i have located a property in regional Victoria which could be a positve cashflow opportunity. It is located about 4-5 hours from melbourne. The downside is there are no property managers in the area due the relatively small population (1500). Is this a problem? It will be my first investment property.
Hi Millsy,
we have 2 IP’s where we have property managers and as we are new to property investment this has given us peace of mind that someone who is educated and experienced in property management ( she has her own rentals as well) is looking after our investments.
Have been looking is country SA lately we have found the same – that many small towns don’t have property managers, or that ones from larger towns are not willing to travel there – time and money considerations – fair enough.
One town did have a local who did property management part-time and the selling agent recommended her. However she was moving…….but phoning her was really valuable as she gave us lots of insight that only a local can……..We have not bought in an area where there is no PM as we are not willing to take that risk.
Perhaps more experienced forumites will have ideas for you.
All the best,
Diane<<<positve cashflow opportunity>>>
Is that the only reason you have decided to invest in that town of 1500.
There is more to investing in property than positive cashflow. Do you earn enough postive cashflow to make it all worth your while.
What do you reckon the property will be worth in 5-10 yrs time?
Having a property manager able to manage my property is a MUST for me. But I dont invest in regional or rural areas.
Can I ask – have you read more Books than 0-130 properties in 3 1/2 yrs?
Yack –
“Is (+ve CF) that the only reason you have decided to invest in that town of 1500.”I invested in a town of 1500 a year ago with no property manager there.
BUT…It was not an Australian remote town. It is in NZ and 30k from a major regional town of 44000 where the property managers managed it from, as well as other properties in the small town
There was high rental demand and still is
It is a few Ks from the sea
It is within 3 hours of a major city
and 1 hour from an international airportThe yield was 20 percent at the time of purchase
NZ as a whole on a global scale was undervalued, and there had been huge positive publicity about NZ, so I figured it was never going to go down, and had a chance of going up
The surrounding towns were showing improvements and growth
I did not expect it to go up in value because the world was full of ‘yacks’ telling me it wouldn’t.
I was happy for it to hold it’s value and knew that the value and rents would at least go up in line with inflation, as history has shown.
“There is more to investing in property than positive cashflow.”
yes, there is risk. i thought that given the points above mine wasn’t going to be that much of a risk (also the property was only 27500 and needed NO renovation!!)
and the grief factor was good too as I didn’t have to renovate, got it professionally managed, and have still never been there a year later!!!!
“Do you earn enough postive cashflow to make it all worth your while.”
I did ask myself that, and figured with holding costs, insurance, vacancy (if any, I allowed 3 weeks) and rates, and management fees, i would end up with about a 10 percent return clear.
That to me was twice what my term deposit was doing at the time, plus there was the CHANCE that the property *would* go up in value. At least, I knew it would hold it’s value over time unlike cash. And I thought I would always be able to get at least ‘today’s equivalent’ of 27300 out of the property again.
A year later the cheapest house on the market in that town that would be comparable (corner section, subdividable with two street frontages, street appeal, big palm trees, tidy condition) would be at LEAST 50- 60K.
but you won’t find any statistics that tell you the median price in that town has doubled, because i have found that growth at the bottom of the market is always higher than at the median or top. And because the median and top price properties are so much more the data is always skewed towards what the higher priced properties are doing price-wise.
>What do you reckon the property will be worth in >5-10 yrs time?
around 150K or more
“Having a property manager able to manage my property is a MUST for me.”
I agree.
“But I dont invest in regional or rural areas.”
I wouldn’t invest in AUSTRALIAN regional or rural areas just now unless they were similar investments to the NZ ones in terms of price, risk, yield, and demand as outlined above.
Why not? Aus regional – I reckon is now too overpriced as we’re still just past the top of a boom, prices haven’t dropped to a reasonable price/yield yet
rural – way too remote, often one industry towns, unstable rental demand, too high risk for mebut I feel that small country towns still can be fabulous. You just need to go in with your eyes open and know the answers to yack’s questions about your own investments like I do about mine. You need to know the answer to all the what if’s, and know what the worst case scenario is for that property. I had no repayments as I bought cash, so my only liability after I purchased and paid closing costs and insurance was the rates at $250 per quarter, which I could have funded out of earned income if necessary. So my worst case scenario (no tenant) was only $20 per week approx, and i could live with that. As it happened I got tenants within 2 weeks, the rental manager didn’t take the first people who applied, she waited for an employed couple who wanted a place for 3 years, and it has been tenanted ever since.
“Can I ask – have you read more Books than 0-130 properties in 3 1/2 yrs?”
I think yack wants you to read the book he has read, called ‘negative gearing, negative thinking: why I stopped investing in property’
yack, I wish you could magically be transported to NZ to have a look for yourself, or failing that just start getting our bird dog deals mailing list and see for yourself what kind of properties you can get over in NZ right now for what kind of prices/areas/demand/condition/yields/potential for growth and future demand. You’d be amazed…
it really is a different kettle of fish over there.
Just remember, not all CF+ve properties are equal.
cheers-
Minijoy to the world
Joy to the world indeed…..
Mini, I wish I could be transported to NZ to check out whats going on over there.
You’ve just about convinced me…
Are you on the North or South island ?All the best,
KPCome on Mini!!
Seriously, is there no topic you won’t hijack to tell everyone how good NZ is? [biggrin]
regards,
Rod
Millsy,
If you cant find a PM at all,Consider if you are prepared to travel up there 4 or so hours when needed.Is there a stable long term tenant in there, or do you have to find one. Interview – One trip, hand over keys – another trip. Problem tenant that needs to be served breach of duty notice – another trip(s) (maybe or mail that takes 3 days longer), Can’t contact tenant and no rent has been paid – WHAT WILL YOU DO?… Another trip?
I have a prop 1 3/4 hours away, and had to travel up there 7 times in 7 days to sort out a troublesome tenant. Lotsa petrol and time. For me, this is on the limit, but there are PMs in the area if I cop out of personally managing IP. It would have been a sick feeling if the trouble continued and I couldn’t handball the property to a PM.
Is the cash really worth the potential to take time out of your life…. could you find a local who could keep an eye on things for cash?
I would not start with an IP that could not be managed if I decided not to manage it myself.lifexperience
Mini said:
>What do you reckon the property will be worth in >5-10 yrs time?
around 150K or more”
_____________________Mini, why do you think your property will be worth 3 times what it is worth now, in 5-10 years. Most stuff I have read suggests that property doubles each 7-10 years.
Do you think only CF+ properties such as yours, will triple? Or all properties in NZ?
kay henry
Originally posted by MiniMogul:It is in NZ and 30k from a major regional town of 44000 where the property managers managed it from, as well as other properties in the small town
It is a few Ks from the sea
By that description I’d say that your major town is Wanganui and Palmy Nth is your Int’l airport. As a side note it might not be classed Int’l if proposed customs legislation goes through with mutal border control between NZ / Aus.
The lower west coast of the Nth Island is going through some good times as my olds just sold their home in a lazy beach town which is an hour and half from Wellington. The brought it for $68K or thereabouts in 97 and sold it for $193K.
Whilst I’m pleased that you picked up a good deal and there are still many more to be had, I’d be careful and ensure that you do your DD as I have several mates / family in the RE biz in NZ who are sooooo happy that ppl from Oz are buying without looking at the IP’s – like stealing candy from a baby.
Also be careful as some Ozzies are buying at slightly inflated prices – example one old school mate told me was how a couple from Brisbane brought a 2 bedrom unit for $75k in a wee town and the vendor’s reserve was $44k. GV was $39k and rent well that depends on the season as the unit was never rented and the area only really has farm / seasonal work. Maybe they’ll get someone!
Moral… be careful
Oh, and yes whilst NZ is small, remember all things are realative!
Later….
SquashSome think that this life is a rehearsal but I’m telling you that it’s the show baby!
There’s no business like show business…
Hi Mini
I would love to compare notes in 5 yrs time. Lets say Aug 2009.
Lets compare where your at and where I am at in Aug 2009.
If I am going to renovate a property I would rather a return of $70k on a surburban property than a $20k return on a rural property.
I am gainfully employed and can afford to buy growth properties that require some cash from me first up when purchased.
Hi kp,
everyone else, sorry i again smooshed all replies into the one email without breaking it up into who said what
> Mini, I wish I could be transported to NZ to check out whats going on over
> there.your wish just came true, as they have these flying chariot things with tiny little waitresses, tiny plastic knives and tiny seats at tiny prices
> You’ve just about convinced me…
OK, it’s only 24000 frequent flier points return….
Or $300 bucks going freedomair.co.nz or virgin> Are you on the North or South island ?
north> Seriously, is there no topic you won’t hijack to tell everyone how good NZ is?
> regards,
> Rodrod, seriously, no….
well, not on a property investing forum, anyway…..> Mini said:
>> What do you reckon the property will be worth in >5-10 yrs time?
> around 150K or more”
> _____________________
> Mini, why do you think your property will be worth 3 times what it is worth
> now, in 5-10 years. Most stuff I have read suggests that property doubles each
> 7-10 years.many reasons. One is that the increased rent will backwards capitalise into increased purchase price. One is inflation. One is comparisons with a similar property over 13 years in a similar town.
Purchased 1991 5k
rented $20 per week
Worth in 2004 50k
rented for $130 per week(this is not an unusual property! This is a commonly available property.)
You do the math…
Oh, oK, I’ll do it – that’s going up in value ten times in 13 years.therefore I think that going up in value 3 times in 10 years was me being conservative.
Why don’t you calculate how much cashflow that property made it’s owner over the 13 years. One has to ‘make up’ at what intervals the rent rose from $20 in 1991 to $130 in 20004, but the way I did it was to increase it by 2, 5, i.e. smaller amounts each year for the first few years and then increase the rent by $10 or so each year to come to $130 (today’s price.)
NZ is undervalued…..blah blah blah
Kaye, most ‘stuff I have read’ suggests that the average capital gain is 5 percent per annum. In the world. But everyone knows that you can outperform that (q’land over the last few years?) – actually everyone in Aus has been outperforming that for the last few years. And NZ investors are outperforming now. And Australian investors (mostly) aren’t….Swings and roundabouts.
Of course you can also underperform the market too if you buy (i.e.) brand new apartments without much land content in an oversupplied market
Most ‘stuff I have read’ – even about the towns I have purchased in – says the median properties did this or that. but my properties have outperformed the median. i think I have explained why this is a zillion times already…
To sum up…my properties outperform the market.
>Do you think only CF+ properties such as yours, will triple?
Yeah. ones similar to mine
> It is in NZ and 30k from a major regional town of 44000 where the property
> managers managed it from, as well as other properties in the small town
> It is a few Ks from the sea
> By that description I’d say that your major town is Wanganui and Palmy Nth is
> your Int’l airport.Last time I name – checked a town on the forums, it started a boom.
If I did name-check the town I was buying in, especially now that I am a bird dog for NZ properties, it might seem like I was trying to manipulate a boom! In reality, our bird dog clients of course have to know where we are buying, but I wouldn’t want to name-check a town of a few thousand on a website with 30000 plus property investing members….
>As a side note it might not be classed Int’l if proposed
> customs legislation goes through with mutal border control between NZ / Aus.I see the side-note, and I see your agenda.
The rest is just…well, hah, there are two issues here. For Aus and NZ not to be ‘international’ they would have to be one ‘nation’. Good try, but I don’ think that’s just gonna be a sub-clause of your ‘proposed customs law’ (sic).> The lower west coast of the Nth Island is going through some good times as my
> olds just sold their home in a lazy beach town which is an hour and half from
> Wellington. The brought it for $68K or thereabouts in 97 and sold it for
> $193K.It’s not just the ‘lazy’ lower west coast of the North Island which is going through “some good times”… I make it my business to be on the pulse of not just current ‘good times’ but planned and predicted future ‘good times’….
> Whilst I’m pleased that you picked up a good deal and there are still many
> more to be had, I’d be careful and ensure that you do your DDOkay…
> as I have
> several mates / family in the RE biz in NZ who are sooooo happy that ppl from
> Oz are buying without looking at the IP’s –define ‘look’.
I know of a blind property investor who bought a portfolio of about 50 properties to do up. He couldn’t ‘look’ at his properties….
>like stealing candy from a baby
Sounds like you don’t approve. well, tell your family and mates to stop it then
> Also be careful as some Ozzies are buying at slightly inflated prices –
> example one old school mate told me was how a couple from Brisbane brought a 2
> bedrom unit for $75k in a wee town and the vendor’s reserve was $44k. GV was
> $39k and rent well that depends on the season as the unit was never rented and
> the area only really has farm / seasonal work. Maybe they’ll get someone!
> Moral… be carefulLook, while I appreciate you trying to educate me as to the ins and outs of buying in NZ I would bet my ass that you don’t have any properties there yourself.
I have heard all this kind of *stuff* and more for a year, ever since I started buying there – from people who don’t really know, other than by hearsay. memory is selective. if you don’t have properties there, you will only hear and remember the horror stories which support your market position (out of it! -you don’t speak like someone who is in the market.)
I, however, am in the market. So I have a different ‘filter’. I filter out hearsay stuff from people who don’t invest (and therefore have no clue even though they think they do.)
I filter out tenant from hell stories if the properties were managed by the owners. (i.e. I got a call to fix the toilet in the middle of the night).
This does not even compute, as I live in another country and my properties are professionally managed.I filter out all stories such as ‘ straight after they bought it the roof started leaking and cost 5k and the insurance wouldn’t pay out when theplace burned to the ground because their fireplace was illegally fitted.’
Because I do builder’s and LIM reports on my deals.
>Oh, and yes whilst NZ is small, remember all things are relative!
Like, that there are some things bigger than my ass?> I would love to compare notes in 5 yrs time. Lets say Aug 2009.
OK> Lets compare where your at and where I am at in Aug 2009.
OK, but can we do it offline? I am serious. email me!
It’s not about ego or anything, I reckon it would be fun to have an ‘opposite investing’ buddy. Kind of like by being exposed to and keeping track of someone who (from previous posts) so obviously does things differently, there would be value in doing that.> If I am going to renovate a property I would rather a return of $70k on a
> surburban property than a $20k return on a rural property.Too tired to talk you through it properly. Suffice it to say that I ‘get’ the paradigm that you’re in, which sounds like ‘only Australia, only negative gearing, only in a boom, only in suburbs, only in cities, only if you can make min. 70k for your trouble, only above a certain price-range’. That is so fine and I’m sure it has worked for you. If it continues to work for you then great, but I suspect you are not doing anything at the moment investing-wise and I would suggest that you should read the book ‘who moved my cheese’. Because it explains how people who can’t change when the market does, are stuck, inactive.
> I am gainfully employed and can afford to buy growth properties that require
> some cash from me first up when purchased.
AKA Negative gearing. Good for you. I hope for your sake that the property market continues to rise, and never crashes, slumps, goes sideways, or other. because otherwise your negatively geared properties will be making you a loser twice-over. Once with the cash you put in, and one with the capital losses.Ah well, I guess your answer to that will be ‘I don’t mind about losses, because they’re tax deductible against my income’.
I could scream…
cheers-
Minijoy to the world
Hi Millsy
You will need a handyman, they are always available, especially in rural or remote areas. Pay him some extra to do property inspections for you, while he is doing routine maintenance. While he’s there, replace all tap washers, oil anything, check insect screens, carpet, cleanliness inside & out, roof & gutters, read the water meter, inspect issues raised by tenant.
cheers
crest133 [biggrin]thecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Originally posted by MiniMogul:
> Whilst I’m pleased that you picked up a good deal and there are still many
> more to be had, I’d be careful and ensure that you do your DDOkay…
Whilst it didn’t come across the way that I intended it was more of a general comment for forum members.
Originally posted by MiniMogul:
> as I have several mates / family in the RE biz in NZ who are sooooo happy that ppl from Oz are buying without looking at the IP’s –define ‘look’
Good point – I define look in the context of performing due diligence. Whilst I’m new to IP as part of ‘my’ wealth creation strategy I’m certainly not new to the discipline. In short I’m referring to doing the necessary homework to ensure that risk is minimised to a tolerable level and that possible outcomes of investment decisions are understood. I’m not trying to lecture you or anyone but just share an opinion that I believe in
Originally posted by MiniMogul:
>like stealing candy from a babySounds like you don’t approve. well, tell your family and mates to stop it then
My family certainly aren’t in the business of ripping ppl off – well not that I know of. Everyone has a right to make a profit, but there is a fine line, so yes, you’re right I don’t approve of anyone ripping ppl off but I’d be silly to think that it doesn’t happen, even with us harmless, beautiful looking kiwi’s :p
Originally posted by MiniMogul:
> Also be careful as some Ozzies are buying at slightly inflated prices –
> example one old school mate told me was how a couple from Brisbane brought a 2
> bedroom unit for $75k in a wee town and the vendor’s reserve was $44k. GV was
> $39k and rent well that depends on the season as the unit was never rented and
> the area only really has farm / seasonal work. Maybe they’ll get someone!
> Moral… be carefulLook, while I appreciate you trying to educate me as to the ins and outs of buying in NZ I would bet my ass that you don’t have any properties there yourself.
WRONG! In fact our family business which I am apart of have 6 IP’s, 4 which are commercial developments in Wellington and Christchurch, the other two are residential IP’s elsewhere in NZ
Whilst I’ve never been involved to any great degree in the selection and management of them, my MONEY does go into the business and it’s investment strategies. Outside of the family business I don’t have any IP’s in NZ, hence recent posts about tax implications for me personally, not afraid to ask a dumb question.
Originally posted by MiniMogul:
I have heard all this kind of *stuff* and more for a year, ever since I started buying there – from people who don’t really know, other than by hearsay. memory is selective. if you don’t have properties there, you will only hear and remember the horror stories which support your market position (out of it! -you don’t speak like someone who is in the market.)I see your angle, HOWEVER, I’m not saying don’t buy NZ IP’s just passing on a point of view :o
Originally posted by MiniMogul:
I, however, am in the market. So I have a different ‘filter’. I filter out hearsay stuff from people who don’t invest (and therefore have no clue even though they think they do.)I’d be careful in what you’re saying there as my time in business has taught me that people who may not be directly in your line of work, business, or share your same insight, strategies can still add immense value, but your comment about filters is extremely valid. But you already now this – right, so I’m really just reinforcing something that most ppl already know.
Originally posted by MiniMogul:
>Oh, and yes whilst NZ is small, remember all things are relative!
Like, that there are some things bigger than my ass?I don’t know is there?
In summary, you do what you believe is right for you, I’m however open to listening to other views and I’d hope that other ppl would reciprocate on a ‘public forum’ like this. I think healthy debate is good as it gives us an opportunity to validate or invalidate our beliefs and strategies.
Later… Squash
Hey Squash,
sorry about thinking you weren’t an investor in NZ. Thanks for some good discussions and everything is clarified. Plus, I lost the bet so, err, here’s my ass!
cheers-
Minijoy to the world
Hi Mini,
Not about wining the debate but rather about sharing the opinions and generating enough wealth to support our desires and goals in life.
I don’t think for one second that the ‘average joe’ would frequent this site, and believe that those who post show the deeper desire to grow and achieve financial independence.
I believe that I am still a novice at creating wealth and have a lot to learn, especially from ppl like you mini.
Anyway, thanks for the nice words, and from reading your bio you weren’t’ involved with the kiwi band ‘push push’ where you? Outsell MJ and U2 – you have me stressing my poor brain to think who that was – must have been my heavily sedated period whilst in the army doing naughty things….
Later…. Squash
Hey Squash
I’m an average Joe. I just have a love of property. There’s multimillionaires on here, and folks who don’t yet have a property. I sometimes think there’s too much emphasis on heirarchies. I’d like to think that anyone- no matter how average- can have an opinion on anything- no matter how average that opinion might be
kay henry
Well Kay,
I’m possibly being a little bit elitist or esoteric in my views and my opinions – sorry if I am!
The All Blacks have just lost to the Wallabies so I need to sedate myself with more alcohol and convince my wife that profanity is part of the normal act of losing – she should know this given that she is a kiwi herself!
Mind you she seems to be content with making babies and leaving wealth creation up to me – but she’s never short of an opinion on how WE should spend MY hard earned money!
That all said, again, I’m sorry if I sounded discriminatory, but I still stand by my comment, and say that you (Kay and others at this forum) are not ‘average’ if you want to succeed and achieve financial independence….. let the debate begin ïŠ
Later…. Squash
hehe Manic- bad luck about the footy… it IS footy you’re talking about? :o)
There’s some interesting threads on “status” on here, Manic- I’d pull up the link if I wasn’t dog-tired. As for me, my political nature is anarchist, so I don’t really distinguish between “average” and successful or whatever. One of my oft-quoted favourite thoughts is this one from Desiderata:
“If you compare yourself with others,
you may become vain and bitter;
for always there will be greater and lesser persons than yourself.”http://hobbes.ncsa.uiuc.edu/desiderata.html
I don’t know what seking “financial independence” really means. I work, and enjoy my work, and I enjoy property- I love it, in fact. My father and my grandfather loved property, and I inherited the desire. To me, it’s an aesthetic thing, as well as anything else. I guess if we were no a collectibles board, there would be some who saw the $$$ value of the collectibles, and others who just enjoyed knowing about the items, and learning more about them.
I think people can have different interests and aims in property. Sometimes, I think about the money side of things, but at others, I just like learning about property, and discussing it.
I’m super happy I have a couple of properties. Any money from them means that I can be comfortable in life, but it will be many years until I pay them off. Money can buy some comfort, but it can’t buy happiness. And the latter is the important thing to me.
What does financial independence mean? I already pay for myself, and don’t rely on anyone to pay my vills for me. I see that as independence. It’s *possible* that one day I may live off rents, but that merely means other people will be working, and I’ll be living off them. I’m quite happy at the moment doing the job I do. I don’t “plan” as such, but I see myself as working until I’m 65, getting super, and developing more skills through my working life.
I’m very average, Manic. There’s genocide happening in Sudan at the moment, and I kind of like to keep my property interests in perspective with the kind of privilege that I have in being able to make those choices. But it’s not everything.
kay henry
“deeper desire to grow”
AHHHHHH Manic
You’ve utterly nailed it!
Wanna be my new best friend?Absolutely and totally.
Kaye, I hear ya about the things going on in the world that we feel powerless to stop.
The richer I become the more power i will have to change the world for the good. Money is just another form of leverage. A poor person is too busy surviving to change the world. A rich person can pick a million ways to help the world.
joy to the world
Hi all
[offtopic] ??
cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
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