Hey guys, new here. Read Steve's 0-130 (a year ago) and 0-260+ (just finished for the 1st of many times I'm sure).
Anyway, I've been doing my local research for quite some time getting a feel for the local market around me here in New Zealand.
What I've noticed is taht the boom has tapered off and so I'm picking that we're entering the flat at the top.
I have put all my investment savings etc to date into growing and expanding my business of 7 years taht I started from scratch. Now that I'm past that, I've been depositing into an on call 8% account while I wait for the right time.
I've done quite a bit of research and decided that my niche at least to start with is more the minor do upper, get it rented and showing a much superior yeild and then turn around inside 6 months or possibly keep if it is worth it.
So, basically, my question is this… when should one start while the market is currently inflated? Should I go out a buy my first investment at the risk of the market moving downwards during that turn around time or am I best to a) leave my savings in this account at 8% or b) look for other options in shares options etc?
I don't have a problem with getting started so much as not wanting to start at the top and then risk the market dropping out on my initial starter and loosing bad.
Another problem I have is the local knowledge factor… If I look beyond an hour or so out of my locality, how do you get that local knowledge? The internet can give you 10 different views of growth/decline on just reading 4 sites!!!!! Also I've had a lot of problem getting actual info out of 'out of town' RE agents.
Anyway, help and copmments appreciated.
John
How long do you intend to hold your IP?
Dear Morgage Broker,
Reading Steve's books is a great start and getting advise from knowledge people in this forum is also a good step in the right direction. Swimming in the sea of options and opinions have you considered purchasing any more of Steve's Products or using a Buyers Agent?
Kind Regards,
Mark Leith
Property Advocate
Global Buyers Agent
http://www.buyersagent.com.auHey Simon,
If I can turn them around in 6 months I'll be happy. I just know taht they won't all go according to plan and so some may end up on the books longer than that.
Of course, if I find a CF+ property that is appreciating as well, then I'll likely change plan and keep it a while.
My plan at this stage is to find the marginal deals that require some value adding, do them up, turn them around already rented adn showing a slightly higher than normal yeild so that they move quickly.
John
Hi Mahanga IV,
First of all, welcome to the site and congratulations on starting your investment journey. Reading books to get knowledge is great but the question is how are you going to use that knowledge. I believe in results and you get results by taking action. Leaving your money in the on call account at 8% is under-uilisation of your funds. I can offer you more than twice that return but thats not the point.
I think turning properties in 6 months is quite optimistic especially when you are just starting. I don't know enough about the NZ market to give any advise but my suggestions are:
* Try to look for a motivated seller to negotiate a discount deal.
* May be you should consider buying in Australia. You may want to use the services of a buyers agency.Hope this helps.
Hello,
When is the right time to buy property? The answer is "Now". It's an old saying but one that is almost 100% correct. The only time I would not buy is in a dramatic downtun – like in the UK in the late 80's when owners encountered negative equity (where you owe more than the property is worth due to devaluation). The probability of that happening in the near fure in NZ or Oz is truely minimal.
If I were you, I'd be thinking about some other factors:
Firstly, you need to buy well and at undervalue. How do you do that? You start looking and keeping going until you are convinced that you have found a bargain. It will take time and effort and it will not be delivered to you by an estate agent or buyer's agent.
Secondly, if you're going to buy a property which is undervalued it will invariably need to be renovated. When you do all the sums (eg: excatly what is it going to cost to purchase, renovate, hold and sell the property – and over what period of time) do not add into that equation what you are planning to gain through capital appreciaition. The reason for not doing so, is that your assumptions for capital growth may be sadly lacking. After all, economists get it wrong half the time so why will you be able to guage a market any better? As a rule of thumb, I don't buy a property unless I can make at least 20% over all outgoings and before any capital appreciaition. Better to be pleasantly surprised than sadly disappointed.
You also mention that you are concerned about looking outside your own area. I wouldn't on your first outing. Too easy to make a mistake with regard to neighbourhoods, prices etc…. and too costly to reno (as you will have to employ more labour, travel further etc…). I very rarely venture out of Tassie (I'm not allowed to without a special pass). I probably should now but I have a few years of experience under my belt.
Finally, in my opinion, you are far better with your money in property than in a cash account so long as you don't need liquidity – (and even then you can get that if you have equity through refinancing). You can't leverage off a cash account. You can off property. For example, say you have $20k on deposit, you'll get $1600 per annum – of which a fair old chunk will go to the taxman as it is taxable income. On the other hand, use the $20k as a 10% deposit on a house, and you immediately have an asset worth $200k – which will most likely be appreciating at a similar rate – giving you $16,000 (of which the taxman gets bugger all until you realise your gain) less your holding costs which will be nil if the property is cashflow positive or neutral. You'll have a tenant in place paying your mortgage, tax deductibles, the opportunity to improve your property through renovations etc… Its a much better deal than a cash account.
Go on, buy something. It really does make a lot of sense.
Andy
Actually you do have to be careful when you buy propertey! It all works in cycles and as alot of people will remember being burnt at the last boom (buying at the height of the boom / only to have the values correct themselves the next year and have no growth for the next 3) you need to be wary of how the markets are!! NOW if you have enough finance to buy and hold comfortably for 10 years then you will not need to worry about small fluctuations! but its still better to be smart about your investing and do some research and try and read where different areas are at!! GOOD LUCK
One of the most insightful comments I have heard with regard to property investing was to the effect of "no matter how much you pay for a property now, in 10 years time you will think that it was a bargain because it will then be worth twice as much".
I think that now is the right time to buy. Prices WILL go up in the long term. Who knows what they will do in the short term, but if you are ready to buy now then buy now. Strike while the iron (you) is hot.
If you want to make sure you aren't paying too much for a property, get it independently valued. It will cost you about $500 and is worth every cent.
Cheers
K
hi all,
in your situation were you want to buy a property, so it up and sell in your local area and the market is at it's high point then my view would be to start looking but don't buy until you are sure it will work. the saying "the best time to buy property is now" is true but the rest of the saying is "somewhere" so if you do want to buy in your area and you cant find a property that is a great deal then don't buy one. you may find one that isclose to what your looking for but unless it is going to be profitable, then why loss your money when you are getting 8% already.
basically don't buy just because your ready. there is another saying that you as a handy man should know,
"measure twice, cut once"know it will work, before you comment
I had started to wonder if I should be looking at out of town stuff due to the higher prices locally and the difficulty in trying to turn anything local into CF+.
I had located a few properties in the south Island but they are quite a distance away and without anyone 'local' it might run away with costs a bit.
I'm a builder by trade but doing other stuff now but still have the feel for the job and ability to estimate reasonably close. Sight unseen is a totally different ball game though obviously!!!!!
One option is to pick up a small block of flats, unit title and sell off 1 to reduce the loan and turn it CF+. There are a couple of options like that not too far from where I am so that may be a safer course of action at this stage.
OR perhaps, I need to re think my 'niche' a bit more to suit the market that I'm in.
John
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