Hi all

John
let me explain why often it is better to ride the ups and downs.
say you bought a home 5 years ago for 125k today you can sell if for $250K. Lets look at the cost to dispose of this asset.
selling cost Legal $1,000
agents selling commission $8,000 (guess)
so let say $9,000 to sell.
then you need to pay tax on $125k. No mattter what tax bracket you are in most of this will be taxed at 47% (on 50% of the CG) so 47% of $62,500 is about $29K. Total so far $38K.
Now you have to buy back in lets say the market drops 10% from now (i ‘m not saying it will, infact it may not drop at all !).
So let say the market drops 10% you buy a home for $225K, you have some costs associated here these include Legal $1K and stamp duty (in Victoria) about $9K. Plus loan costs,
lets say total $10K.
So far the costs have added up to $38K plus $10K total $48K. Even without any CGT it is still about $20,000
hope this helps to explain my point.

regards westan

I live in New Zealand and for a fee find cash positive deals there, email me at [email protected] to join our database

hi all

we should demand and expect honesty from ALL our politicians

regards westan

I live in New Zealand and for a fee find cash positive deals there, email me at [email protected] to join our database

Hi john and yack

you may well be right. But remember that property investing is very expensive to move in and out of (unlike shares) which will mean that you are better to ride through the down period as by the time you sell and buy back again you maybe out of pocket, not to mention paying tax. You maybe aware that the market in the larger cities moves through cycles and i suppose sometimes we have to say where will prices be in 5 or 10 years time.
One concept mentioned on this forum is positive cash flow properties, these are ones that put money in your pocket at the end of the week. Sure interest rate rises will hurt the bottom line but hopefully not turn it into a negative geared property. I certainly wouldn’t like to own 30 negative geared properties at the moment.
Regarding interest rates i don’t believe that the rate increase will be that much (but i’ve locked a few in at fixed rates), look at what rates you can get for 5 year fixed loans , obviously the banks don’t expect any dramatic hike in rates no matter what there rhetoric.

regards westan

I live in New Zealand and for a fee find cash positive deals there, email me at [email protected] to join our database

Hi shirl1978

there are such things as no money down deals, (i’ve never done one), use “search” on this site and i’m sure you will find something. There are lots of American writers who promote these types of deals, one idea is you can ask the seller to keep some of his money in the deal (ie 20%) so you only borrow 80% from the back. Or else you can borrow from family (Yes i’ve done this one), but you need to know the market very well and know what you are doing.
Finally don’t let your accountant put you off. I spoke with an accountant 7 years ago when i first started investing, he suggested i not buy property but invest in education bonds (or whatever they are). I didn’t take his advice, today i’m the owner of 30 properties in Oz and Nz. A few months ago when i was going through some old bills (yes ones i had paid) i found his bill, this reminds me i need to frame it, it puts a smile on my face everytime i think of it.
regards westan

I live in New Zealand and for a fee find cash positive deals there, email me at [email protected] to join our database

Hi 7

sorry moderators for bringing this post up again, i knowe no share stuff. try hotcopper also, But one word of warning. Unfortunately a lot of people use these types of forums to ramp up stocks they already own. It is possible to promote some small stocks through these types of forums and move the market. During the dotcom days people would join these types of sites and take on multiple identities. They would then post things such as “ABC ltd is about to make a huge anouncement”, then using another name post “my brother works for them and he said the same thing but would say anymore as he is sworn to secrecy”. Then a third name (same person) would make a comment like “ive been told by someone who works for a legal companyt associated with the company to buy as much as i can as its going to be huge”.
It may sound funny but it worked. (no i never did it)

regards westan

I live in New Zealand and for a fee find cash positive deals there, email me at [email protected] to join our database

Hi Mr simba

also call as many property managers as you can they know their stuff (usually) and are more than happy to tell you what they know. They are the experts on the market and often set the price.
Good property managers are happy to do inspections and make comments on the demand for that particular home and give rental estimates.

regards westan

I live in New Zealand and for a fee find cash positive deals there, email me at [email protected] to join our database

Hi peter

the other have covered tyhe lease issues well, i would add be careful with them as they set the rate every so often on the current land values as the land will be valued at a higher rate big increases could in in the pipeline.

In regar to finance in NZ you will be best to go through a NZ based bank (as opposed to the australian office) there are a number of excellent brokers on this site who are arranging finance for investors and have an excellent track record. (do a searchon NZ finance). Don’t expect to do any better than 80% finance.

If buying site unseen obviously get a building report (i often just get a verbal one but written is better probably), make sure you check the rental demand and rental prices with a number of property managers, most will even inspect the home for you and give advice about the home the area etc.

regards westan

I live in New Zealand and for a fee find cash positive deals there, email me at [email protected] to join our database

Hi Fnomna

i would take the selling your property option. I’d then reinvest that money in a home that was showing a higher return or invest the money somewhere else for a better return. I even rather have the money paid off your mortgage than in this IP which is costing you money. The property as you have said will give you tax free money if it is sold.
At the moment it is costing you to own this home if you sold it and got the 100k equity out, at least you will be saving around $7000 a year if it was put on you mortgage.
So unless you felt the home was likely to appreciate in value in the next few years i’d get out and as i’ve said buy a cheaper property as an IP, reinvest or reduce debt.
what do other think ?
regards westan

I live in New Zealand and for a fee find cash positive deals there, email me at [email protected] to join our database

Hi all

one other option is landlord insurance, this is nicely priced and will insure you against tenant rent default and any damage they do. Good policies will cover loss of rent till the property is relet (providing the tenant was on a lease).

regards westan

I live in New Zealand and for a fee find cash positive deals there, email me at [email protected] to join our database