High Yield NZ Cheap Investment

Hi there,

Last year I became aware of 3 properties coming up for sale in a low socio economic, small town in NZ.

The properties are owned by a family who inherited them and have decided to sell and split the cash following ongoing disputes with each other.

They are all 3 bedroom, 1 bathroom weatherboard homes 1960s era and they hit the market for $39k NZD each!

One sold to a long time tenant and the other two are still available. I am looking at one of them which has a tenant whose been there for 18 years, has their rent of $125 a week paid direct from their social security benefit each week and is praying that whoever buys the property will let them stay on for good.

Recently my husband and I paid out a Citibank ready credit loan early and they’ve now offered us $25k at 5.9% for 2 years. We’d normally turn offers like this down and not be tempted but after speaking to the agent trying to sell the properties he’s said I should be able to by the house in question for $30k NZD and I’m tempted to take the offer from Citibank, top it up out of our savings and buy the house in NZ. We’d be able to pay it off in less then 2 years and then have ongoing income of $125 less expenses which in NZ really isn’t much at all. They have no stamp duty, land tax or capital gains tax and my father in law in NZ who is quite the handyman and bored out of his brain during retirement is happy to manage it for us.

We currently are renting on the Gold Coast, husband earns good money and although we’ve been for a home loan here and been approved, we’ve always decided against going ahead because of all the costs involved and the property prices but we like the idea of having an investment property at home in NZ.

The rates are $1856 per year and the house is valued at $67k NZD

There probably wouldn’t be much capital growth but if we bought the property without a mortgage and then owned it outright I was toying with the idea of using it as collateral to buy another investment property later on and then maybe even using them both as collateral to buy our own home in NZ when we move home later on.

Based on the figures above does it sound like a good investment or am I missing something here? Can anyone suggest something else instead?

Thanks in advance.