NZ suburbs

Hi everyone especially welcome KtKiwi

Very interesting to read your post.

I think that everything you say is true for most investors.
For the average investor.

Re: the BNZ thing if us resident Aussies want to be in the loop with things like that re: investing in NZ then subscribe to KPI magazine – I already knew about that from an article two or three months ago, and there is another bank called

http://www.kiwibank.co.nz

which is worth checking out for competitive rates but I don’t think you can go through a broker with them either (correct me if I’m wrong.)

>Be wary of small towns…

My uncle said exactly the same thing, before advising me to ‘buy vacant land’. However I didn’t necessarily take his advice,
as unlike him I’m not a multi-millionaire with tons of spare cash to buy up city blocks in San Francisco and turn them into parks, or buy up a big chunk of Queenstown by the lake. hehe

But what I DID do is run my numbers past him (he happens to also be a professor of finance to boot and BOY did he put me through the ringer!! So anyway my first purchase has worked out so well that it’s almost boring. Small town of 1500 people half an hour away from a city. Fantastic really pretty villa on brilliant corner section giving me a 21 percent gross return.
It rented after a week and recently became vacant and again rented within one week.

Second place, i got really excited because I found a place with a sitting long-term tenant with documents returning 29 percent.
Unfortunately the day it settled she left! Ah well, such is life. Brilliant, i thought, time to do it up (structurally sound but what a dump!) so several weeks and several K later it is good to go, and hasn’t got a tenant yet since it was put up for rent 4 weeks ago. Doh. However according to my calculations and including the renovation costs, I can afford to be vacant for 27 weeks of the year only getting the same rent as the house used to get when it was a dump, and STILL make 9 percent.

So yes I hear what you are saying about vacancy rates and booms and so on forcing prices up and I think that the market may have even changed in the small towns substantially since I bought merely months ago, (more sensitive to numbers of investors coming in due to the smallness of the markets) BUT, there is so much margin for error and the house was so damn cheap that I’m not crying yet. Because I am starting at the bottom of the bottom of the market even if all I get out of it is a great big lesson, hey, it was cheaper than going to boot camp!

Now really freakily, and unexpectedly, the latest KPI magazine says that the area has gone up in value 25 percent in the last year (when traditional CG hotspots such as Devonport, Auckland, supposedly went DOWN 25 percent.) And this is an area that I SOOO wasn’t buying for Capital Gain!! So maybe the boom thing is kind of when Auckland is flattening, up go the regional areas. I dunno. Anyway, if that is true, then I just made my year’s rent in CG, hehe.

>I’m just saying be wary

What I have learned is ‘buy in a good area’ and that sitting tenants don’t mean anything. (although, i thought, it gave me a realistic idea of the actual market value of a property, rather than what the agent tells you it will rent for..)

>After all who wants to own a property in a small centre with >high vacancy rates.

I think a lot of them don’t actually have high vacancy rates, one town of 1500 people, the agent was saying she hasn’t had a rental property on the books for ages and the last one she had, she could have rented out 6 times over in 3 weeks.

In the town where I am having trouble getting a tenant, supposedly, two people a week come in looking and neither RE agent in town had ANY rental properties at the time I bought.

> Huntly properties due to the mines underneath it!

eww- thanks for the warning

>And be wary of those promoting towns like Tokoroa as wise >investments!!! Tokoroa was a ghost town in the slump of >1992! I know people who lived there that were buying >properties for $5,000 (in 1992 i.e THE BOTTOM OF A >PROPERTY SLUMP) and renting them out for $20 / week. >Those properties are now apparently worth $50,000 + with >rents of @$140/week (in 2003 i.e. NEAR THE TOP OF A >PROPERTY BOOM)

Hm,,,,,,,, when is a 20 percent return not a wise investment?
(at the time of purchase). Especially one which is indexed for inflation (hence the rise from 20 per week to 140 per week over time) and in 11 years becomes a 140 percent return? Tell me if I’ve done something wrong but let’s say they managed to pay off their $5000 house by 1999 and so they have a freehold house. Let’s also assume they got 140 per week this year, 130 the year before, and 100 the year before that.
That makes about 20 K cash over the last three years. Add to that 45K capital gain and you get 65 K for your initial 5 K investment. Oh no, it was less than that, because you only put in 20 percent of your 5000 way back in 1992, and you had a mortgage. So really you only put in 1000 and a bit more for closing costs back in 1992. And now you have 65 K, 65 times your money back. what kind of cash on cash return is that? How much better does it have to be make/risk before you would consider an investment ‘wise’???
Man, if I can make 65 times my initial investment in 11 years I’ll be laughing.

>Check out the latest NZ press about tokoroas massive job >losses and heavy dependence on the forestry industry

Ipswich was the same and look at it now. However I agree actually – I didn’t end up going for Tokoroa because of this very reason.

> “newbie got rich quick” investors
so quick is good? or bad?

>But those of us that have been around for a whilst know >better than to buy in small centres whilst a boom is on!

OK, let us know when it’s ‘off’ and then we can maybe find some wise investments

>You don’t have to be too clever to work this one out…
>My attitude is to stick to the larger centres. You can still get >good returns if you are picky.

How good are the returns that a picky person can expect in the large centres??

>Check out some of the opportunities we have placed with >investors at http://www.hpc.co.nz/tool_opportunities.php
>All of these are in Auckland.

Also check out
http://www.richmastery.co.nz

this wouldn’t happen to be the ‘got rich quick’ people you were talking about earlier, would it? I noticed your site is a property finders one too, and as richmastery also offer this service, they’d be your competitors – anyway, it would certainly give your post a certain ‘angle’.

I have some friends who have done really well in Auckland, (but major sums of money involved – entry level investments almost ten times the price of entry-level investments ‘in the sticks’ – anyway, Auckland rocks as an investment mining ground. I for one will be happy if everyone follows your advice and runs screaming from the small towns (tokoroa or otherwise) – and there is a good chance that they might if in fact investors are lemmings as has been suggested elsewhere on this forum. (said with the most tongue in cheek tone, and a nod and wink to my investing compadres on this forum)

but in conclusion, I think if you don’t have much money and you wanted to get started in the game of monopoly you could do a lot worse.

cheers-
Mini

http://www.vocalbureau.com

If 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

hi all
well in NZ and have busy
Levin 3 out of 5 agents nothing to sell
hot hot hot
new plymounth missed by about 1 year
small towns good r/ts but some of the PI have been on the market over 1 year
so if you need to get rid of them?
rents are good and seem to consitent
I am going back to wellington via the major and minor towns
there are other aussies over here buying up PI
my phone while I am in NZ if anyone wants to talk
is 0211356620
it is a beutitfull place and friendly people
ther are still PI around
but I feel it could be too late fro some of the areas (not being a expert in NZ0 I am only going on gut feel
see ya
recovery

I forgot to add
the bank I am using ANZ does do up to 90% if 10% is cover by insrance about .076 of purpance price
areas that they will not lend on unless you put in 30% or the property in > 70k
tokoroa
ngaruawacha
waihi
wanganui east
castlecliff
gonville
aramohon
patoruru
flaxmere
highbury
hokitika
westport
gregmounth
see ya’s
recovery

Hi sooshie

spoke to recovery earlier today he ment to write “purchase” price.
Must of had one of those cheap keyboards or has been talking to so many Kiwi’s now he’s starting to spell like the way they pronounce words

westan

Hi all,
MINI: whose second job must be as a travel agent!!The itinery is fantastic Thanks so much, Will reply to email tomorrow as i`ve gotta go watch the footy show as my fav player is out for the season & i want to hear all the goss. [xx(]Any other dejected Knights fans out there ??
KTKIWI: Didn`t read your reply to ring today until tonight , so i will ring tomorrow & you can give me your rates on LOCS, hopefully you will be there!
SOOSHIE: Boy , that comment made me laugh [][][]
WESTAN; Thanks for clarifying recoverys spelling.Your comments also gave me a larff,oops,laugh!!!Nothing new going on up here, might touch base over the weekend.
RECOVERY:Keep the speling misteaks cuming, their grate four a larff
[:0)]
See ya all
Diamond

hey rod C drop your email and I’ll send you the guff I sent diamond

Diamond I will do the rest of it soon I promise!
cheers-
Mini

http://www.vocalbureau.com

The following is incorrect. GST applies to all property acquisitions in New Zealand – residential and commercial, at a rate of 12.5%. However, if the acquiring party is a New Zealand registered company, the GST content can be claimed [refunded].

quote:

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Hi Guys
No GST is payable if buying residential property in NZ.
If you are buying a farm it is though.
Regards

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hey westan
I like your 36,500 bargain, congrats!!
Will you have to do much to it? Did you offer that unconditional? Did you get a builder’s report etc etc,
did it have a tenant, how much, sorry for asking so many questions – don’t answer if they’re too personal etc etc

cheers-
Mini

http://www.vocalbureau.com

To further clarify, you are correct re: GST as it is applied to income derived from a rental property in NZ. However, in response to your original post which states “No GST is payable if buying residential property in NZ.”, my point was GST applies to the “sale” of residential and commercial property in NZ. Only if the commercial property is a “going concern”, is GST exempt.

Hope this is helpful.

quote:

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Hi Guys

In reply to MichaelR I found this in one of my books-“Property Tax in New Zealand” written by Mark Withers.2002.

He states, “That for the investor, there is a signficant difference with regard to GST for those investing in residential property and those investing in commercial property.

Under the GST Act, residential rental property investment is an exempt activity for GST. This means that the investor will not be GST registered and effectively can ignore the effects of GST. However, the investor will be paying GST on costs incurred associated with his residential property investments.

For example, a property manager will charge GST on top of his 7.5% fee, and because the investor is unregistered for GST, he is unable to claim back the GST that he has been charged. However, as the GST represents a real cost o the investor it is claimed in his income tax return as part of the management expense.

With regard to commercial property, the threshold for GST registration is where the total rental income exceeds $40,000 as stated in the GST Act.p/47

With regard to traders in property, GST is a major and significant issue that must be fully understood.”p/48

I won’t go any further except to say that the residential buy and hold person is not liable for GST or income tax on the capital appreciation in the value of his investments.
I hope this may clear up any misconceptions

Regards

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