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duncan macgregor
11-11-2004, 04:13 PM
Property investment is the simplest easiest way to make money. The simple easy reason for this is it is self funding. A dollar down a dollar a week rent, and pocket the capital gain. That is a very simplistic way to explain things, but true never the less. I will make the rash statement and say, that most millionaires in nz acheived it with property gains. With property you use the other guys money, rent it out, peter pays paul. If you are smart enough and then you can get called mr 10pc. Property is the only investment where if you are smart enough you can gaurantee a capital gain useing the other guys money. Shares you can do better but wait a bit its your money your risk. Only an opinion MACDUNK

troyvdh
11-11-2004, 04:27 PM
Couldn't have said it any better DM.I've been in res.investments for nearly 30 yrs-never had one regret (other than I should have bought more at certain times e.g.late 80,s, those I did buy at that time have moved 300-400%).It fair dinkim fabberghasts me when folk argue against res. property.
It aint rocket science.The biggest problem I think is that folk think making the stuff is somehow based on something secret and complicated.It aint.As Ive stated in the past sometimes (in fact most of the time) wealth creation involves "just sittin and doin nothing".
Having said that I've also enjoyed having shares (NZ of course,espicially since the "suited brigade" were saying "go off shore".
PS Re that 300-400 % shift,usually I put in about 10k deposit....it fair frightens me to work out the return blah blah..fair to suggest it may beat the pants of most other investments...and for a third of that time I just slept....

Runswifscissors
12-11-2004, 08:27 AM
I keep getting informed repeatedly that, residential property is for amatuers and commercial property for professional investors. I get told the returns and clients are better for commercial property. Whenever I see a really wealthy property invester, the bulk of their investments are in commercial property.
I believe that picking a good commercial property to own is trickier than buying a residential property.

stephen
12-11-2004, 09:03 AM
"Property is the only investment where if you are smart enough you can gaurantee a capital gain useing the other guys money. Shares you can do better but wait a bit its your money your risk."

I can think of at least three different ways to leverage shares right now, ie use the other guy's money. Conversely, even smart people occasionally lose money on property.

And shares of course are very liquid. Because of the amount of spare money I have right now, I prefer to be able to sell whenever I need it. Selling residential property in a hurry can be pretty painful...

Think about it, macdunk. You in particular often advocate being contrary. In NZ, would a contrarian invest in residential property?

Runswifscissors
12-11-2004, 09:10 AM
quote:Originally posted by stephen

"Property is the only investment where if you are smart enough you can gaurantee a capital gain useing the other guys money. Shares you can do better but wait a bit its your money your risk."

I can think of at least three different ways to leverage shares right now, ie use the other guy's money. Conversely, even smart people occasionally lose money on property.

And shares of course are very liquid. Because of the amount of spare money I have right now, I prefer to be able to sell whenever I need it. Selling residential property in a hurry can be pretty painful...

Think about it, macdunk. You in particular often advocate being contrary. In NZ, would a contrarian invest in residential property?
Good point well argued. Except one caviat. Property is better security for Banks so the fees for using Other Peoples money tend to be lower.

Wanderer
26-11-2004, 08:03 PM
My first real job (apart from pumping gas at the local s/stn) was preparing accounts and tax returns for some wealthy family trusts and estates. The majority of these trusts had their funds tied up in property and shares.

I took a quick lesson from the smart money. And yes, commercial property is the way to go and yes it is more difficult to pick a winner than in residential but as with shares experience makes it easier.

The surplus cash goes into shares because I can make a better return than what I'd save by reducing my mortgage.

You just have to have that balance

halcyon9
13-12-2004, 03:07 AM
couple of simple points.


small amounts of money can be LEVERGED very nicely at the right time and agree has made many NZers millionaires. Leverage IS the key for sure.
having had both Comm and Res, I can say commercial property is much more aligned to "yeilds" or cap values and you can certainly do very well here if you can be smart and get the rent up somehow. rezone, redevelop, building concept, space utilization.
The big thing with Comm for me was
long term leases
owner "takes care" of your property (it's their business!)
rates and insurance included or easily passed on (in contract)
low maintainence, low turnover.


One big thing that always strikes me when comparing stock returns and property is real estate figures DON'T take into account the capital/$$$$ poured into the residential homes/investments for improvements, renovations, maintainence.
If we took these away, the LT returns would not nearly look as good...unless you are LEVERAGED.
once you buy a share...there is no need to keep "feeding" it.


PS
made good/ave money in Res, great in comm.

Dough Boy
10-05-2005, 01:32 AM
halcyon9,

Generally agree with your comments that simply buying because the gross yield looks good or the valuation looks good is simply being a lazy investor.

When investing in property you must do some detailed calculations (I can already hear the 'back-of-envelope' gang groaning) but a spreadsheet needs to be done showing the full costs of purchase, ownership, tax obligations and the claw-back of depreciation on a future sale, with yearly steps in time and have a single figure giving annualized return on equity (1% 5% 10% 20% ?). Only then can a logical decision be made.

Only when an investor has done this will they understand that two rental properties with the same gross yield and valuation can have very different rates of return on equity.

Oh if doing a spreadsheet sounds all too stuffy go ahead and 'wing- it' or go with your 'gut-feeling', but I and lots of other stuffy types will be waiting in the wings to relieve you of your burden at some future date at a knock-down price.

Dough Boy
10-05-2005, 01:40 AM
One point I forgot to mention,

Agree with the point that the recent increases in the 'median' house prices has a lot to do with all the money that owners have poured into their properties in terms of renovations, extensions, removals and rebuilds, spa pools, attached garages, marble bench tops and so on.

If you want to know what the actual increase in property values has been or maybe in the future simply look at the land values / section prices. Far more enlightening than the national median house values! But remember that a section today is lot smaller than a section ten or twenty years ago!

ari
22-06-2005, 04:41 PM
quote:Property investment is the simplest easiest way to make money. On paper it is, but one of my new p/y's has been on the market since 10/3/05.
http://www.open2view.com/Property/101447?searchid=6831335&offset=0
Open homes every weekend till last weekend when I stopped them. Hopefully if someone takes the time to phone off signs they will be more genuine. Just sick of the wall kickers comming for ideas (even with cameras)and wanting it for $200K below listing price. The average 41 days to sell in this area has certanly gone.
Anyone else suffering.I could well use the funds on next project:(

Dough Boy
22-06-2005, 05:52 PM
quote:Originally posted by ari


quote:Property investment is the simplest easiest way to make money. On paper it is, but one of my new p/y's has been on the market since 10/3/05.
http://www.open2view.com/Property/101447?searchid=6831335&offset=0
Open homes every weekend till last weekend when I stopped them. Hopefully if someone takes the time to phone off signs they will be more genuine. Just sick of the wall kickers comming for ideas (even with cameras)and wanting it for $200K below listing price. The average 41 days to sell in this area has certanly gone.
Anyone else suffering.I could well use the funds on next project:(


Ari,

Well a 4 bedrooms for $889,000 with a 'seaview in the distance' and split over 2 levels (or is that 3 levels) and concrete block lower level walls in shaded positions, min landscaping and a rough looking lawn.

Sorry mate, even if the property market has boomed and someone down the road got such and such, I too would be offering 200K or even less! Maybe someone will be the bigger fool but the day of reckoning is coming for property worldwide (refer to The Economist article(s)).

Lets take the example $889,000 at a 8% return on investment, represents $71,120 annual income.

So if I simply put the money into alternative investments and collected $71,120, I could rent a $25,000 per year house and put the remaining $46,120 + $5,000 I save on rates etc., into the bank gaining me 5.8% per year.

Are you sure that this property will gain 5.8% in value on average in the long-term excluding money spent on improvements? That is to say it is to be worth $1.562m in ten years, and GDP / wage growth is 2.5 to 3.5%, if we are so lucky.

(assuming 100% mortgage for above)

ari
22-06-2005, 06:07 PM
Dough Boy...you're moving too far ahead. We all know what that sort of money can return but some people actually still buy new houses.
It's actually on 4 levels with very high spec. Market is based on 2 new houses within 70m, with little view and on low side of road both sold for around $800k. Two more (new) within 500m sold 8mths ago for $850.

Dough Boy
22-06-2005, 06:29 PM
quote:Originally posted by ari

Dough Boy...you're moving too far ahead. We all know what that sort of money can return but some people actually still buy new houses.
It's actually on 4 levels with very high spec. Market is based on 2 new houses within 70m, with little view and on low side of road both sold for around $800k. Two more (new) within 500m sold 8mths ago for $850.


Fool's gold I say, and if you can, get rid of it to the next bigger fool. Hope you don't have debt over it?

22-06-2005, 08:32 PM
Ari are some people actually waking up to the impractablility of some of those showy fittings. One house I looked at marble vanity tops I looked and liked was tempted to buy. These very high quality practical fittings actually put me off the house as I could not move into it and I have seen the mess reasonably good tenants can do to such fittings.

Dough Boy
22-06-2005, 09:00 PM
quote:Originally posted by aspex

Db,
The stone wall is $200k of that price but the one at Mt Eden is bigger and better.:D:D:D

However the logic of paying that much for a place to sleep at night is totally illogical (says he from his $700k dump)
Frankly, I only live in something more than I need because I have grown used to it. I do like space in a house but I would never pay over the odds for "show". Certainly I would never takje on a mortgage that would be difficult to service.

We shall see the intestinal fortitude of some of these buyers once the market starts to show a bit of unemployment.


Oh well then, the stone wall sells it, and just imagine what great entertainment could be had showing guests the craftmanship of your rock wall and it perfect mortaring, they will be talking about it to friends for days after the dinner party.

ari
22-06-2005, 09:09 PM
quote:Ari are some people actually waking up to the impractablility of some of those showy fittings
No not at all, not glitzy like some of the Asian houses, all very tasteful and minimalistic and practical in keeping with the design. All design work.....decour, colours, kitchen design, bathrooms, carpet etc by Scott Design, who are part of the Fletchers Group.

And Dough Boy, you mentioned fools gold.....Mangakino?

23-06-2005, 07:55 AM
ARI your bathrooms are all glitz and not practical I have seen some of those fittings pulled out in 6 months.

ari
23-06-2005, 09:15 AM
quote:ARI your bathrooms are all glitz and not practical I have seen some of those fittings pulled out in 6 months.

You would not fekin know......dork!

Dough Boy
23-06-2005, 01:36 PM
quote:Originally posted by ari


quote:Ari are some people actually waking up to the impractablility of some of those showy fittings
No not at all, not glitzy like some of the Asian houses, all very tasteful and minimalistic and practical in keeping with the design. All design work.....decour, colours, kitchen design, bathrooms, carpet etc by Scott Design, who are part of the Fletchers Group.

And Dough Boy, you mentioned fools gold.....Mangakino?


Oh yes, I do recogonize that Mangakino does have a very lowly past, but even a modest rise in its 'station in life' will reap rewards. Have already made 18% in 9 months based on QV valuation, which is 50% of prices on the current market, which I admit to being hyped.

Also an original $34,000 commitment is a small diversion of assets that is not providing cashflow.

Suggest you look at Sydney as to future implications for Auckland's top-end market. Homes in Sydney have dropped from the likes of $800,000 to $700,000. I call that negative gearing with an overdrive.

ari
23-06-2005, 03:29 PM
quote:Have already made 18% in 9 months based on QV valuation
Good gain for not so much capital, but at the end of the day we ain't made nothin, till that cheque book is prised out of that pocket;)

23-06-2005, 03:43 PM
Ari Those vanities and other fittings just show off the amount of money they cost. But do not make the house a nice place to live in. More suited to restoration of an english statley house or a french chateau. Than a modern NZ home and a house in that price range without a modern two door fridge with icemaker etc. is not ideal. And that is what the customers are trying to tell you when they offer $200000.00 less than you are asking. But you can bury your head in the sand.

Dough Boy
23-06-2005, 04:14 PM
quote:Originally posted by ari


quote:Have already made 18% in 9 months based on QV valuation
Good gain for not so much capital, but at the end of the day we ain't made nothin, till that cheque book is prised out of that pocket;)


I think that is the problem you are most surely are faced with a $889,000 price tag.

rmbbrave
24-06-2005, 12:44 AM
Ari,

You are dreaming asking nearly $900,000 for that house. You could buy 9 Sealegs boats for that and I have difficulty seeing why anyone would even buy one.

ari
24-06-2005, 07:15 AM
quote:You are dreaming asking nearly $900,000 for that house.I'm not, price is going to be pulled back as I've found 27 acres. Price was set by 2 leading Realty firms originally at $902k.
Here's a spec list to show there is something for your money....
Smeg SA70X fan oven with rotisserie
Delonghi DGHS70Wi built-in 5 burner gas hob
Robinhood range hood
Fisher & Paykel WD1002 waste disposal with air switch
Fisher & Paykel active smart S/S refrigerator
Fisher & Paykel S/S DD603 double dishdrawer
Oliveri twin sink with accessories
Granite bench top by Stone Warehouse
Tiled splash-back
Linen pattern stainless steel rear bench

BATHROOMS
Englefield polished alloy showers
Englefield spa bath
Villeroy & Bosch vitreous china pan & cisterns toilets
Heirloom butler basins
Scope heated towel rails x 2
Heirloom heated towel rail x 1
Devi programable under floor heating in bathrooms (with floor sensors)
Quality Grohe tapware
Vanity unit design by Design Studio
Tiling by Italian Ceramics with tiles from Tile Warehouse

Electro-Guard security system (5 infrared sensors)
Communication/Sky wiring throughout
Sky digital dish
Analog TV Ariel
Surround sound wiring
TV points = 8
Telephone points =9 (2 lines in = 4 pairs)
RCA points = 2 x 8
Surround sound speakers
Power points (double) = 30 (single) = 8
Stair lights = 7
Lighting design by Albany Lighthouse
External sensor lights x 2
Real Fires balanced flu gas fire with BOC gases twin pack system
Gas bayonet fitting family room
Sound proofing batts and additional batts internal walls and floors
Feature rock wall on front boundary & 1.8m high wooden boundary fence
Kwila floor kitchen (supplied by South Pacific Timbers) (5 coats polyurethane)
Kwila deck (supplied by South Pacific Timbers)
External glass/alloy balustrades by Aluminium Technolgy (tinted glass & colour keyed hardware)
Kiwivac internal vacuum system (5 outlet points)
Ashton Garage ripple panel door with 2 remotes
Robin Hood S5000 Supertub
Quality Grosvenor door hardware
Design Studio decor, internal & external
Dux mains pressure hot water system
Hills Paraline-Duo clothesline
Wrought iron powder coated Internal balustrade & hand rails by Bailey Engineering
Built-in wardrobes by Wardrobes plus
Hardies Linea weather boards
Insulclad cavity, approved plaster system
Dulux paint throughout
Coloursteel roof

clips
24-06-2005, 07:21 AM
mate you can have all the specs in the world, realty firms can tell you its worth $.....whatever - really the bottom line is that its only worth what you can sell it for.

24-06-2005, 07:52 AM
The design company let you down. You might like the design but others Don't.

ari
24-06-2005, 09:34 AM
Enigma-Advanced memeber...advanced alright.

quote:You might like the design but others Don't.
What a load of crap you talk...first the bathrooms now the design.
Yep, if sold for reasoable price will definately lift the benchmark for the area. Just sold another property, lk away $50k up on what the agents were saying because it was different to local area houses in that it was 360m2 with 5 car garaging, but the agents put it in the one pot for their valuations.
As I write new owners are moving into house next door, circa early 50's, little done to it over the years, no view $630k

Halebop
24-06-2005, 10:19 AM
Hey Ari,

I don't think anyone is really qualified to comment on design, fixtures and fittings or whatever from a few photographs.

What you do know though is the house isn't selling. There are two ways you can view this:

(1) I'll hold 'till I get my price
(2) I'll sell and move on

Both have their costs and benefits. Personally I'm from the cut my losses and get on with it school. But thats because I keenly feel the opportunity cost (like buying 27 acres).

Enigma is right the house will not be to everyones taste but this is not why it isn't selling. Price and confidence are the only reasons any product won't sell. If the market thinks you are asking too much then they will offer too little - which could be why you are seeing only cheeky bids? Who knows why there are problems with this property now? It doesn't matter - maybe the market has softened, maybe its just a bit too pricey for the street, maybe there are a few too many alternative on offer right now?

Cut the price, be negotiable and move on to better and newer things.

ari
24-06-2005, 11:30 AM
quote:Cut the price, be negotiable and move on to better and newer things.

Halebop, finally someone who writes sense. As I said in an earlier post price has been pulled back, $30k to be precise. With 26 open homes since mid March there has never been one adverse comment re design or layout,fittings etc. The problem is it's on a main road. One couple came back 6 times (last time 7.30 at night with a bottle of wine) to feel the ambience (agent talk).But could not get their head around the road then went and purchased inferior Asian built house on busy corner!

duncan macgregor
24-06-2005, 01:07 PM
ARI, I blame the agent most of them are useless. Ten pc sell 90pc with 90pc selling 10pc. Most of them have absolutely no idea about how a building is constructed, or how to close a sale, or even bothered to learn about different cultures. They have no idea what some races deem important, or how to talk to them, or even how to keep at a distance as different races have different comfort zones. Bathrooms and kitchens for indians, asians, and nzanders, are all completely different. I got rid of one agent who was doing all the talking to this asian mans wife. She was that dumb that she didnt realise the man was totally insulted, and out of principle would never buy the place. Sell a house to a nzealander stand at arms length an asian one and a half arms lenth. They are smaller than us so stand back, they also have the perception that we smell.
Change the agent find one that knows something, then look after them, then you will find selling your house is a breeze. macdunk

24-06-2005, 02:49 PM
ARI you did say the design team picked the bathroom fittings and fixtures and that was a huge error in my opinion. Have a friend wander round at an open home looking like a likely buyer and listen to the comments and you will know what the markets are thinking.

ari
24-06-2005, 03:35 PM
quote:ARI you did say the design team picked the bathroom fittings and fixtures and that was a huge error in my opinion. Have a friend wander round at an open home looking like a likely buyer and listen to the comments and you will know what the markets are thinking.
Enigma.....what is it with you, drop it!
For your info I spent 12 mths in the planning going thru show homes etc Fletchers, Sovereign,Signature,Universal,David Reid,being larger ones here.In conjunction with what I saw and recommendations from the design team we made our decisions.
And guess what, those building companies are still selling houses....