +CF deals for your NZ portfolio for a fee, just email me.)
There’s also the Lord of the Rings aspect. yeah yeah you say, but think about how big this is… Suddenly New Zealand is the ‘hot’ destination for millions of Americans who are getting married here, moving here, having holidays here…
It’s suddenly on the radar and is being heavily promoted (have you seen the Air NZ planes with full LOTR themes painted on them?) across the world to generate more visitors.
And its perceived as a safe haven in this age of terrorism.
This can only be good.
John.
Yack – If I was still in Sydney I would probably be waiting for the bust as well. But in the MAP and in NZ – everything is all go. What I meant about being ‘less picky’ was that I was looking for the perfect investment, and in reality you have to settle for near perfect sometimes. [biggrin]
(I believe that later this year there will be no +CF deals left in NZ, so I’ve moved here to invest full time. I can find +CF deals for your NZ portfolio for a fee, just email me.)
Hi all, I have three comments:
1. I have IP’s left in Hobart that I have been considering selling to take profits (to reinvest in another market, and yes that would be NZ). If this new tax were in Tas not NSW I would be selling immediately. I wonder how many NSW investors are sitting on a stack of potential cash and will be thinking along the same lines…?
2. I’m even more glad I left Sydney for NZ now that there will be two lots of stamp duty in NSW, and still none in NZ.
3. If it were a race in NZ to buy +CF, the announcer has just called out “This is the final lap!!”
BTW Muppet – name’s changed from TasInvestor to Tasman Property. But hey, as long as there’s a Tas in there somewhere, I’m happy [biggrin]. And as you’re a kiwi, I guess you could even call me Tis? Ha ha.
John [biggrin]
(I believe that later this year there will be no +CF deals left in NZ. If you’d like Steve’s MAP protege living in NZ to leverage your time and find the deals to build your portfolio quickly, just ask me!)
Hi Gran T (!)
I’d like to help as this is the situation faced when I moved from Sydney to NZ recently (and yes getting finance has been tricky, but mostly because I am now a self employed property investor and have changed career and stable income etc all in one go).
You need to think of it from the banks viewpoint. Basically anything is possible if you can demonstrate that the risk is acceptable to the bank. So all your suggestions will help, particularly using the same bank that ‘knows you’ (as best a bank can) and why not approach a bank and a mortgage broker.
Do whatever is necessary to get finance. And if it isnt working, do something else to get finance! (MAP tip: Action leads to Reaction leads to Momentum leads to Action…)
Talk to a personal or business banker about your needs, dont just call the helpline where they are run by what their computer screen says (such as having 6 months employment in the same job being first requirement).
If you run into trouble (the bank sees the risk as unnacceptable) as why specifically and then help the bank to get over that hurdle. Maybe they wont lend you 80-90% but they would lend 70-75%? You may need to be flexible, and may need to approach a few banks (after your own) as one may perceive their risk to be less than the others for some reason.
Good luck and well done for taking action to achieve your goals!
(I believe that later this year there will be no +CF deals left in NZ. If you’d like Steve’s MAP protege living in NZ to leverage your time and find the deals to build your portfolio quickly, just ask me!)
Great tips Brent!
I feel that one of the bigger risks is to the uninformed investor that buys in NZ without really knowing the market here. Specifically:
1. Someone who buys over the net or phone from Australia (still cant believe people do this).
2. Someone who flies over, hires a car for a week and does a whirlwind tour to buy properties in places they’ve never heard of before. Still better than 1 i guess…
I speak from experience, as I did the whirlwind tour last November when I was considering moving over. I could have bought then, but knowing what I know now I am glad I held back (well except that the prices are moving up so fast!). Who knows what I would have bought! And if there’s a problem its harder to fix in a different country…
Westan has moved over here, Mini lives here, Brent has been over a few times with Steve and Dave to buy properties, I live here. personally I think the bird dog idea is a great win/win as you can leverage your time to find and buy a good +CF deal in NZ without the hassle of airfares, car hire and taking a week or two out of your shcedule to achieve a whirlwind tour as in (2) above.
You may pay a few thousand dollars for a good deal, but you’ve saved the same in travel costs and time, and your spotter will probably have negotiated the same or more off the purchase price anyway!
Better still, work with a spotter as part of your investing team to build a portfolio in NZ – not just 1 or 2 deals. They’re still so cheap here (for now) that if you have $50K to invest, you can buy 4-5 deals in one go and do all your finance and settlements all at once. Much easier.
John [biggrin]
(I believe that later this year there will be no +CF deals left in NZ. If you’d like Steve’s MAP protege living in NZ to leverage your time and find the deals to build your portfolio quickly, just ask me!)
Anythings possible if you find the right person to talk to… butin my experience 80% LVR is the limit for Aussie investors in NZ. Plus if you go over that you have another cost to factor into your CoCR calcs, namely mortgage insurance.
Stick to 80% or less in the current market would be my tip, depending on your own circumstance.
Good luck with your trip Brent.
John [biggrin]
(I believe that later this year there will be no +CF deals left in NZ. If you’d like Steve’s MAP protege living in NZ to leverage your time and find the deals to build your portfolio quickly, just ask me!)
put some in the bank, earning good interest, then offset the tax on the interest by conservatively gearing into property and/or shares as well (unless you like to take higher risk, are experienced and want everyting to happen faster).
Say $100K in the bank
and
$500K + $500K borrowed = $1m property portfolio.
Depending on your time available, you might like to manage deals yourself, or you may like to have someone manage them for you (my preference).
Alternatively with that kind of cash you could become a financier or JV money partner for a professional investor, and get a higher return (say 10-15% flat rate) with higher risk, or a share in the profits of the deal.
Personally, I would move to NZ and buy +CF deals full time, and hopefully never need to work again. Wait, that’s what I am doing [biggrin]
(I believe that later this year there will be no +CF deals left in NZ. If you’d like Steve’s MAP protege living in NZ to leverage your time and find the deals to build your portfolio quickly, just ask me!)
