Who here actually owns investment properties?

[Westie]

Been reading through the posts in this topic & i'm beginning to wonder which posters in this forum actually own investment properties themselves. Anyone willing to reveal?

I'll kick it off for the sake of reciprocation. I own five & manage another ten for my family. All residential, all in Auckland. All up, about 10 years experience.

Have done but cannot stand the hassles 10 years since I have held any. Far better returns from shares with practically no hassles.

[cdt18]

I owned five houses up until last year when I worked out it would be smarter to invest the funds elsewhere. My properties sold for yields of about 6% and the new owners are all losing money in the beginning by about 3% of the value of the house which to me is simply bizare.

[clips]

own 3 houses, since 91,95 & 02, yeilding 8.8% on cost price, 4.6% on value. It's all self funding and pretty much self sufficient, just ticks along year after year, now produces a surplus. Probably stick with it for a few more years, it's the first serious investment i made and much as some poke the borax at property investment it's sure better than doing nothing.... - now fiddling about with shares but not on borrowed money.

[dinosaur]

Now own 4 investment properties in Aust plus own home in NZ. Tried the NZ market nearly 20 years ago when interest rates were 24%, but got out after 1 year because the tenants didn't value our property, even though it was fully redecorated when they when in.

Aust investment properties were worth A$990K when we purchased them new 6-7 years ago and before GST. Now worth around A$2mil conservatively.
All for an outlay of A$70K and using NZ equity. That's better than I could ever have done with shares, although I do believe we were lucky to catch the correction in prices in Australia.

Very good protection and Insurance for landlords in Aus. Rents are still going up (about $10 every 6 months) but have not kept pace with the increase in property values. Have considered buying more but the prices are too dear now, compared with rents.

Watching 'Renters' on TV I can't believe what rental managers in NZ let tenants get away with. Our tenants get pulled up if the 'edges' have not been done. No hassles at all.

I've two at the low-average end of the mkt and will get more of the same at the right price. Just waiting for those investors on 2-year fixed, with little cash flow, getting scared of 9+% and bailing out.
Still a few opportunities available in ChCh but you have to be in the know or damned quick.

[Bling_Bling]

Had a few properties, but have sold down and cashed up 50% of the portofolio. One must not be greedy. :)

[nelehdine]

Own 2 commercial properties , yields on purchase price of 9.48% and 9.65% respectively, both in Auckland CBD. Rent reviews linked to CPI and good long leases, capital gain not that flash but ROE since purchase averaging about 13.5%. Locked in at 7.20% a year ago with another 24mths covered ... hopefully rates will have fallen by early 2007. Absolutely hassle free investments. Mortgages will be paid off by 2013 when the rents will probably be around $75k combined. Currently throwing off arond $1500/mth positive cashflow.

Also own approx $120k in Aussie and Kiwi listed property trusts.

[SEC]

Have disposed of my rental properties over the past four months and dripfed the equity into ASX stocks at appropriate times.

I'll be back into property but not at the moment. Timing the market is far more profitable than time in the market. And with residential property, the only time you make money is when you sell (less 5% fùcking transaction fees).

SEC

[JBmurc]

[quote]Originally posted by SEC

Have disposed of my rental properties over the past four months and dripfed the equity into ASX stocks at appropriate times.

I'll be back into property but not at the moment. Timing the market is far more profitable than time in the market. And with residential property, the only time you make money is when you sell (less 5% fùcking transaction fees).

;)yeah bloody agents[}:)] have made 50,000 out of me this last year sold down 4 of property investments(spec&rentals) now only one property spec, starting next week.
will be investing spare funds into ASX over the next couple months
started with 80,000 AGM shares today ,great med-long term buy;)

[SEC]

JBMurc, I prefer MCR;) - makes money, pays dividends and Comsec margin lends against it.

I note everyone responding to Westie's question has either sold down/out or held their investment properties. Certainly no-one is buying residential property.

SEC

[cdt18]

The people buying property in the last 6 months are the suckers who are gonna take the fall. They're the poor morons who have waited & waited for the "right" time, when they think there is no risk in buying res property as everyone is making money on it so it must be a sure thing !

I was talking to an agent about the market in my city and he says all the locals have stopped buying as they think the prices are
b u ll s h it.

CDT18 which city please

[JBmurc]

quote:Originally posted by ENIGMA

CDT18 which city please

Queenstown's market is certainly overvalued by at least 20% [:0]
5 odd years of 20% growth per year is coming to a end ;)
as will some of the highly geared development companies[B)]

[Westie]

quote:everyone responding to Westie's question has either sold down/out or held their investment properties. Certainly no-one is buying residential property.


Actually, I bought in Jan & Feb. The Jan purchase was for myself, my first home. It was a deceased estate so I got a standalone 2 bdrm house 400sqm about 100m from water for $210k. 2 bdrm units in the area are going for more.

Also bought a 1 bdrm unit yielding 9%, for about 8% less than CV. Owner was overseas so keen to sell. Never owned a 1 bdrm unit before, suprised by the high demand but it does make sense in this climate.

Although I understand the concerns of the others on the forum about the likely hard times ahead, I've owned through 1 cycle & I'm not yet 30 so buy & hold is fine for my time horizon. I have become a lot more picky about what i'm buying now though, the situation/odds really needs to strongly favor me as the buyer.

Love to hear if anyone knows of reliable ways to ferret out deceased estates. They are great buying if you can find them, can buy with cash, & offer fast settlement.

[cdt18]

Dunedin

[wns]

Our own home + two rental properties + still got two wraps going.
All in Queensland.

[Sideshow Bob]

I don't own an investment property, rather on the other end - a tenant. Got back from the overseas in the middle of the boom, and decided to sit out, rather than add to the hype. Plus also such a hard place to find a decent house.

Worked out where I am sitting with rates, insurance, maintenence and mortgage, plus money under investment, prices would have to increase by 5% in the coming year to be on the winning side - not likely.

My dislike of real estate agents is heightened by the fact our place underlet, good for us, but absentee landlord for whom an estate agent manages. They under-let it, as the agents want to buy it!

Think alot of people will start to hurt on their rentals, once they come off fixed and rents don't meet the mortgage!

SSB

[rmbbrave]

quote:Originally posted by Sideshow Bob



My dislike of real estate agents is heightened by the fact our place underlet, good for us, but absentee landlord for whom an estate agent manages. They under-let it, as the agents want to buy it!

SSB


I don't understand what you mean by underlet.

Do you mean the agent has beeen given the power to decide the amount of rent by the landlord and has taken advantage of the landlord by setting it lower than the market rate and is at the same time offering to buy the property at a-below-market-price?

[Sideshow Bob]

quote: Originally posted by rmbbrave:

I don't understand what you mean by underlet.

Do you mean the agent has beeen given the power to decide the amount of rent by the landlord and has taken advantage of the landlord by setting it lower than the market rate and is at the same time offering to buy the property at a-below-market-price?

The agent, who looks after our property (note agent, not agency) sets the rent, given their knowledge of market conditions etc etc. Owner lives out of town.

They have taken advantage, in letting at a price slightly under market rates, not that I am complaining at all. Given what else is around and what another agent has told me, about 10% below.

The agent is not trying to buy the property at present, but the agent has tried to buy the property off the landlord in the past, and has said to me that they are still very keen.

SSB

[Longtack]

I've recently completely refurbished a modest 3bdrm house in Linwood for another landlord. He paid $200k for it plus another $15k repairs etc. For me the numbers just don't stack up.. Ten weeks now and not tenanted. He'll be hurting and he won't drop the $290 asking rent.
Negative cash flow - ugh $45/week. [xx(]

[Xerof]

I've got forestry on land about 10 km inland. My long term plan is to harvest the trees in 25 years time, but not replant. By then, what with global warming raising the sealevel, the waves will be lapping onto the front of the property, and I'll be able to hawk the land off as coastal sections for an absolute mint.

Anyone want a share of this - its a dead cert.....

Xerof

[SEC]

quote:Originally posted by Xerof

I've got forestry on land about 10 km inland. My long term plan is to harvest the trees in 25 years time, but not replant. By then, what with global warming raising the sealevel, the waves will be lapping onto the front of the property, and I'll be able to hawk the land off as coastal sections for an absolute mint.

Anyone want a share of this - its a dead cert.....

Xerof


If that's your plot of pine trees up on the Port Hills I think you're being a bit optimistic.

[Longtack]

Banks' Peninsula will subside and drown Xerof's pinus - wrongly assuming that these trees are on the Port Hills. E's from Havelock Nth eh?

[Xerof]

Nothing wrong with a damp pinus Longtack:D:D

Spend a bit of time in the bush but the pinus is dry most of the time[^][^];);)

regards

Xerof

[Longtack]

Soak in H5 treatment thricely to prevent stump-rot Xerof - just to be sure, to be sure, to be sure. [:I]Tax return is very dull.:(

[Xerof]

Thanks Longtack - tried that and its definitely increased the radiata[^][^]

Xerof

[Longtack]

;)

[Dough Boy]

As for my real estate have 3 properties with 4 houses with 5 tenancies in the Henderson / Massey. Brought in West Auckland up to 7 years ago as area showed very good rental yields and was valued lowly compared to adjacent suburbs. Have bought double sections or double tenancy properties to maximise return. Recent purchase (1 year ago) in Henderson will yield 100K capital gain when subdivided and built on and the property market does not even need to rise for this to happen!

At this point in time would only buy if there is a sizable and instant capital gain to be made (subdivision) but otherwise will not be buying with the current yields being offered.

Rather currently concentrating on buying shares at discount at the annual clearnace sales of the ASX and NZX.

[duncan macgregor]

DOUGH boy, To get the maximum return on what you are doing you can get a 2brm granny flat, max size 65 sq metres on the property, without subdividing. The advantage being no subdivision costs, cheap rates for the increased return. If you are buying a property with this in mind, a corner site is best with the grannyflat site higher than the house site. The corner site is great if you can come in from another street making the granny flat look like a seperate house next door. Remember the 65 sq meters in your area is living area, so build the laundry in the garage. All drains and services hooked up to the origonal house, that is why ground level is important. macdunk

Duncan If the buyer is Savvy you would never sell the property afterwards. Check the legalities. I have caught many real estate agents on this one.

[duncan macgregor]

ENIGMA, The legalities are in the area mentioned are, one title, 65 sq metre max size minor dwelling to be built within a certain distance from the main dwelling. In some areas a water tank to take flood water, and discharge it at a reduced rate to not overload the system. You can have a sep footpath crossing and hook into the power from the origonal house. Most people dont do this, as sometimes the line is not up to it. In other areas of auckland the max size is greater than 65 sq mtres. I built about 30 of these mainly in east auckland, with no problems before or after. One title means you cant sell one without the other, but it is a good way to maximise your return on a rental property large enough to accomodate this. The 65sq metres is living area only as i said stick the laundry in the garage. macdunk

Legally it has to be a familly member resident in most cases. I have been to the councils on several of them and this is the answer I get. So possibly a familly member of the tenant if rented out. Or a familly member of the owner if owner occupied. I have looked at several and have good lawyers the say do not touch with barge pole. Please get your own independant legal advice.

[duncan macgregor]

Probabely where you come from but not here. You build it and rent it out to anyone. All the ones i built thats what happened with quite a few being onsold, and a few subdivided later. I suppose it depends on your council, and where you are, even in Auckland the rules change from one area to the next. macdunk

Duncan I am talking about New Zealand Auckland My lawyers Are very good You get a permit for a granny flat and rent it out to others you may find you have big liablities Even the Fire regulations are different in some cases. Yes you can do it until somebody wakes up. Subdivision later is probally the best way of legallizing the cituation if possible.

[Farouk]

I have invested $150 grand in a property syndicate that owns a commercial prop (is a Cinema Complex with 4 movie theatres). The building is valued at 2 million, the rent we get is 200K a year, because we own 50%, the other 50% is borrowed & the interest on that million is 7% I think, --the impact of this is that myself & the other investors get about 11% return on our $$$. So, the deal is pretty sweet so far. A local Accountancy outfit deals with the tenants who are a fairly big player in the cinema industry at a cost to us of 5 grand a year. The only problem that I can anticipate is if the 1 mill at 7% ever goes up to over 10% this will knacker our return (though we could always buy that extra portion ourselves, or get more investors in). So far (3 years) it has been good, get a cheque every 3 months & no hassles.

[clips]

good for you mate, looks like a nice little earner.....i've found property investing to be like going to the rugby, there are 30 people actually playing the game and 35,000 sitting in the stands on the sideline who all have an opinion on what the 30 on the field are doing wrong.

[dinosaur]

quote:Originally posted by ENIGMA

Duncan I am talking about New Zealand Auckland My lawyers Are very good You get a permit for a granny flat and rent it out to others you may find you have big liablities Even the Fire regulations are different in some cases. Yes you can do it until somebody wakes up. Subdivision later is probally the best way of legallizing the cituation if possible.


Enigma, you may need new lawyers.
In most council areas, Manukau, North Shore, Auckland, there is nothing in their District Plans to my knowledge, that says a Minor Household Unit Granny Flat)is only for the use of relatives. Franklin District had a requirement that the minor unit (70m sq max)is used by only relatives or farm workers, although their new plan change seems to have dropped this restriction. The fire regulations DO NOT vary in NZ. Every building comes under the NZ Buiding Act. But one thing to watch though, is whether there is fire seperation where the flat is attached to or in the main dwelling, as this requirement can be waived where the owner states that the flat will be used only by a blood relative and the council granted a building regulation waiver. THIS MAY NOT BE NOTED ON THE TITLE.

Years ago Manukau City used to be quite tough on Granny Flats and you had to have a clause inserted on the Title stating that the property was a single household unit, then they removed this requirement in the early 90's. Then because too many people were building granny flats as home and income, thus putting a strain on services, etc, Manukau City last year made a change to their District Plan and now all new minor household units (60m sq max) are treated as subdivisions, and you now need seperate drainage connections and make contributions for sanitary and stormwater services. I think you may even be rated as 2 properties although you may never be able to sell them off seperately if your section size is below that allowed for subdivision. This has made it very expensive for people wanting a genuine granny flat.

Even if the current District Plan states a Granny Flat is for relatives only, the particular flat may have 'existing use rights' as it depends on the rules when it was constructed.

Hope this helps you.

[BRICKS]

For brick buildings come to Paraparaumu..[8D]

Dinosaur they picked holes in existing properties I was looking at. But most people assume you can just rent them out. So general advice to do what Mac Dunk suggested needed to be tempered with some extensive checking. As many land agents said yes selling as home and income potential. But solicitors said no way. All properties have to be extensively researched. I have even had a builder of new homes that did not know regulations.

[dinosaur]

Yes I agree Enigma. The main word in those types of property notices is "potential". As I pointed out, with changes like Manukau has implemented, that potential could be very expensive to realise.

Each property does need to be researched, but if the Granny flat is free standing (which Mac Dunk was talking about)and at least 2m from the main dwelling and the kitchen has been permitted, as opposed to a sleepout that has had a kitchen added without a permit, then it is most likley you can let it out to the general public. If a flat within a home has been specifically built and consented with the appropriate fire ratings installed, then there is no reason whey that too cannot be a home & income.

In the Botany area in the late 90's, early 00's a large number of homes were constructed with legal minor household units attached to the main dwelling so as to be home and incomes. The min section size to do that 'as of right' was 600m sq. So many in fact, were being built that in future stages of the subdivision, the developer reduced the section sizes to under 600m sq to stop it from being done, as the covenents couldn't stop it.

[duncan macgregor]

DINOSAUR, I have an idea that you may need to question the advice you are getting. Personal experience from someone that did it. I built about thirty 2brm granny flats complete with garages or car ports in the eastern suburbs of auckland two further south, three in rodney. All were rented out as income producers, some through reinz agents some properties were on sold etc etc etc. One buyer bought about 27 in total, over a three year period, he only bought properties that he could build a grannyflat on then onsold the properties with absolutely no problem what so ever. The rules and sizes are different from one suburb to the next, but most places in the Auckland area it is 65 sq mtrs living area. Land cover comes in to it normal height restrictions apply you can connect services to the existing house, ex one power meter and one water meter for both houses. Or if it is rural connect to the existing septic tank and save yourself a fortune. It is for the switched on investor. By the time the herd wake up they will have rules to stop it. The one thing my investor got out of it all is he now is a master builder because he successfully did all those homes problem free. If you want to worry about something worry about that. macdunk

[dinosaur]

Macdunk. My advice is correct, I'm involved directly, although haven't done a minor unit in Rodney. Yes I know you can put garages verandahs on etc.

The rules USED to be quite slack but are/have changed re minor household units (MHU) as councils are using the RMA to control infill housing. Especially Manukau, as mentioned, where the size for a MHU is only 60 sq mtrs and you now have to apply for a subdivision consent, even though you are not subdividing as such. It's getting harder all the time. ARC have also got envolved on rural lots re septic tanks which even effects a straight bedroom addition. Have to get the current system assessed now.

Point taken on the MB bit. Just like mechanics, there are some good ones and bad ones. Personally I prefer Certified Builders, which you can't join just because you built a house or two, but the Building Practitioner regime will change everything beginning 2007.

[ronaldo]

Quoted rental returns are misleading.Its always the gross return.Nett should be quoted as expenses are considerable,rates insurance,maintenance.vac while awaiting tennants or repairing.Return on property investment is only worthwhile because of Capital gain.Thats what its all about.Forget about the rental return-better to have money in bank.Capital gain is what makes it worthwhile

[duncan macgregor]

RONALDO, You are pretty near to what it is all about. Capital gain is the profit. rent is living expences. Juggle the two with someones elses money work out the numbers and do it. macdunk