Hi
I’m a beginner and looking at where to start to look for my first positive cash flow property.I’m from NZ but have been living in Perth for the last 7 years. I’ve started looking around Perth to see what is out there but not having much luck due to my budget. So i though NZ would be a good option as far as I can see low house prices, good return on rent, no stamp duty.
Has anyone had any experience purchasing houses in NZ from Aus or weighed up the Options of both?
Any information would be great.
You are looking to buy in two high priced markets
Have you considered investing in the United States. It has just come off record lows and still has a lot of growth to go.
Nigel Kibel | Property Know How
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Hey Nigel
I haven’t thought about investing in The U.S. As I’m still learning the ropes I want to start local and use the resources I have first before looking abroad.Cheers
Obviously not sure what your budget is but you also need to think about the ease of obtaining finance for the acquisition.
Even being a local your lvr will be limited.
The attached link might be useful.
http://www.rbnz.govt.nz/financial_stability/macro-prudential_policy/5393159.html
Still constraints in Australia but 90% is still achievable for an investment property.
Cheers
Yours in Finance
0-40 Properties in a decade. Email me for a copy of my API Interview.Richard Taylor | Australia's leading private lender
how do you buy in the US? If your transfer your AUD to USD for your deposit, then you sell the property might go up by 20% but then the AUD has moved against the USD and your 20% profit might not turn into any profits at all when you convert the profits back 5 years, how could you control that risk.
Great to see Nigel and Richard still actively contributing. wtg guys!
aussieinvestor | Digital Revenue Pty Ltd
http://appliancewhiz.com
Email MeHi Roach,
I’m slightly seasoned in Australia, have traveled to USA with Steve McKnight and have my super invested in his USA fund and have just gotten back from NZ where I have now made two formal offers. My hubby is from NZ and we are looking at buying in his home town, which is a uni town with very low vacancy rates and still the opportunity for good returns with positive cashflow. We have mainly done buy reno sell in Australia and 1 duplex development but whilst the market was moving, we couldn’t make the numbers work here (little did we know!) and now we DEFINITELY can’t make the numbers work for a reno or development and we are a bit hesitant to invest in such a crazy hot Sydney market. So we started looking at NZ as a viable option and it’s stacking up for us so far.
I started looking in our target area before we traveled over (for a family gathering) and then did several inspections whilst we were over there. I then managed to find an Aussie Mortgage Broker who is also licensed in NZ to start working on the finances for me. The big 3 banks here Westpac, ANZ and CBA all operate in NZ (CBA = ASB in NZ) but all have different lending criteria. Westpac will take 100% of your income into account, ANZ takes 80% of your gross income into account and ASB only takes 80% of your net income into account for serviceability. So we were advised to open up a Westpac account whilst there which we did! Westpac will also pay up to $2000 of your legal fees which is amazing!
NZ is not that different to Australia and I love that it’s just a 3 hour plane trip (for me) away. The pros – No stamp duty, no land tax, no capital gains tax and positive cashflow in good strong towns is still achievable. The Cons – I’m finding the rates to be quite high, especially on multi-unit sites and a lot of the properties are around 100 years old. Agents fees are also around the 10% mark for an all inclusive service and insurance is up there too, but it’s still doable. Since the Christchurch earthquakes, there are also issues with insurance. If a house is pre-40’s, it has to be re-wired, re-piled and re-gibbed to be insured. There is definitely a very different standard of living over there but as Steve always said, we don’t have to live there!
We missed out on the first offer we put in (2 houses on one block) but we were quite happy that we did. It made us realise what we really wanted to focus on and now we are targeting a very specific type of property. We put in a formal offer today which we have been told is tentatively accepted and if it goes through next week, we are buying at an 11% return already. We plan on tidying them up to increase the rent return and to keep them low maintenance.
My husband and I have always done buy – add value – sell. This is the first time we are properly venturing into the buy & hold market and I’m really excited about it. We will still have the funds to do something here if the market settles but in the meantime, we want our money to be working for us somewhere and NZ is a no-brainer for us right now :)
Thanks Richard and fireFly.
It’s great to hear your experience Firefly as that is exactly the situation I’m in on deciding on especially the bank loans. I already have an asb account which is an added plus. I didn’t about the insurance because of the Christchurch earthquake which is a great help. Thanks for sharing your experience as this is probably the most valuable information I have got. Hope you and your husband investment in NZ goes well.
Hi Roach
Not sure if you are still weighing up the option of NZ, but will share with you our experience. We have several properties across 3 provincial towns (north and south) all purchased in 2011 with the objective of positive cashflow and market growth. We have found the cashflow to be marginal at best – insurance, rates and maintenance costs all seem high and any increase (like insurance premium increases or unexpected maintenance) can make it negative. And when you think about the numbers, generating a 10% return on a $100,000 property is hardly anything to write home about. Older houses(there are a lot) mean poor insulation, unexpected maintenance and cold/ damp which means that tenanting will be harder. Councils may place requirements on landlords for removal of wood burners (due to pollution) so there’s extra cost. Interest rates have started to fall but in the last 1-2 yrs there were multiple rate increases. The Reserve Bank has been playing a lot with lending policy to try to take the heat out of Auckland. But there is no stamp duty and banks will lend to you so that makes buying there easy and cheaper than here.On top of this, the biggest issue we have found is that there has not been the capital growth in the 4 yrs we have held most of our property. This is at a time when the NZ economy has been quite strong and Auckland has been booming. Growth was restricted to Auckland (and Christchurch post earthquake rebuild). Some of the towns closer to Auckland have recently started to get some benefit of the Auckland boom. So if you are looking at NZ (or any property market) for buy and hold would suggest that you understand what will drive the demand through population and jobs growth so that you get to ride the growth trend. More likely to have some success rather than just hoping that there will be market rises.
All the best
Carolyn
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