PDA

View Full Version : NZ 1st homebuyers are ScReWeD...



Pages : [1] 2 3 4 5 6 7 8 9 10 11 12

Crypto Crude
03-01-2007, 12:52 AM
New Zealand is at the beginning of a first homebuyers crisis...
lets assume NZ median house price is $330,000 .... and you pay a piddley deposit of $30,000
-also assume interest rates are 8%
-number of years to pay the loan off are 30 years
-loan amount is $300,000, after deposit is paid

you therefore get....
Year 1 2 3 4 5 6
Beginning principal bal 300,000 297,352 294,492 291,403 288,067 284,464
payment 26,648 26,648 26,648 26,648 26,648 26,648
interest component 24,000 23,788 23,559 23,312 23,045 22,757
principal component 2,648 2,860 3,089 3,336 3,603 3,891

-and so on, for 30 years
-in the first year you are paying $24,000 in interest only... wow... and only $2,648 is coming off the loan balance at the end of the first year...
-so, your house value has to increase 8% in the first year... (24,000/300000) just to break even and cancel out payment for interest only (8%)
-year 2 opening balance is year 1 beginning principal balance less principal component
and so on...
-so for 30 years you are paying $26,648 per year or $512 per week, every week.....
-total amount paid to the bank after 30 years is $799,440 ...[:0](26,648 * 30)
-the above example doesnot include the benefits of what you save in rent by having your own house

I have only ever been told to buy a house, by parents, friends, every single person I have gone to, to ask for advice has told me to buy a house... The housing success stories are all to common for people who are 5plus years older than me and beyond...

but yet, I look at the above loan amortization table... and cannot see a path...
I am 22, student, without a house (of course)... and cannot allow myself to be a 52yr old man, and have a house only... so I looked for another means... I spent two years just looking at shares, and the last 2 years playing high risk shares, with much success I add... I applied a simple strategy where I invested in high upside, low downside... trouble is finding a share with these characteristics... any way....
It is always a goal of mine to have a house... but It will have to be paid largely in cash...

Or I will need a combination of a few events happening...
-house price falls dramatically
-interest rates to drop, (not likely in the next year) but interest rates will drop in the medium term
-rental rates to increase dramatically, so house buying becomes more attractive
-wages to go up massively (yeah right)
-large govt incentives...

we are due for a housing fall... If you are a first time house buyer, dont be fooled into housing by others... let the numbers speak for themselves...the only way to make house buying attractive is large front end payment, or up weekly payments.up $500, yeah right...
any more than 15years spent to pay for a house is far toooooo long!...(for me)

at $500 per week for 6 weeks equals 3 thousand, a nice sized share parcel... we are going to be a generation of renting property, or inheritance... I want neither...

they say there are risks in buying a house... no theres not... theres no risk in doing what everyone else is doing, because at the end of the day everyone will be in the same boat... and either all better off, or all worse off... there aint no risk in that...
to get ahead in life you have to take risks....

I have heard that many property buffs are changing their views on apartments... I heard of apartments selling recently as low as 55k in auckland...
if you are pondering a first home, then all the best, wheather you buy a house or not, it will still be the largest decision you will ever have to make
Thank you for taking the time to reading the above...

Crypto Crude
03-01-2007, 01:06 AM
opps, the amortization table above looks alittle unclear, this will help...
Year...................................1.......... .2..... ...3............4.. ........5.............6
Beginning principal bal...300,000....297,352...294,492...291,403.....2 88,067....284,464
payment.........................26,648......26,648 ....26,648......26,648.....26,648......26,648
interest component........24,000......23,788.....23,559.... ...23312....23,045.......22,757
principal component........2,648.........2,860......3,089... .....3,336.......3,603.......3,891

foodee
03-01-2007, 07:49 AM
SC
That is 'shrewd' observation.
What you did not mention is that your house price is already pegged whilst your income will(hopefully) be 'upwardly mobile' with time.
You can even get some flatmates to subsidise your repayments, and they don't even have to know you own the place;)

Now the second house - that is a different story.

Cheers and happy new year

Steve
03-01-2007, 08:12 AM
I purchased my first house as a rental ($300/wk) while continuing to rent personally ($80/wk being my share).

While I didn't have any emotional satisfaction from living in my own house, it allowed me to get on the property ladder...

duncan macgregor
03-01-2007, 08:36 AM
SHREWD CRUDE, QUESTIONS TO ASK YOURSELF.
1, The value of the house over a ten year period ?.
2, The rent that you paid elsewhere?.
3, The rental income for part or all of it.
4, Refinance after five years to get all your money back.
6,Would you be silly enough to lend money for an 8pc return.
MACDUNK:D

Crypto Crude
03-01-2007, 11:46 AM
firstly, I dont expect to make big inroads with the property forumn... I am just the new kid on the block... and yous are prob fat rich cats off property (some of yous)... and going forward i cant see me making it here... I dont even want to spend 15 years paying off a house, let alone 20,30... In australia aint they doing life long loans...

broke, good point... but, back 20 years or so, when we had persistant high inflation in the 1970's averaging 12% and 1980's 11%... a 12% rise in inflation would just cancel out 12% rise in house value, would it not?... house prices prob rose more than 12% though back then....eg, when inflation peaked at 20%, you would have been getting around that with interest in the bank... so inflation erodes away at returns as well as your argument around decreased debt payment

foodee, gone were the days where you didnt need flat mates.. my mum and dad never had any, and didnt need to have any...nowadays things have changed... and they were on average incomes... any way, id like to have a family, and kids some time, so flatmates probably aint an option... maybe in the short term only... and flatmates do bring their problems, (baggage)...

steve, the property ladder has made many a millionares in the past... I cant see the same formula working with this generation... wont we just inherit it anyway...

macdunk... wheres question 5...haha.joking... i dont pay rent, i live rent free at home... dad gives me free rent, I give him free financial advice..lol..im moving out next year.. I guess once I start paying rent and I see negative cash flows, then.....then...um... im funked...i guess, off to auzzie where I can earn 50% more, and a stronger dollar.. ... no I wouldnot lend money at 8%... rather buy shares, and own small percentages of companies, and aim for much much more...

the property market can move in two directions... up, or down..
if we get two more years of 10% growth, then my arguement is a nail in the coffin me feels... or if the market goes down, we will have many bankcruptcies, the people that will be hit the most are those who got in property in say the last few years and have large debt...

duncan macgregor
03-01-2007, 12:25 PM
SHREWD CRUDE, What you must remember is the idea is to use other peoples money not your own on the path to riches. I feel sure you are smart enough to work it out. Property gives you very cheap money to invest elsewhere, doubles in price every ten years. After a couple of years you have property with none of your own money involved. Sit down and think about it. macdunk

rmbbrave
03-01-2007, 01:38 PM
quote:Originally posted by duncan macgregor

doubles in price every ten years.


Doubles in price every 10 years? ie about 7% per year

Thats a new one Duncan. It used to be 10% a year - ie doubles in price every 7 years.

Do you still reckon propert has doubled every 10 years from 1066 to 2006 and will do so from 2006 to 2056?

Year average house price
2006....400k
2016....800k
2026....1.6 m
2036....3.2 m
2046....6.4m
2056....12.8m

A house is considered expensive if it is 7 times the average wage.

What are the chances of the average wage being $229,000 (1.6m/7 = 229k) in 2026?

Pretty slim I'd say.

If house prices keep doubling every 10 years no one will be able to afford to buy them.

rmbbrave
03-01-2007, 01:47 PM
How fast have house pices gone up?

It depends how you look at it.

In the UK in 1985 a house cost 3.4 times the average wage.

In 2005 a house cost 6.1 times the average wage.

Conclusion in the last twenty years house price in the UK have not even doubled in price.

I.E gone up 3-4% a year.

http://news.bbc.co.uk/2/shared/spl/hi/guides/456900/456991/html/nn2page1.stm

Steve
03-01-2007, 01:51 PM
SC, I did it this way as I did not really have the means to move in outright and this way I also received the benefit of tax deductability of the costs such as interest/rates/insurance etc.

It was just a means to the end.

The most difficult bit is getting the initial deposit...

Crypto Crude
03-01-2007, 03:38 PM
I see your point macdunk...other peoples money or not... it dont matter.. us newbies are priced out of the market, so it doesnt matter where the money came from....
My point is that 1st homebuyers are screwed...(usually the younger ones)
My deposit for a house has gone all into shares... I can afford a deposit, but I cannot afford 15, 20, plus years... or in my example 30 years...

hey Rmb... u raised a good point.... and that is that we are less likely to get 100% capital growth from property than ever before..

our property market is run by foreigners that buy up our houses, push up prices, and yet the new generation coming through are screwed on like 11, 12,13 dollars an hour...
what good can you do with $400 after tax per week... and $512 weekly loan payments is too large even with two flatmates...
so house prices have been rising through more wealthier internationals..who consider our property cheap... cheap for them expensive for us... expensive for us unless you are already on the property wave of course....
Government raised minimum wage last year and in April this year, and propose again next year... this is a clear signal... lower paid jobs are at the lower aged end of the market...
and the youth need all the help they can get if property is their life long debt ridden goal

duncan macgregor
03-01-2007, 04:09 PM
SHREWD CRUDE, Most people start with nuthing everyone leaves with nuthing, its what you do in between. The cream always reaches the top my friend in any generation. MACDUNK

Crypto Crude
03-01-2007, 04:52 PM
I might be egyptian macdunk.... I may want to take everything with me to the afterlife..haha [:p]...
does anyone agree with my summation???, because there aint no way that even at 450 after tax plus two flatmates say 100 a pop each equals 650 less weekly loan payments of 512 equals $138 to survive on...

maybe foodee, you could do it real hard for a few years... get your pay rise and then just, use that extra cash to live on... take the 30year loan, and breeze through until your 52 without kids, because you need their rooms for the dough... [:p]...lol

Yes I have a plan macdunk, it aint nuffin to do with property, the cream at the top dont spend 20plus years to gain a 300,000 investment... so nor shall I... and even if your investment doubles... you are still paying $799,000 in total over 30 years...

my argument has nothing to do with the outlook on property... it is to do with the first homebuyers outlook on their life long debt ridden goal...

duncan macgregor
03-01-2007, 06:06 PM
quote:Originally posted by Shrewd Crude

I might be egyptian macdunk.... I may want to take everything with me to the afterlife..haha [:p]...
does anyone agree with my summation???, because there aint no way that even at 450 after tax plus two flatmates say 100 a pop each.

SHREWD If you really were crude at a $100 bucks a pop you would pay the bloody place off in quick fashion.:D:D:Dmacdunk

Mr_Market
03-01-2007, 06:39 PM
Just be patient and keep investing. Prices will not be 7x wages for the rest of your lifetime. Fear will hit the market eventually and will drive out the speculators. Bide your time and you will pick up a bargain.

Halebop
03-01-2007, 07:25 PM
quote:Originally posted by Shrewd Crude

My argument has nothing to do with the outlook on property... it is to do with the first homebuyers outlook on their life long debt ridden goal...

Shrewd Crude you aren't the only person to come to this conclusion. The relative rise in property capital values to take home pay (compounded by a secular demographic shift from single income to dual income households) cannot be sustained. Unless society moves to three or more income households the impetus provided by the 2nd income is reaching maturity and may even go into decline with more family friendly tax policies prompting new mums or dads to stay at home. Home ownership continues to concentrate into the hands of Baby Boomers who largely did not experience the least profitable periods of home ownership in New Zealand. People in their 20 somethings earning closer to the average wage or less have limited scope to buy the same sort of 1st home their parents could afford in the 60s or 70s. I suspect the consequence will be a prolonged demographic "lag" in learning the wealth building disciplines of saving, budgeting and delayed gratification.

The original "mainstream" two income family is unsurprisingly the Baby Boomer family. They have reached a mature earnings profile which is likely to go into permanent decline in the near future (if it hasn't already started). More than ever this demands more traditional (and cyclical) drivers of real estate outperformance:

Demographics (Birth Rates, Survival Rates, Net Immigration).

Productivity Growth (Technological Improvements, Education, Innovation, Employment Environment and a host of extraneous inputs but particularly downstream impacts of the availability of risk capital).

Wage Rates and Employment Levels.

Inflation (Counter-intuitively property underperforms during high inflation as key triggers like Employment, Productivity etc worsen. On the plus the mortgage "decreases" by the rate of inflation adjusted income increases although this may be swallowed by higher interest costs).

Interest Rates and the availability of risk capital (Changes in banking regulations and prudential requirements have had a huge impact on the attractiveness of home lending in the eyes of bankers - with a consequential "blinkered" shift in the true rather than perceived risk as capital values have increased versus incomes and proportional wealth).

New Zealand (and cities like Auckland in particular) have demographic advantages that will cushion some of the consequences of an aging Boomer population. With high'ish immigration, natural economies of scale and productivity benefits concentrating populations in larger centres and a less proncounced baby "bust" here in NZ, high priced locations like Auckland are likely to remain supported. It would require an important external shock (Weather related? War? Health Shock?) to shift this trend.

Can we expect to see the relative "price earnings" multiple of housing continue to expand at a fast rate without the wealth effect of growing incomes (3+ Income Families? Baby Boomers not cutting back their paid hours until well into their 80s - and not dying?)

As long as you maintain focus, I suspect a program of saving and actively investing your rental vs mortgage payment differential will pay better fiscal dividends as long as you accept the inevitable volatility that comes with it. The emotional benefits of financial wealth versus home ownership is still open to debate. There may come a point in life where you just "want" to own a home more. Keep that in mind when considering demographics. You won't be the only one when that time comes. If it's part of a trend, you are better off being in front of it rather than behind it.

foodee
03-01-2007, 09:28 PM
SC
As I said you're a 'shrewd' observer. It ain't nice out there is it; but if you want it bad enough you'll work through it. Let us face it, no one out there is going to make it easy for you or any one.

Cheers

rmbbrave
04-01-2007, 12:32 AM
A house costing 7 times the average wage is historically high - suggesting NZ houses are overpriced

Another ratio is rent versus mortgage repayments.

Historically it has been cheaper to pay a mortgage then to rent. In Shrewd's example the mortgage repayments are $500 a week. You can rent a basic 3 bdrm house for $300 a week in Manurewa, A nice 4 bdrm place for $400 and a luxury house/small farm in Alfriston/Takininni/Papakura for $500 a week.

Again suggesting houses are too expensive in Auckland.

Is a house a good investment?

Property owners are now getting 5% yeilds gross - A $300,000 house rented for $300 a week. This is a poor investment.

Of course property investors are hoping for capital gains - whether they will get them or not - who knows?

Complicating matters of course are the tax breaks available to property investors and the ease with which you can use equity in one house to buy another.

However if you are leveraging you really, really, really need the value of your houses to be growing. If the growth stops or goes backwards you are in big, big, big trouble.

I will go back to NZ in a year and will probably be a first home buyer so I have been thinking about this a great deal.

I could buy a house with cash but all these over priced houses are really pi$$ing me off because I will have $300-$400,000 less to invest in shares.

profile
04-01-2007, 01:18 AM
Sydney's inner-city property blues
January 3, 2007


Sydney's property boom has been dead for three years, but that hasn't improved things much for first-time buyers interested in a well-located family home. Changes to the city's median house price over the past decade explain why. It rose an eye-popping 250 per cent between 1996 and the peak of the boom in late 2003. And it is still 2.3 times the 1996 level. So the recent weakness in the housing market has done little to repair the damage caused to housing affordability during the previous decade.

A Macquarie Bank economist, Rory Robertson, showed just how far out of reach the bands of suburbs close to the city centre and close to the coast have become for most new buyers. He chose five popular suburbs within 10 kilometres of the GPO - Bondi, Bellevue Hill, Bronte, Mosman and Paddington - and calculated the average median price for those neighbourhoods. It was $1.6 million, almost $1 million higher than before the boom.

The event that made owning a home in a big city so difficult was the halving of interest rates during the 1990s. That structural change in rates, made possible by low inflation, boosted the purchasing power of home buyers by 60 per cent and triggered a surge in demand for well-located houses. The result was a once-in-a-lifetime price increase that permanently downgraded housing affordability for newcomers.

Robertson estimates that home prices have risen 75 per cent faster than wages over the past two decades. Since buying and paying off a house is the biggest financial event in most people's lives, the gap between the growth in property prices and wages has greatly devalued the lifetime earnings of non-home owners, particularly young people.

The average price of an Australian house, including land, has risen from four times pretax annual wages to about seven times in 20 years. That means an aspiring first-home buyer on average earnings of about $55,000 a year must contemplate borrowing $350,000 (assuming a 10 per cent deposit), rather than $200,000, to buy an average house.

Those with average incomes who brave the housing market for the first time must make what Robertson calls the "never-satisfying compromise between house and yard size and proximity". They have been pushed towards the periphery of cities and beyond, priced out of the market for well-located family homes.

A new housing index in Queensland has highlighted this national trend. The Urban Development Institute of Australia (Queensland)/Matusik Affordability Measure uses average income, interest rates and assumed borrowing capacity to estimate what proportion of housing in 22 urban centres in Queensland is within reach of those wanting to buy their first home. In 2001 the average household could afford 74 per cent of the homes being sold across the state, but that had fallen to 15 per cent by the September quarter last year.

In Brisbane, just 7 per cent of homes were classified as affordable to first-home buyers and those were probably on the urban fringe.

"Something similar has happened in the major urban centres of other states as well," Robertson says.

Despite the compromises being made by first-home buyers, they are being forced to take out bigger mortgages that stay big for longer periods. That means today's young home buyers have far greater financial risks than was typical in earlier decades. They are much more exposed to things such as illness and sudden job loss for more of their lives than people were in the past.

There are predictable signs that home ownership is falling among those aged under 45. The ratio of owner-occupiers in the 25-35 age group has dropped by 10 percentage points in the past two decades and the rate for 35- to 44-year-old owner-occupiers is also edging lower. For most of the 1990s first-home buyers accounted for more than 20 per cent of home loans but this ratio slumped as the boom approached its peak. By early 2004 the proportion of first-home buyers crashed to just 12.6 per cent and even less in Sydney. The proportion ha

Crypto Crude
04-01-2007, 05:40 AM
gidday halebop...
You raise a very interesting point, and especially around the whole Baby Boomer thing which I can see will be the biggest issue in my life time...I think the next stockmarket crash, house slump will be contributed by BB's ... In New Zealand our soon to be retiring BB's crisis could be offset by an expansive immigration policy, other countries like the US will be hit hard, where a census estimated that there are currently 78.2 million BB's... roughly 25% of total population... If you have 20-25% people pulling out of property, shares then we are looking at decades of recessions in all forms of investments...

I can see it starting to begin with my own eyes... I live in Christchurch and the amount of retirement villages pooping up is just amazing... these BB's are selling there houses, internationals are making up with the shortfall at the moment... in 10 years there maynot be enough overseas investors to make up the difference... which could and will lead to house price falls... this could be my entry...

has anybody actually started a BB thread?

Steve
04-01-2007, 08:46 AM
My House, My Castle (http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10417673)
As the number of people able to afford luxury homes grows, real estate agents face another problem - how to separate real buyers from those merely pretending to have the cash.

Astonishing as it may seem, a small group of "Walter Mitty" types regularly attempt to deceive agents and raise their status in society by demanding circuits of exclusive properties.

Even if you can't afford it, you can always try and make yourself feel better!

Halebop
04-01-2007, 10:11 AM
quote:Originally posted by Steve

My House, My Castle (http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10417673)

The real story here is the increase in high priced sales. Skewing both sales volumes and values at the upper end increases both the median and medium values, "proving" rising or stable values in REINZ blurbs when the overall market is not quite so robust. High end purchases of assets like houses and boats can be counter-cyclical indicators rather than proof of growth. When the business game gets tough, high-end purchasers extract dividends and invest in lifestyle instead of reinvesting in their businesses and investments.

Cooper
04-01-2007, 10:45 AM
If you put aside the love affair/special investment nature of property, and break the options down to a simple choice of renting or mortgaging to buy, then most of the time the answer should be that you are better off renting when you consider rates costs + interest costs vs the cost of renting (even allowing for a fair "comfort" premium/value when taking into consideration the value of owning your own home).

The question then turns to whether these discrepancies between housing prices and affordability or housing prices and incomes can be sustained. My own opinion is that they can not, at least over the medium to long term, taking into consideration the adjustments we'd expect the market to make as fewer people are able to afford a fixed/growing (in the real sense) pool of housing, and also given the political clamour that will eventually arise if these discrepancies continue (and the current govt we have).

But my advice to friends is always the same. Rationally, if it is relatively cheaper to rent, then do so and save for a deposit for when this is not the case. I can't see a scenario where house prices continue to rise and we return to a class situation of "landless" and "landed".

The only thing a prospective home buyer needs to consider at any time is whether buying a house at that stage makes sense to them, at that stage; or whether the value they place on home ownership is in equilibrium with the current market conditions.

Take the fear that comes when considering a good such as housing out of the equation, and the current situation is simply a matter of current house prices being out of synch with the market that moves those house prices.

All just my opinion, though.

Halebop
04-01-2007, 11:00 AM
quote:Originally posted by Shrewd Crude

gidday halebop...

...has anybody actually started a BB thread?

I probably mention Baby Boomers in 50% of my posts. Many demographers and a few demographically focussed economists believe Demographics is the only game in town. They have a huge impact on both long and short term cycles - in any aspect of life that can cycle.

If you think back to your basic economic theory, there are a number of cycle concepts offered - mostly around the notion of snaking lines cycling up and down on a run chart. Kitchen, Kuznets and others I can't remember right now. There is also the Kondratiev wave (I think called K-Wave but the others start with K too!) - this metric contends that cycles themselve cycle in size over 50 or 60 years. At the moment we are at the top of the last Kondratiev wave that began in the late 70s / early 80s. Being at the top of the Kondratiev cycle is a once or twice in a lifetime event. Lows are higher and highs are highest. Down periods are soft or just don't happen. Up periods are extended and stronger.

If you overlay demographics on the K Wave you see Baby Boomers as a group entered the work force or at worst university & probably part time employment by 1982. It's no coincidence that this is when both share markets and property markets began a 30 year bull run in most western countries. Just when we were thinking the party must one day end, property and share values accelerated in most countries over the last few years. This is because Baby Boomers are now aged 61 to 43. At worst their children are likely at high school. Mums have gone back to work. As a group they are now in senior management positions, peaks of professional knowledge or have established and properly capitalised their businesses. Earnings and disposable earnings have peaked. This feeds both consumption and the availability of risk capital. Down cycles all but disappear or at least lack conviction.

Push forward 10 to 15 to 20 years. More Baby Boomers have retired than are working. While with-holding their labour has made you and I feel richer at work, with-holding their risk capital for less risky, income generating assets means our employers have less capital to innovate and invest. To attract investors they take less risks and invest less to maintain profits. Cycles are now more pronounced because investments are only made when the trading environment is clearly positive, exaggerating the cyclical nature of economics and investing.

The boomers are now costing more in retirement benefits and healthcare. Additionally, infrastructure built by government in the "make hay" boomer years is inadequate for an aging population - it was built for a Boomer aged population. Substantial infrastructure investment is required against a backdrop of falling growth. The children of Baby Boomers are having children themselves, great for the future, but expensive in the moment as this costs more in health care, education and lost labour. Despite the Cullen Fund, Government borrowing hits an all time high. Inflation is difficult to control. Cycles really cycle. In 2028 the bottom of the K wave is reached and the cycle starts up again.

skinny
04-01-2007, 12:56 PM
HB et al. you might find some of the papers here interesting.

http://www.rbnz.govt.nz/research/workshops/14nov06/2823686.html

p.s. the Barfoot&Thompson recent sales do not reflect NZ's average agent's sales which have been, erm, average!

rmbbrave
04-01-2007, 05:53 PM
quote:Originally posted by Shrewd Crude

gidday halebop...
You raise a very interesting point, and especially around the whole Baby Boomer thing which I can see will be the biggest issue in my life time...I think the next stockmarket crash, house slump will be contributed by BB's ... In New Zealand our soon to be retiring BB's crisis could be offset by an expansive immigration policy, other countries like the US will be hit hard, where a census estimated that there are currently 78.2 million BB's... roughly 25% of total population... If you have 20-25% people pulling out of property, shares then we are looking at decades of recessions in all forms of investments...

I can see it starting to begin with my own eyes... I live in Christchurch and the amount of retirement villages pooping up is just amazing... these BB's are selling there houses, internationals are making up with the shortfall at the moment... in 10 years there maynot be enough overseas investors to make up the difference... which could and will lead to house price falls... this could be my entry...

has anybody actually started a BB thread?



Wait 10 to 20 years and buy the dying Baby Boomers houses is a good strategy in my opinion - However what if I'm wrong and pirces don't come down much?

Then you've lost 10 - 20 years.

For a young graduate now this might be okay but I'm 38 and in 20 years I'll only have 15 years left.

See http://www.sharetrader.co.nz/topic.asp?TOPIC_ID=23675

for a discussion of Population Growth and Growth in Property Values - it includes some BB stuff.

Crypto Crude
04-01-2007, 06:55 PM
In terms of cycles the BB will be termed the DG cycle... doom and gloom cycle... I must say that NZ is starting to prepare for it quite well with the Cullen Fund which is also making healthy returns... 17 odd % last year.... but in America they have massive all time high debts,.. housing is already starting to go peer shaped, those current BB's that are expecting 401k plans willnot get them...
And I no that I definately wont, and not expecting nothing....
It is such a concern that In Auzzie savings is compulsory...
BB's hold most of the wealth, and will have to pull out of shares, housing ... because they wont get their superannuation or only a small part of it... which will cause a decade of recessions... I have great fear, but people I tell, just laugh it off, or dont take me seriously,
It is a real factor and we must wake up... coz even if we in NZ are positioned quite well to take it, If USA sneezes, we all catch a cold...
Or then again If China is the superpower in 20-30yrs it may not be so bad, they have an inpeckable savings record... (50% of GDP, or something like that) and retirees get nothing... whole generations of families live together..
If we do have a 15-20% drop in popualation, then it is safe to say that property will slump big time...
stocks like Ryman will do very well for the BB's, but once BB's are gone these stocks will crash... (genesis research)
Commdities will be the way to go... and we are only at the start of a 30plus year run on gold,silver, and the lot...
adjusting Gold for inflation over the long term should put it at $2800us per
ounce right now... so there is alot of upside scope...
Kitco.com is quite bullish on comodities, check it out...
[8D]
.^sc

Crypto Crude
04-01-2007, 07:21 PM
whats up rmbbrave.... you said
"for a young graduate now this might be okay but I'm 38 and in 20 years I'll only have 15 left"...
we will get early signals...so not 20years but earlier... for most it will be tooo late to start saving...but in say 10 years the smart BB's will sell early... so there will be many years of no growth, but fairly stable before all BB's are retired and then the big crash...
and remember its not when the BB's die... its when they start to sell out of housing because they need the cash to survive....
[8D]
.^sc

srotherh
04-01-2007, 07:25 PM
Shrewd dude
You started a bl00dy good thread.
Lots of good points and thoughts coming out
Especially yours
:)

duncan macgregor
04-01-2007, 07:26 PM
quote:Originally posted by Shrewd Crude

whats up rmbbrave.... you said
"for a young graduate now this might be okay but I'm 38 and in 20 years I'll only have 15 left"...
we will get early signals...so not 20years but earlier... for most it will be tooo late to start saving...but in say 10 years the smart BB's will sell early... so there will be many years of no growth, but fairly stable before all BB's are retired and then the big crash...
and remember its not when the BB's die... its when they start to sell out of housing because they need the cash to survive....
[8D]
.^sc
Not to shrewd crude. They dont sell to survive they take out a reverse mortgage to survive. You pay it all back when you die:D.MACDUNK

srotherh
04-01-2007, 07:32 PM
Mak Dunc
The generation you are talking about are not into borrowing for the future ,dead or alive.

rmbbrave
04-01-2007, 08:12 PM
A reverse mortgage or not when the house owner dies the house still gets sold.

It's either sold by the bank which holds the reverse mortgage or the deceased's kids who want the cash.

If lots of people die at once, lots of houses get sold at the same time. The more houses on the market the lower the prices.

rmbbrave
04-01-2007, 08:34 PM
quote:Originally posted by Shrewd Crude

whats up rmbbrave.... you said
"for a young graduate now this might be okay but I'm 38 and in 20 years I'll only have 15 left"...
we will get early signals...so not 20years but earlier... for most it will be tooo late to start saving...but in say 10 years the smart BB's will sell early... so there will be many years of no growth, but fairly stable before all BB's are retired and then the big crash...
and remember its not when the BB's die... its when they start to sell out of housing because they need the cash to survive....
[8D]
.^sc


In his book, Boomer Nation, Steve Gillon breaks Baby Boomers into two groups: Boomers, born between 1945 and 1957; and Shadow Boomers born between 1958 and 1963.

This generation will be dying at a great rate of knots between 2015 (1945+70) and 2043 (1963+80). That's when we MIGHT see falling house prices or we might not.

I think we will but it is possible I'm wrong. If I am wrong and I wait until 2020 to buy a house and they don't get any cheaper then I've wasted 13 years.

rmbbrave
04-01-2007, 08:36 PM
The dying Baby Boomers won't just be selling the houses they live in they'll also be selling their 2nd and 3rd houses they have bought as investment properties.

RJS
04-01-2007, 09:07 PM
New contributor here...
Many NZers choose to buy and live in their
houses when it costs them more than the house is
worth to do so.

So why do many NZers live in the houses that
they own and pay vast interest, rates, insurance,
maintenance costs, etc.

How many people here live in the house they own and why?

-Roger.

Halebop
04-01-2007, 09:56 PM
I'm not a fan of housing as an investment destination but for many it has proved a wise investment when the alterntive was likely renting and consumption. Although it's a relatively expensive way to grow wealth, the owner occupied home is a worthwhile "compulsory" savings scheme without requiring much input from government and it provides a number of emotional benefits that are difficult to value.

Disc: Renter and investor (but not in real estate!)

Halebop
04-01-2007, 10:52 PM
Don't underestimate the boomers. I think they have added 1 to 2% to growth rates. Although this doesn't sound a lot, in years when real growth might be 0 to 2%, this equates to technical recession and stagnation without them.

I'm not suicidal about the future. There is plenty yet we can do in the next 20 years to improve birth rates, entice (Younger?) immigrants and dare I say it in "throw another body at the problem" NZ, improve productivity growth. But non-earning-cutting-back-and-dying boomers will reduce growth rates by at least 1% (I think closer to 1.5 to 2%). 1% might not sound like a lot but when you look at real growth rates over a time series this drastically improves the chances of recession in any given year. Therefore the chance of investment / financial underperformance in any given year is also materially augmented - and this leads us back into my earlier comments about that K wave.

Crypto Crude
05-01-2007, 12:53 AM
Srothern- yeah mate, just trying to keep my arguments clear and uncomplicated

RJS- hello, you are welcome here

rmbbrave- you said "if im wrong and I wait until 2020 to buy a house and they dont get any cheaper then I've wasted 13 years"...
I guess mate that those are the risks...im looking at other alternatives like a business, and in 13 years (as you say), if housing falls off then im in... but if it doesnt then thats ok too...
it wont be 13yrs wasted, because surely you will have a backup.... and your cash wont be sitting idle for 13 years...

Halebop- yes it is a compulsory savings scheme... for most people if they didnt buy a house then they would never have a dime to there name, so a house is a good thing for them...but, we here are dealing with sophisticated investors here (hopefully) and im expecting alot more...

broke- said "the baby boomer thing is being hyped" .... well if you have 78.2million Americans as baby boomers...(factual data estimated by US census) and 25% of the population retiring... there are two options here... one, you pay them superannuation, and at the moment the 401k plan is well rewarding for the retiree...the other 75% of population would probably have to double tax payments to pay for BB's, ontop of healthcare, schooling, dole, sickness benefit, and the rest...
or two, not pay them nothing, or bare minimum (scraps off the table)... and watch them sell everything they own, or sell down to much smaller dwellings, or retirement villages which are now everywhere...

to pay them say $400 per week
400*52*78,200,000= $1,626,560,000,000
or 1.6trillion dollars per year in the US... wow mumma...

for NZ .25* 4,000,000 people =1,000,000
1million*400*52= 20,800,000,000
SO with NZ's total GDP for one year being 40 billion or there abouts...
the baby boomers take up half the value of GDP... (half the total value of all goods and services produced in NZ in one year)
sure $400 seems high but for those that dont own houses its fair, substitute 200 in, and its still very very large...

another arugment is that for $400 for the one person retiree equates to $133 for 3 other people to make up the weekly payments based on a 25% retiree and 75% other...

therefore, we all know that they wont get jack rabbit.... and the sell down delemma stands.. yes you can ignore it Broke... because everyone else is...
the Cullen fund is much less than 20Billion... maybe 10 bill, so can we even afford to pay for a year or two?
does anyone actually know how big the Cullen fund is?
does anyone know what 401k pays?... I know its generous, 400 minimum per week is my guess
I guess the population will be informed of the BB crisis shortly before it happens,,, will you be foolish enough to wait until then before you listen up to what big brother says?
I won't..... nor will the informed.....
[8D]
.^sc

Crypto Crude
05-01-2007, 01:27 AM
broke said "shrewd is right on crude but probably for the wrong reasons"...
what does this mean?

its just a name, a damn good one...
so when I see "steve fleming" name, does that mean hes the NZ cricket team captain.[:p]
when I see "Joekings" name, does that mean he never tells the truth [:p]
or does "bear" only invest in stocks that decrease in value
does packersoldkidney have any kidneys left?
is bobby fisher a chess champ
I wonder just how much ASXIOU really owes the exchange...
has paper tiger ever made a trade
you get the idea, dont read too much into my user name, its just a name![:p]
I mean no offence to those user names blatenly taken out of context...
[8D]
.^sc

Halebop
05-01-2007, 01:39 AM
401k is not a defined benefit. It's a voluntary savings scheme contributed to by the employee but managed by the employer (although this might mean the Fund Manager nominated by the employer). The main benefit is that contributed savings enjoy a tax free status. Only withdrawls are taxed. The value of withdrawls depend upon investment returns and size of contributions. I personally think this is a smart system because the government will enjoy those tax receipts after boomers retire and would have otherwise have stopped paying high levels of income tax. The challenge still remains that so many financial assets are concentrated in an 18 year demographic.

The New Zealand Superannuation Fund aka Cullen Fund was worth about $11.2b in October.

Crypto Crude
05-01-2007, 05:35 AM
Halebop
I C...cheers for info on 401k...
do you think NZ needs some system where the onus is put on the individual rather than the Government?
last week I was given a free copy of 'The New Zealand Investor'
dec/jan issue - how the kiwi can fly...
rather than dispose of it, im offering it to the first person who replys with the postal address, and I will post it over the w/e ....
Postal address must be in New Zealand...
articles include... amended offshore tax proposals
Air NZ, taxing the nation with John key, Abano, commodities and hedge funds, rakon, MHjeweller, midcap index, met NZ, MFS... reply if interested in these topics...

Cooper
05-01-2007, 08:35 AM
We own a home (in conjunction with a very nice bank who were generous enough to give me their money) but we were able to buy before the current boom. We've just "upgraded", against my protests, to a bigger home so that the significant other has a creative outlet for her renovating urges. Current mortgage is less than half the current valuation.


quote:Originally posted by rmbbrave
I think we will but it is possible I'm wrong. If I am wrong and I wait until 2020 to buy a house and they don't get any cheaper then I've wasted 13 years.


Why wasted? That comment is assuming that house ownership is such an over-riding goal that it should be pursued at any cost. If renting is cheaper, then you're not wasting 13 years, you're saving money for 13 years. The fear of not owning a home shouldn't be the absolute end for those considering buying... that is arguably what has created the current market state. Housing is just one portion of the basket of goods you are able to purchase.

foodee
05-01-2007, 01:08 PM
RJS - good question and quite hard to answer.

We own our own home.
On pure economic grounds renting may prove 'cheaper', but then by the same token why own cars when going by taxi may prove cheaper.

Ownership gives us a sense of security, achievement and being able to practise the concept of 'continuous improvement' in life. There is not many asset that you can get the use out of it for years and get (usually) more for it when you are finished with it.

OK it is getting boring...........

So I may be wrong but happy. Did I say it is cheap or easy?[}:)]

cheers and a prosperous NY

Crypto Crude
05-01-2007, 02:56 PM
im a christchurch New Zealand represental... I rep it hard...
if some gives me their postal address i will send it out, no strings attached...
If not then its no skin off my back...

Best quote, halebop said " and dare I say thrown another body at the problem"

RJS-you question also has something to do with the fact that people choose property because it has always always always been a strong performer in the past.... so no matter the price, and costs associated, and interest charges... that these things are only seen as minor to them in the overall picture... people still think that its guaranteed returns... which its not, and more so now than ever before...
NZ is in the top two countries with highest interest rates in the OECD, this also represents the highest level of risk...
With election campaigning next year... and every party promising large tax cuts, hand outs to gain votes, it will be extremely interesting that any redistribution of wealth back to the people is inflationary, if this occurs, interest rates will have to increase again, and again depending on how large re-distribution is...
tax cuts are not an issue, no tax cuts, no nothing!!
[8D]
.^sc

Dazza
05-01-2007, 09:55 PM
here here... screwd

im in the same boat, in my early 20s.

im just waiting for all u old folks to die, and increase the supply of houses.


i need a diaster to make me mega rich :D

i will have cash awaiting, and will pounce like a jaguar on all the old baby boomers...

looking forward to it every day.


ps i hope theres a crash this year :D

and i hope i cashed up be4 that :D

cantab
05-01-2007, 10:56 PM
We were hitchhiking 25 years ago and a couple in their thirties picked us up, they said they didn't own a house and were going to wait until the housing market crashed, prices were too high they said. :D

Rents are too low, in Australia they have been rising strongly, the same should happen here.

I believe the baby boomer thing will turn out to be a non-event because NZ's population will continue to increase. (Most of the world would walk over broken glass to live in NZ)The people will be there to fill the homes, someone else will take over the ownership as the baby boomers die off.

cantab
05-01-2007, 11:40 PM
Renters, first-time buyers need help, says Labor
Mark Davis Political Correspondent
January 5, 2007
SMH


FIRST-home buyers and renters needed more government help to cope with a continuing deterioration in housing affordability, Labor's housing spokeswoman, Tanya Plibersek, said yesterday.

Ms Plibersek said a generation of young people was starting to give up on the idea of owning their own home as sharp increases in rents made it harder to save for a deposit and rising interest rates made home loans less affordable.

She was commenting on a Real Estate Institute of Australia report that the share of family income needed to pay the average home loan in NSW had reached 36 per cent at the end of last year, the highest in the country.

And the report predicted that rents would continue to rise this year, especially in Sydney, as demand for rental accommodation outstripped supply.

Ms Plibersek said there was a crisis in housing affordability that the Federal Government needed to tackle through measures such as better management of the First Home Owners Grant scheme and a wide-ranging cities policy to make sure housing stock expanded in line with increases in demand.

"We need to see a great deal more investment in smoothing out that rollercoaster of housing, to make sure we don't experience the boom-and-bust cycle that we have seen," she said.

"We need to see a cities policy that makes sure that there is affordable housing in all regions of Australia."

Ms Plibersek called for policies to ensure people on low incomes could afford to rent in the private market and for better targeting of the grant scheme so that it helped home-buyers without putting upward pressure on house prices.

The scheme, which is federally funded and run by the states, gives buyers $7000 towards the cost of their first home.

The real estate institute, which represents real estate agents, wants the grant increased and linked to movements in median house prices.

The institute's 2007 Real Estate Market Outlook report, published this week, said the three increases in official interest rates last year had resulted in demand for housing finance falling sharply in the second half of the year.

It predicted that because of less demand established house prices in Sydney would remain flat this year.

The proportion of rental properties that were vacant had fallen to a relatively low level last year, and rents nationwide rose by an average 9.8 per cent in the year to September.

The shortage of rental accommodation was not likely to improve soon as rising interest rates were deterring investors from buying rental properties.

http://www.smh.com.au/news/national/renters-firsttime-buyers-need-help-says-labor/2007/01/04/1167777218795.html

clar
06-01-2007, 10:06 AM
Hi guys. Great thread to follow – hopefully my rambling doesn’t lower the tone.
I certainly consider the deal we’re getting at the moment from renting (in both financial and, less tangibly, lifestyle terms) outweighs any desire to buy. Its a nice house with a nice outlook; every couple of weeks some joker comes and mows the lawns; and if the roof leaks a quick call to the landlord is all that’s required. There have been times when we’ve been betwixt and between, but a quick comparison of mortgage payments (plus rates, insurance, maintenance, etc) versus rent has kept us as we are. Interestingly, I do find that renters are called on more often to justify/defend their position than buyers paying premium prices are (which is in effect what’s being debated here). Cantab – perhaps if rents were higher our thinking would change. But if rents went up, wouldn’t the flow on effect be a further increase in property prices as demand for owning these rental properties likewise increased?

Crypto Crude
06-01-2007, 01:02 PM
Dazza I think we are in the prime time going forward for us... because our generation is full of people just living for today...Internationals spend it up too... Chinese students come here and live it up off parents wealth... and this is wealth that gets passed down through generations... they buy expensive cars, come here and dont get jobs etc... of course you can see that they havnt worked a day in their lives!... In China they are only just gettin in on the credit card boom (25million c cards now) a few years back there were zero...
countries are becoming westernised, and that means to consume, eat out, create debt, obtain a service if it means you dont have to do it, brands are important... etc...

So here and globally there will be a trend to spend inheritances... and I guess people are already starting to spend up, and pay it off when inheritances come through... there may be no dough left once parents cash comes after they have paid for their self created debts... there will always be demand for luxury goods, usualy starting with cars,
Many rich BB's offspring have no respect for money because its always been there...
So after the BB's there will be a filter system, many of these rich will become pour... and there will be plenty of opportunity for all...

cantab-yes "most of the world would walk over broken glass to live here"... NZ with its small open economy could have expansive immigration policy and could full the short fall in BB's... but, its not until they come here, earn our wages, live our lifestyles until they realise that property here is expensive... If they want to get ahead, then they will go somewhere else, If they want the lifestyle they will stay...

If you have $100,000 .... and return 10% per year thats 10,000 .... 10,000/52= $192...
this will help your rent payments per week... if your an individual, you will be up....

RJS
06-01-2007, 04:15 PM
Buying a house works because of the time factor involved ie your working
lifetime, any long term investment you pay more upfront for long term gain.

If your worried about purchasing a losing asset then position yourself in
the asset that the retiring BBs want in the next 10 years.

Its been predicted that BBs will sell their surburban home for a retirement
setting like rural, coastal, natural and quiet, The BBs who get retirement
lump sum will buy rentals for the regular income. My folks did.
They will buy to get what they want regardless of price because they
want the intangible benefits of security and safe investment.

Ive seen whats happening in
CHCH Id say buy a property you wont lose, its a scarce resource and will still
be for some time yet.

Anyone find it difficult to format the text in this small box?
cheers
Roger

Crypto Crude
06-01-2007, 04:29 PM
I just read that an article by the Washington Post on May 5th 2002... outdated but same principles apply now... pretty grim readings for BB's
these are American figures....in 2000 the balances of 44% of people in the 401k plan were less thatn 10,000...
ranked second was the 10,000-20,000 category at 14% of 401k plan holders...

and retirement wealth of the wealthiest workers nearing retirement actually declined between 1983 and 1998...87 stock market crash...
also...many of older workers have had their 401k plans wipped out when the dotcom boom which lead to the second worst bear market since WW2...
I also read that the big stockmarket bust will begin in 2016, as BB's start withdrawing their assets... could start to see signs in 2012....
in 2016 their are an estimated 2,282,887 Americans turning 70 years old... 30% increase the year later... there are large tax penalities for drawing down on plans before the age of 70.5 years old... so.... 2016 is the mark...

reasons for little contribution to their plans include high taxes, eductaion costs for their children rising, increased cost of living, and workers donot realise how important time is when investing for the long term...

Im out of shares in 2010... a reason for the last 3, 4, 5 years of excellent returns here and in USA, could be put down to BB's and the fact that increased people in the sharemarket leads to increased prices... the good thing for us is that we will start to see the signs early... The BB's will turn 70 over a matter of 20years and if the market moves down in 2010,2011,2012 then get ready for decades of recessions... mark my words... I will still post here in 10 years... dont let me say I told you so...
Quote I just made up "plan for today and tomorrow, not just for today"
[8D]
.^sc

Crypto Crude
06-01-2007, 04:37 PM
RJS- assets that BB's will demand are small one to two bedroom units, small kitchens, small garden.... yes the wealthy ones will demand that of what you say, but most will demand small....
BB's will also demand healthcare... JB morgan is picking Healthcare stocks for 2007, after performing fairly soft last year, and continuing demand put on these stocks by older people... After JB picked Healthcare... F and P healthcare rose 6cents.... wonder if there was any link

Halebop
06-01-2007, 05:06 PM
quote:Originally posted by RJS

Buying a house works because of the time factor involved ie your working
lifetime, any long term investment you pay more upfront for long term gain.

I think its the opposite. Equities outperform property by 3 or 4% per annum. Over the long term they are a hands down superior performer. In the short term you can buy a residential dwelling using leverage and enjoy higher than "average" equity performance. Over time though, unless you keep releveraging yourself (and raising your risk profile), your returns will fall below equities as your debt componant reduces. Whats-more, over long term, capex requirements on a property increase, reducing the tax benefits the current depereciation allowance system provides (because you are now actually spending your previously claimed depreciation).


quote:Originally posted by RJS

If your worried about purchasing a losing asset then position yourself in
the asset that the retiring BBs want in the next 10 years.

Its been predicted that BBs will sell their surburban home for a retirement
setting like rural, coastal, natural and quiet,

This is what Baby Boomers are right doing now (and over the last 10 years). It's not what they will do when actaully retired and grow older and slower. As they age they will have less energy to mow lawns and keep up a large property (and less income to pay someone else to do it). They will have more acute health care needs so proximity to medical care will become more important. The A&E facilities in Tairua are unlikely to match what the average urban center can provide. Their physical mobility will also reduce so urban centers are better equiped to provide public transport and other services that a nice, quiet, rural or beach setting cannot hope to offer. I'd pick those lifestyle assets as something to sell into the current boomer demand. All but the richest and healthiest boomers will be wanting to sell these properties well before they die.

cantab
06-01-2007, 06:18 PM
quote:Originally posted by clar
Cantab – perhaps if rents were higher our thinking would change. But if rents went up, wouldn’t the flow on effect be a further increase in property prices as demand for owning these rental properties likewise increased?


clar, I don't think property prices will go up nearly as much as rents will. Rents need to catch up a quite a bit with property prices.

Personally I don't see a need to ever own ones own home, better to pay rent and accumulate deposits to put down on an increasing number of rental properties when the time is right.

Interesting read on this very subject on P2 of the property section of today's Press.

Shrewd Crude, compared to rents, house prices look expensive to me.

When I'm old I will want to live walking distance from the Post Office, bank, shops, cafes, medical centre, medical specialists in a nice safe area, in Christchurch, that would be Merivale, alternatively something nice in the inner city.

rmbbrave
07-01-2007, 01:35 PM
I think you've got it the wrong way around Cantab.

It is more likely property prices will fall to match the rents.

Steve
07-01-2007, 01:40 PM
quote:Originally posted by cantab

When I'm old I will want to live walking distance from the Post Office, bank...

Cantab, it appears that you are not going to be embracing the electronic age that has email and a cashless monetary system!

rmbbrave
07-01-2007, 01:45 PM
"I believe the baby boomer thing will turn out to be a non-event because NZ's population will continue to increase. (Most of the world would walk over broken glass to live in NZ)The people will be there to fill the homes, someone else will take over the ownership as the baby boomers die off."

Cantabs above statement could be correct.

But not only for NZ - You could say the same thing for Europe, Japan, the US, Canada and OZ.

I believe the competition for quality migrants is hotting up. A Chinese or Indian scientist who wants to migrate could probably go to any one of the above.

It is extremely difficult to predict what will happen to property prices as a result of demographic changes.

While I believe property will ot be such a good investment as the BB start dieing off, the chances I'm wrong are likely to be higher then I would like.

Mr_Market
07-01-2007, 02:21 PM
A thought that occured to me today. Even at 7x the average wage people don't feel agrieved enough to take action. I wonder what critical mass would be for people to take to the streets in protest - 10x wages, 20x wages.

Steve
07-01-2007, 02:32 PM
Does anyone know where to find a chart showing the comparative history of house prices vs income? There must be something somewhere on the net...

Crypto Crude
07-01-2007, 03:45 PM
no-one will no what is going to happen in 10 years, no one will no what government policy will be in 10 years, no-one will no which party calls all the shots...
But at the moment the govt does have an immigration policy where only a certain amount of immigrants can come into the country per year... and I cant personally see them changing policy If house prices fall off... because the government is already concerned about house prices being high, and wants the market to cool off.... house prices donot dictate policy...
policy doesnt just change because house prices do, and certainly not if house prices fall 10%... maybe if 25 or 35% then policy might change, but not immediately... their will be time delay between house price falls, policy change, and then internationals to react...
and time for us to make action...

www.rbnz.govt.nz/keygraphs/fig4.html (www.rbnz.nz/keygraphs/fig4.html)

check this graph out, treands off this graph indicate percentage returns of housing to decrease

cantab
07-01-2007, 05:37 PM
quote:Originally posted by rmbbrave

I think you've got it the wrong way around Cantab.

It is more likely property prices will fall to match the rents.


rmbbrave, I disagree. Existing house prices look reasonable value compared with the land value and replacement cost to re-build the house. Also the immigrants will keep coming in. I note the government has increased the quota for next year.

cantab
07-01-2007, 06:06 PM
quote:Originally posted by Steve


quote:Originally posted by cantab

When I'm old I will want to live walking distance from the Post Office, bank...

Cantab, it appears that you are not going to be embracing the electronic age that has email and a cashless monetary system!


Steve, you couldn't get much more embracing than us however there will always be the odd time.

Halebop
08-01-2007, 12:59 AM
A historical perspective...

http://img466.imageshack.us/img466/1396/propertygrowthdk1.jpg

http://img214.imageshack.us/img214/4636/propertygrowthcpiadjustgj2.jpg

Steve
08-01-2007, 04:12 PM
With the discussion on rent growth vs house price growth etc, what would be the equlibrium house price growth rate if rent growth is 4%?

Would it be a linear relationship with other things being equal?

Rents rise by about 4pc a year (http://www.stuff.co.nz/3921093a13.html)
A Massey University survey of rents shows median house rents nationally up 3.8 per cent to $270 a week in the 12 months to November. The rise was slightly higher than general inflation of 3.5 per cent.

trackers
08-01-2007, 07:04 PM
quote:Originally posted by Shrewd Crude

I see your point macdunk...other peoples money or not... it dont matter.. us newbies are priced out of the market, so it doesnt matter where the money came from....
My point is that 1st homebuyers are screwed...(usually the younger ones)
My deposit for a house has gone all into shares... I can afford a deposit, but I cannot afford 15, 20, plus years... or in my example 30 years...

hey Rmb... u raised a good point.... and that is that we are less likely to get 100% capital growth from property than ever before..

our property market is run by foreigners that buy up our houses, push up prices, and yet the new generation coming through are screwed on like 11, 12,13 dollars an hour...
what good can you do with $400 after tax per week... and $512 weekly loan payments is too large even with two flatmates...
so house prices have been rising through more wealthier internationals..who consider our property cheap... cheap for them expensive for us... expensive for us unless you are already on the property wave of course....
Government raised minimum wage last year and in April this year, and propose again next year... this is a clear signal... lower paid jobs are at the lower aged end of the market...
and the youth need all the help they can get if property is their life long debt ridden goal





Hello Shrewd Crude,

I gotta laugh at the irony of it all.. I'm 24 at the mo, bought my house a little over a year ago, just before i turned 23... Same age as you.

The mortgage sucks, I don't feel the repayments really so im lucky, but to see the mortgage only having gone down a few thousand over a year or so is disheartening...

But the thing is... A year ago people were spelling out the doom and gloom, just as badly as they are now... Prices were going up crazy and it was unsustainable! But the 230k house I bought in Chch is now worth just a touch under 300k, so while i missed out picking up a 150k odd house by 9months to a year by succombing to the uncertainty of it all and waiting it out, least I didn't wait and have to pay 300k! If I sold out now I'd get my 2k odd I paid in principal, plus $70,000 (odd) in cold hard cash.

Moral of the story, next year you may have to pay 350k...or 400k... who knows? If you can get in, get in... imo

trackers
08-01-2007, 07:14 PM
quote:Originally posted by Shrewd Crude

I might be egyptian macdunk.... I may want to take everything with me to the afterlife..haha [:p]...
does anyone agree with my summation???, because there aint no way that even at 450 after tax plus two flatmates say 100 a pop each equals 650 less weekly loan payments of 512 equals $138 to survive on...

maybe foodee, you could do it real hard for a few years... get your pay rise and then just, use that extra cash to live on... take the 30year loan, and breeze through until your 52 without kids, because you need their rooms for the dough... [:p]...lol

Yes I have a plan macdunk, it aint nuffin to do with property, the cream at the top dont spend 20plus years to gain a 300,000 investment... so nor shall I... and even if your investment doubles... you are still paying $799,000 in total over 30 years...

my argument has nothing to do with the outlook on property... it is to do with the first homebuyers outlook on their life long debt ridden goal...







I've never seen so many double negatives in my life but anyhoo...

SC, in ChCh and in many parts you can still get a reasonable house for $250,000 (3beds)

$250k minus $20k deposit = $230k
@ 8% over 30yrs = $780 / fortnight or $390 a week. 2 flatty's in at 100 a week each and you're copped with $190...Easy

Dazza
08-01-2007, 10:39 PM
chch.....

cheap land..

try auckland pls.. be4 u speak lol

Crypto Crude
08-01-2007, 10:54 PM
Trackers... I have to take a risk and assume house prices are going to fall... Im going to sit this one out... I can't justify a purchase at the moment...
all the signs are pointing to a slowdown... Then maybe I will have an opportunity after a slowdown... I will plood along, build up my deposit, through share portfolio growth...if house prices fall say 10%, interest rates fall within a few years, then I'm looking at a 10 year loan... rather than the full monty at 30yrs...
I want a family so the two flatmates situation could only be seen as a temporary thing...
If house prices continue to rise, then thats ok too... there are other paths, and I dont think im just limited to housing...
I will continue to focus on shares over the next few years... and only look to property if it becomes more in my favour...

SEC
09-01-2007, 01:11 AM
SC, Daz etc (all you 20-something wannabe property owners):

Yes you can analyse to death the merits of owner occupier property on a spreadsheet etc but at the end of the day intangible influences may well have the final say - the GF/fiance/wife/family, not to mention other intangibles such as the feelgood factor of being on the property ladder, knowing you are not paying dead money rent, satisfying your (or your partner's) creative influences when it comes to renovations, no landlord to kick you out when he decides to sell the property etc etc (these intangibles I've learnt the hard way!!).

I would save that s/sheet analysis for any investment property you may choose to buy. At the moment one would be nuts to buy investment property in NZ or Aus compared to other asset classes such as shares (unless you are extremely well informed on the likes of mortgagee sales). That is why I've sold all my NZ properties over the past two years (and drawn most of the equity prior to reinvest in the ASX). Gross rents typically less than 5% in NZ (and even less in Australia), rental PE ratios at bubble levels, negative cashflow for years, it doesn't auger well for property investment at the moment...

SEC

The GrandMaster
09-01-2007, 04:18 AM
quote:Originally posted by SEC
not to mention other intangibles such as the feelgood factor of being on the property ladder, knowing you are not paying dead money rent, satisfying your (or your partner's) creative influences when it comes to renovations, no landlord to kick you out when he decides to sell the property etc etc

or any alternative view could be....

the feelgood factor of having the freedom to move about without being to tied to bricks and mortar, knowing you are not paying dead money in interest, satisfying ALL your interests by not being stuck in your home all weekend painting the hallway, no painful real estate agent to deal with when you want to move on etc etc

TGM
Disc: a very happy renter

cantab
09-01-2007, 09:18 AM
TGM, "not paying dead money in interest" - I like that one. :)

It's costing the landlord 10% in costs(interest 8%, other costs 2%) to rent at a 5% gross yield. Pay rent of $300pw and the landlord is effectively giving almost $300pw to pay for the tenants petrol, restaurant meals, bar tabs, winter holidays to Queensland, etc. Alternatively for all that dead interest money one could rent a far superior place than that $300,000 house.

When the yields get to 8 -10% again then start buying the investment properties.

SEC
09-01-2007, 09:53 AM
Grandmaster, I rent too, I share your views, and a logical and rational analysis would conclude that buying property at the moment is currently not a good investment. However rational thought often goes out the window when significant other halves have an influence.


quote:Originally posted by cantab

When the yields get to 8 -10% again then start buying the investment properties.


Yep, agree there. The 'rental PE' is currently too high. Something has to give, and depending on where the house is located, it could go either way. Property prices stagnating/falling, rentals rising above inflation. The Sydney market is probably a good indicator of what will happen in NZ (and Akl/Wlg/Chc in particular). In Sydney, there is net immigration, rents are rising but that hasn't stopped property prices falling since 2003 - not surprising with gross rents near 3%!

SEC

cantab
09-01-2007, 10:46 AM
quote:Originally posted by SEC
The Sydney market is probably a good indicator of what will happen in NZ (and Akl/Wlg/Chc in particular). In Sydney, there is net immigration, rents are rising but that hasn't stopped property prices falling since 2003 - not surprising with gross rents near 3%!

SEC


Agree that it is worth following Sydney. In nominal terms the fall hasn't been great - 10% perhaps however the falls have been major and catastrophic in SW Syney I think, (lower income - local economy/employment not doing so well) whereas the better areas and closer in have been much more resilient, so Sydney is a number of markets performing quite differently.

The thing I take from Sydney is that people are choosing to rent whereas investors are not buying rentals, accordingly the vacancy rate is now very low, about 2% and rents are rising strongly. In some cases accomodation agents have so much interest from renters that they are conducting rent auctions! To a much lesser extent we should see the same thing happen in NZ.

Crypto Crude
09-01-2007, 11:15 AM
"The real Estate institute is warning people not to expect houses to get cheaper in the near future.... Latest figures show the median house price in NZ is more than 7 times the average salary - a 72% increase on five years ago...The institute says experts have been saying the bottom is going to fall out of the market for quite some time but out in the field there is no sign of the market slowing"-source Newstalk ZB
as if REINZ would downtalk housing market to start with...Biased view.... a few intereting points though....

response for being called a wannabe...
SEC.... the current expensive property market situation and the outlook for us 20 something year olds is the reason why I created this thread...The very first post on this thread sums it up for me... So i cant see your point when U say that im a wannabe property owner, ... I could buy a house tomorrow, more like a cannabe but wontabe..[:p]...
other than that i totally agree with what you are saying
...all im saying is that a downturn is required for me...

trackers... theres two years that seperate us if I got into housing now... but 5,6,7 years that seperate us in paying off the bank, (and growing)... u have done well!
[8D]
.^sc

JoeKing
09-01-2007, 01:07 PM
Shrewdy
Lots of interesting posts on your thread. It is very easy to pick out the haves and hopefuls, the half full and half empty attitudes. There is some sound avice, and bad advice. Your problem is going to be "who/what do you take on board".
Truth is, it really is comparativley NO more difficult to buy a house today than it was in your parants time, or their parants time. In fact I get calls from banks almost every week with offers of more money, which I don't want.
Four years ago I set out with a goal to use $20,000 equity and turn it into 1+ million $$'s in 3 years, from property. I discussed the idea with a friend who had $40,000 saved to buy first home.
2 years later I had bought 34 houses (3.8 million $$s) using NOT ONE PENNY of my own money. My friend had "invested" $20,000 of his $40k in books, tapes, videos/DVD's on investment strategies, siminars, boot camps... etc etc.
At the end of 3 years I had sold 16 by financing 98% of sale to (first home) buyers at 3% above bank rate, invested $400,000 in refunded GST at bank rates (by paying off existing mortgages) produced a cash flow of over $100k a year and still owned over $3 mil. property with all tax advantages.....
The only downside was last year 8 of the deals were able to refinance with traditionl bank (just as I had promised) and I had to pay over $200,000 tax, from proceeds. I didn't mind one bit!

My current goal is to turn $40k into 1 mill. on stock market in 3 years. In just over 2 years it is today $411k nearly half way.
There are some basic rules you must learn, one is:
There are ONLY 2 ways to make money...
1. You can work for it... (which is what 95% of people do.
2. You can make IT! work for YOU! ie. decide to become a 5 percenter!!
Another, mentioned earlier by none other than the shrewd Scotsman McD.." SHREWD CRUDE, What you must remember is the idea is to use other peoples money not your own on the path to riches.
Attitude is everything!!!If you really WANT TO! You CAN do it! Don't let yourself become SNIOPed!
Cheers
JK
Oh! my friend still has not bought his house ("the price has gone up") but he has managed to re-save the $20k. He now rings me every week to ask what shares to buy..
edit: And after nearly 2 years still has not bought any. He does have a great collection of books/videos/DVD's/tapes on sharemarket investing tho.

wns
09-01-2007, 03:49 PM
Hi JoeKing, sounds like you did some vendor financing deals - lease options or wraps or similar. Well done on your success.

JoeKing
09-01-2007, 04:34 PM
WNS
Yes, WRAPS. SO!! easypeezy, gratifying and rewarding having someone ring and say "thank you for the opportunity to buy our own home, come for coffee and see the new bathroom", instead of "Mr Landlord someone ran over the letter box when ya gonna come fix it!"
Cheers
JK

Year of the Tiger
09-01-2007, 10:01 PM
I'd like to throw my tuppence worth in here.

My son-in-law and daughter started out about 8 years ago with Sweet FA. My son-in-law could hardly read or write when he left school but decided to self teach himself by reading books on property investment ( I guess I don't have to say who the author is). While working on a farm and with 3 kids under 4, they bought their first investment. A cheap section in rural Waikato and a "house to go" in Hamilton. The house and section were married up, a bit of tarting up on the inside and out (by the kids themselves and they are not builders by any means) and putting in a tenant who is still there 8 years later. Total cost to the kids (or should I say their bank, $65,000.) Three years later this was followed by a stint in Oz for about 2 years. When they came back, they started back into the propery market while all the time, milking cows twice a day, seven days a week.

Second house, a mortgagee auction in very rural Waikato. House was pretty run down so they lived in it for a year while still working on a farm. (They rented out the farm cottage they could have had with the job). They put in a basic kitchen, basic bathroom and a bit of paint inside and out. Put in a tenant after a year. Cost of purchase two and half years ago, $49,000 plus the cost of a bathroom and kitchen which they bought all the bits from a guy who recycles house bits and pieces. Last week they got a contract to sell the place for $205,000.

Third house, again in another rural Waikato town. Bought another Mortgaee auction about 2 years ago for $65,000. Now have a contract to sell for $165,000. They've done nothing to this place.

Latest project, bought a Dairy Company house for removal. Bought a section in Rotorua and currently relocating the house to the section. They'll sell it when completed.

Two years ago they bought an acre of urban land for about $35,000. Sold it a year later for $115,000.

They've decided to pack up and move to Oz because their boss had sort of promised them a 50/50 sharemilking opportunity next season. He's decided to wait another couple of years and leave the kids milking for him.

Well, no way Jose, by the time they have sold up their properties plus some farm equipment that they've managed to accumulate, they will be heading off to Oz with the best part of $600,000 cash in their pockets. I don't know all the details about interst rates, rental incomes etc etc but I do know the rental income has always more than covered their outgoings.

So when I hear people moaning an groaning about how they will never get the chance to own their own home, I'm afraid it is falling on deaf ears here.

JoeKing
09-01-2007, 11:04 PM
Year of The Tiger
BRAVO!!! Your daughter and hubby!. Just LOVE to hear success stories from/of ordinary people with extra-ordinary determination and attitude.(5 percenters)
Yep! it's true... YOU CAN! IF YOU BELIEVE YOU CAN!
For those who may be interested there is a DVD available called simply "the secret" a google search will show you where you can buy it. It will not be for everyone but for those genuinely looking for "the secret" to success it will be the best $60 you will invest.
Cheers
JK
Discl. I have absolutely no financial interest in sales of "the secret" DVD.
PS. I had breakfast with Robert K. a few years ago. A real down to earth guy, we talked about everything but property.

Dazza
09-01-2007, 11:29 PM
gj

yes its great

but i live in auckland.........

thats the thing peeps.... akl = 500k for a decent home...

my my has property gone off!


and SEC, dun u worry im all tied up in the ASX :D

Crypto Crude
09-01-2007, 11:31 PM
great stories JK, and YOTT
U are a savage cat JK, a freak of nature... your sharemarket growth is highly comendable...
so you are getting approximately 300% growth per year, wow, what have been some of your best picks?... im looking at 100% growth min this year... best pick I made in 06 was AED...also got 55% off ppp (annualised return) last year...

Property is a topic where it is very hard to change a set mind...If you are currently in property, then no doubt you have been successful... if you are successful at something then it is hard to see the other side... and the other side is that 1st homebuyers are priced out of the market... end of story

The whole idea of a business man is to find, cheap discounted assets, not expensive ones..

There is no relationship between past performance and future performance... a guaranteed return, or percieved guaranteed return...creates increased inflow of investment... which leads to over priced, over hyped assets...
I have put 80% of my total wealth into australian dollars (ASX shares)... I dont want to hold NZ dollars when exchange rates and interest rates are unsustainably high... over the next 5-10 years its a guaranteed hedge against falling share prices...
show me current guaranteed property investment going forward....
currently I am a full time student, part time worker, mid time share growth investor...
I study at Uni... consider myself savvy.... not savvy enough for Property i guess...
[8D]
.^sc

SEC
10-01-2007, 12:49 AM
quote:Originally posted by cantab


The thing I take from Sydney is that people are choosing to rent whereas investors are not buying rentals, accordingly the vacancy rate is now very low, about 2% and rents are rising strongly.


Yes, the Sydney rental PE ratio may retrace fairly rapidly in the next few months as baby boomers flood the market with investment properties for sale to transfer money into their super funds before June 30 to take advantage of tax-advantageous transitional arrangements. House prices down, rents up. However I'm not sure rents are 'rising strongly' quite yet - the latest stats for Sydney indicate they're only up 3.4% for 06.

SEC

Hommel
10-01-2007, 06:40 AM
In simple terms residential property prices in NZ have risen at a far greater percentage per annum over the last 4 - 5 years than have wages and rents. To me, at some stage, either property prices have to stagnate for several years, but at the same time rents and wages would need to increase by economic growth, OR property prices need to drop about 20 % to bring everything back into line. The price increases appear to have been fueled mainly by more mortgage debt and there is only a certain amount people can borrow and service. Once everyone is "mortgaged to the hilt" the main driver for property price increases is gone.

duncan macgregor
10-01-2007, 07:39 AM
quote:Originally posted by Hommel

In simple terms residential property prices in NZ have risen at a far greater percentage per annum over the last 4 - 5 years than have wages and rents. To me, at some stage, either property prices have to stagnate for several years, but at the same time rents and wages would need to increase by economic growth, OR property prices need to drop about 20 % to bring everything back into line. The price increases appear to have been fueled mainly by more mortgage debt and there is only a certain amount people can borrow and service. Once everyone is "mortgaged to the hilt" the main driver for property price increases is gone.
There is a very simple reason for the increase in property prices above the rise of inflation.
1, Compliance costs for land developement.
2,compliance cost for building.
3, We now require an engineers report to cover minor problems.
4, It costs double to have your plans drawn up which must show every last detail.
5,If you are silly enough to think that the price of houses will drop, then good luck, try meeting the requirements to develope a new block of land and build on it.
6,Not only have the costs gone up but to develop new land normally requires a certain ammount to be gifted back for parks etc.
The price of houses will continue to rise at an ever faster rate. MACDUNK

Hommel
10-01-2007, 09:01 AM
Duncan I accept your point. I know people who have built new houses over the last few years and they are saying that building costs per m2 have gone up substantially over the last 2 or 3 years.
But at the end of the day people can only borrow so much and they can only pay what they can afford. People's incomes / wages must be the limiting factor in the end.

Steve
10-01-2007, 09:12 AM
Duncan, do you have the current average m2 building costs to hand? I recall that you have posted these figures maybe a year ago

duncan macgregor
10-01-2007, 09:48 AM
quote:Originally posted by Steve

Duncan, do you have the current average m2 building costs to hand? I recall that you have posted these figures maybe a year ago
Sorry steve I dont have the latest figures. I got out the building game along with so many other builders because of all the stupidity, and rule changing. The building costs of compliance is unreal, i would hate to go along with all the crap of today. We never had a leaky home problem before the seventies, then we had rule changes by idiots who continue to change them. I have been warning people about this since the eighties. Had great arguements with councils, its time to move on. The price of new houses will increase faster than inflation. MACDUNK

JoeKing
10-01-2007, 09:48 AM
Hommel, Shrewdy and others.
It sounds like you have already resigned yourselves into the "rental rut". Unless you completely turn your thinking 180 degrees thats where you will stay.
Instead of looking at a dozen reasons why your CAN'T, just find ONE reason why you CAN...NOW!
Shrewdy...quote: "if you are successful at something then it is hard to see the other side... and the other side is that 1st homebuyers are priced out of the market... end of story"
Rubbish! I worked my **** off for 27 years before I bought my first home. Not the big 3 BR house I always wanted but a very modest 2 br flat in Rotorua for $39k, on $7k deposit 24% interest, and lived in it 5 years. Still have it plus the other 4 in the block!
I could have done the same thing 20 years sooner, with the right attitude.
You say Auckland properties are over priced. Why do you have to buy in Auckland? Why not buy a $80k property in say Opotiki, rent it out, build some equity for deposit on a modest Ak home, rent part of it to yourself and be ready to take advantage of the next property cycle in 3 years?
REMEMBER, McD's advice.... wealth is created using OPM (other peoples money).
Learn the difference between good and bad debt.
Think outside the square.
You CAN! do it today if you really want to.
You don't need spreadsheets, expensive strategists advice, consultants, etc etc all you need is to wake up in the morning and ask... "HOW! am I going to do it TODAY!"
DO IT!!!
Cheers
JK

Hommel
10-01-2007, 10:02 AM
Hi Joe. Not in the "rental rut" here. Own a very nice freehold home thanks. I just have no desire to own rentals I would rather invest in the sharemarkets. Alot of the "money" people have made in property has been made from capital gains, especially in the last few years. The real earnings growth (rent) has not been a great factor. It all works fine while prices are going up. Sooner or later if prices go up and up no-one can afford to buy any more.

cantab
10-01-2007, 10:03 AM
I can't see house prices dropping, $2000m to build a decent house in Christchurch, plus rising immigration. Average house $300,000, deduct land component $250,000 and the building and improvements only cost $50,000

Rents stink in Christchurch and have to go up, then buying an investment property will make sense. It's happening in Sydney:

Tenants get the blues as landlords rub their hands


http://www.smh.com.au/news/national/tenants-get-the-blues-as-landlords-rub-their-hands/2007/01/09/1168104983576.html

Investment property is hands down the simplest, safest, you're in control way to generate wealth using the banks money - not at a 5% gross yield though.

foodee
10-01-2007, 10:07 AM
JK
Ahhhhh Opotiki - next area to take off.
Beach front development hasn't flown - for a lot of reasons.
Great beaches
Great microclimate - esp tableland
Strategic junctional/gateway area

As Whakatane/Ohope prices increases Opotiki will look attractive.

Opps off topic.

Cheers

JoeKing
10-01-2007, 10:45 AM
Foodee, you are ontoit!
I am not in the property (investment) game any more, but have been suggesting to investors who ask, look at Opotiki it will be next! I think there are still some beach front sections for sale at Waiotahi for around $100k,
Friends bought a block of 5 strata title units there 2 years ago $150k. latest valuation $440k. Fully let, the sale of 2 now would freehold the other 3, and who says the property business is dead?!
I think it was Zig Ziglar who said "the deal of a lifetime happens every day" you just gotta learn to recognise them. I always try to imagine 3 years in advance.
Cheers and good investing
JK

Crypto Crude
10-01-2007, 10:59 AM
as you say JK,"and be ready to take advantage of the next property cycle in 3 years"...
....well then I got the best part of 2 and a half years to get onto it then...2 more years of share growth, save a couple of hundred a week in dough... 50% deposit.... 10 year loan...
big difference [8D]....
I am not stubborn enough to turn down an opportunity, like a sideways market for 2 years.
a sideways market for that period would be enough for me to get large deposit and be in..

as per my first post example.... if im buying a house at 300k, 8% interest... and total amount paid to the bank at the end of 30 years is 799k.... 300k off the value of the house, $499,000 is the extra money that goes to the bank in interest charges.... 499k is almost twice the value of the house....
(im looking at 50% deposit in 2 years which makes 499k look way excessive)......and 2 flatmates paying 100 a week for 10 years... because I want a family and need the whole house after that... 100*2*52*10=104,000
so therefore net 700k payed after flatmates revenue stream... if my house is valued at 1mill in 30 years then im only 300k up in real terms...
summary- so you buy at 300k,costs of net 700k, 1mill house value in 30yrs ,In this example most property investors would say that they are 700k up, ... really they are 300k up... a big difference....eg, when it comes to story telling the buying and selling prices lead, .... and not the actual profit figure adjusted for debt payments... i have been told many a stories none which take into account the massive interest rates during peak inflation, (24% jk)... XZY said" i bought it for, sold it for, but miss out the important bit inbetween..

one million house value in 30 years, question mark....
what will houses in Auzzie be, 2 mill plus?...
will banks be doing loans for 2 times one life long loan?... (2 generations, 160 year loans)

a falling market or sideways market, is just the risk im going to have to take... the no risk way is the 25-30 year loan approach... the risky way is the 10year loan approach...
[8D]
.^sc

JoeKing
10-01-2007, 11:37 AM
Shrewdy, no offence mate but you sound just like my friend, still saving to buy his first house
STOP! and listen! >OPM<!
Without going into a lot of number crunching if you intend saving your deposit then paying off your house with AFTER TAX $$'s you are still thinking like 95% of people who spend their whole lives working for... or "slaves" of money.
At 43 I lost a farm, and was adjudged bankrupt. Thats about as low as one could possibly get! I decided working HARD was not the way to success. Unable to get a job in town I became an Encyclopaedia salesman, (considered the lowliest of jobs at the time) and learned how to work hard and SMART! Had my first million within 7 years! I am merely pointing out that I know what its like to be at the bottom with just a black hole to look into, and the difference a change of attitude can make...

Cheers and good luck
JK
PS it will take a very long time to get started if you are banking on $NZO ... been there too ;))

foodee
10-01-2007, 12:15 PM
JK
Likewise I am out of property and hold some shares as a 'hobby'.

I learnt that money is not good for anything except spending - I know a lot of posters won't agree.

Cheers and happy living.

Crypto Crude
10-01-2007, 01:14 PM
JK,
"I may sound like your friend", you say.... trust me mate, im nothing like him...
I have a good outlook on life (not that he didnt)...I do think like a 5 percenter.. I'm gonna get 5 years experience with wages, and then become a business owner...
the house fits in somewhere... just cant be sure when...
Housing equals short term heartache, long term reward...
Im after short term reward, long term mack daddy... [:p]
If housing rises 10% this year, with 300k house... equals 30,000... think I'll get more than 30k off the shares...although I have to lay all the dosh out on my volatile stocks...
(but of course I dont have to pay the 24k on interest charges this year),
I call them interest bunnies
all I say is dont judge me because i'm going against the grain...
judge me next year on current portfolio picks... including percentage of total portfolio...
currently holding AED 42%, NZOOD 24%, URA 22%, UOGO 12%,

[8D]
.^sc

Crypto Crude
10-01-2007, 01:21 PM
now my balls are dangling on the line... should make things interesting...
[8D]
.^sc

Bel
10-01-2007, 02:11 PM
People are smiling like happy sheep after the effect of 9 years of booming property prices on there investment properties....

Funny really when you consider that there mortgages are likely to be for 30 years and in that time a lot of bad things can happen to property that is negatively geared.

e.g.
-Mass migration
-The air car is invented. Now you can live anywhere and commute easily to work.
-Capital gains tax on property is introduced.
-Interest rates again reach 18%
-[insert unforseen future events]

Mr_Market
10-01-2007, 07:38 PM
Good point Bel. All of the profits that people have enjoyed over the last few years from the sale of properties has created ZERO wealth for this country. For every dollar of profit taken there are several dollars of debt to be paid by those holding the mortgages.

The profit dollars have created the illusion of a strong economy. They are mostly spent in NZ providing record employment. Thus the good times can only be sustained by further profits being taken from property.

Interest rates are probably going to be increasing this year. How high can people bid the price of property and still pay their mortgages? We are in for a sharp shock when we hit the ceiling. There will be no more property dollars to prop up the economy. Small businesses will go under. Jobs will go. Mortgagee sales will increase. Those with positive equity will trade down to release sorely needed cash.

The inevitable can only be postponed (by increasing immigration). But the fact remains that we are not creating wealth in this country.

JoeKing
10-01-2007, 09:51 PM
A quick note to Broke
" How can $20k be "not one penny"
This is what I said: " ...Four years ago I set out with a goal to use $20,000 equity" EQUITY! That means I put up NOT ONE PENNY!
Before trying to pick holes perhaps you shold learn to read more carefully, maybe then you won't be "broke" while I have been to the beach and checking the construction of our new million $ apartment ;))
Cheers
JK

JoeKing
11-01-2007, 06:46 AM
Good morning Broke
Sentence 1... correct.
And actually I am a very firm believer that any business is only as successful as your relationship with your banker.... I have dealt with some very understanding and helpfull bankers and shifted accounts away from banks run by waynkers.

"Checking the construction" sorry I meant "checking on construction progress" The engineers are due to start laying pipes for AC. The Apartment was due for completion by Xmas, won't be ready till maybe April. It is exciting watching a dream develop from a sand-dune!

Inspire the naive? sorry mate you lost me here. I drive a Toyota HiAce (4WD to tow boat and caravan) and my wife drives a RAV.

FOODEE yes agree "money is only good for spending" As I had pointed out to me when I commented on gold leaf stuck on my shoes at Thai palace.. you cannot eat,drink or breath it.

SHREWDY... Good luck with your ventures, I'm sure you will do well.

If anyone would like to know how to make a million without using a cent of your own money, I would be only too willing to start a new thread and explain in detail how to setup a true WRAP. All the info that would normally cost THOUSANDS absolutely FREE! or just email me.
Cheers all, I'm off to play golf.
JK

Steve
11-01-2007, 06:55 AM
quote:Originally posted by JoeKing

If anyone would like to know how to make a million without using a cent of your own money, I would be only too willing to start a new thread and explain in detail how to setup a true WRAP. All the info that would normally cost THOUSANDS absolutely FREE! or just email me.

I would be interested if you were to start up an 'educational' thread. It is always good to see another way of going about things

Jay
11-01-2007, 07:49 AM
quote:Originally posted by Steve


quote:Originally posted by JoeKing

If anyone would like to know how to make a million without using a cent of your own money, I would be only too willing to start a new thread and explain in detail how to setup a true WRAP. All the info that would normally cost THOUSANDS absolutely FREE! or just email me.

I would be interested if you were to start up an 'educational' thread. It is always good to see another way of going about things



Same here Joe - further education is always good - no-one knows eveything :)

Crypto Crude
11-01-2007, 09:22 AM
I'm in for free advice... count me in...

Bling_Bling
11-01-2007, 09:57 AM
The nine year BOOM has gone on for so long that people forget the period of BUST. Enjoy the good times while it last. Dont forget to put abit on the side for rainy days. We have a nation of new investors who has never been thro the crashes and are leveraged to the max for a lifestyle of the rich and famous.. HAHA

Bling thinks the next global crash will be triggered by China. Their banking system there is a total chaos.

duncan macgregor
11-01-2007, 10:19 AM
Lets look at it from young Shrewd&crudes angle for him to make his first million. Property leaves shares for dead over time for most people, so lets assume that the crude one is single with a few bob in the bank, started work, and gets a reasonable income.
1, rule one learn how to paint & paper, do simple plumbing and carpentry jobs.
2,Understand what to look for ,Slips,floods,leaky homes,building regulations etc,code of compliance is a must.
3,Visit open homes, mortgagee auctions,do an at home course for a real estate salesmans cert. 100pc pass rate:D.
4 Visit the lending institutions first,find out what you can borrow at what rate for three years on fixed interest, [no longer]
5,Never sign anything without an escape clause unless you are 100pc certain of everything.
6, Look for a shabby house in a good area with nothing major wrong that a good paint, paper and scrub up wont fix.
7,Place a deposit on your first house move in yourself rent out the other bedrooms.
8, Do up one room at a time. Set a time table one room one month[}:)]
9,When the house is finished start on the garden, tidy it up.
10, After three years refinance leave only enough equity in the house that the rent covers all the out goings.
11, After your first house is paying its way your second and third houses will come faster. You will find that after a few years your very first deposit which should be the only time you ever use your own money will have multiplied to give you a good income.
12, rent plus capital gain has always been higher than finance costs and expences. You are getting rent and capital gain using the banks money. Your first deposit you can get back after thee years if you are dopey enough, and still have a property business.
13,The property market runs in cycles which are easier to predict than the share market, use this to your advantage.
14, There you have it crude one, if you are shrewd enough you might get into property. Sell those NZO shares the above is a certain path to riches with only a three year investment using your own money.
macdunk

Bel
11-01-2007, 01:42 PM
quote:Originally posted by trackers


quote:Originally posted by Shrewd Crude

I see your point macdunk...other peoples money or not... it dont matter.. us newbies are priced out of the market, so it doesnt matter where the money came from....
My point is that 1st homebuyers are screwed...(usually the younger ones)
My deposit for a house has gone all into shares... I can afford a deposit, but I cannot afford 15, 20, plus years... or in my example 30 years...

hey Rmb... u raised a good point.... and that is that we are less likely to get 100% capital growth from property than ever before..

our property market is run by foreigners that buy up our houses, push up prices, and yet the new generation coming through are screwed on like 11, 12,13 dollars an hour...
what good can you do with $400 after tax per week... and $512 weekly loan payments is too large even with two flatmates...
so house prices have been rising through more wealthier internationals..who consider our property cheap... cheap for them expensive for us... expensive for us unless you are already on the property wave of course....
Government raised minimum wage last year and in April this year, and propose again next year... this is a clear signal... lower paid jobs are at the lower aged end of the market...
and the youth need all the help they can get if property is their life long debt ridden goal





Hello Shrewd Crude,

I gotta laugh at the irony of it all.. I'm 24 at the mo, bought my house a little over a year ago, just before i turned 23... Same age as you.

The mortgage sucks, I don't feel the repayments really so im lucky, but to see the mortgage only having gone down a few thousand over a year or so is disheartening...

But the thing is... A year ago people were spelling out the doom and gloom, just as badly as they are now... Prices were going up crazy and it was unsustainable! But the 230k house I bought in Chch is now worth just a touch under 300k, so while i missed out picking up a 150k odd house by 9months to a year by succombing to the uncertainty of it all and waiting it out, least I didn't wait and have to pay 300k! If I sold out now I'd get my 2k odd I paid in principal, plus $70,000 (odd) in cold hard cash.

Moral of the story, next year you may have to pay 350k...or 400k... who knows? If you can get in, get in... imo



I'm going to try hard not to be offensive but i've read so many of these misleading statements.
You say youve made 70K in paper profits but why do you count interest payments, real estate agent fee, insurance, inflation, bank fees, maintenance and rates as being irrelevant?

Owning your own home is awesome and i envy you for that, but thats what it is, your home. Not the be all end all investment. (IMHO)

Heavy Metal
11-01-2007, 02:29 PM
quote:Originally posted by JoeKing

If anyone would like to know how to make a million without using a cent of your own money, I would be only too willing to start a new thread and explain in detail how to setup a true WRAP. All the info that would normally cost THOUSANDS absolutely FREE!



Wow - endless wealth using other peoples money. A dream come true. This seems priceless information - why don't you start a company that runs WRAP seminars and charge $1000 a pop?

cantab
11-01-2007, 03:44 PM
quote:Originally posted by Bling_Bling

Bling thinks the next global crash will be triggered by China. Their banking system there is a total chaos.


In 1997 the doom and gloom people were saying exactly that.

Didn't stop ANZ and CBA recently purchasing 20% equity interests in several Chinese banks.

Perhaps the next global slowdown will be caused by China's growth slowing to 8% pa. :D

Crypto Crude
11-01-2007, 04:11 PM
mac dunk.... im only looking at shares for the next 2-3 years so it aint a long term thing.. Have to get out before the baby boomer thing... After the many responses in this thread about baby boomers, I have changed my mind in that I agree with other posters in that the BB's will have less impact on the NZ housing market with immigration somewhat offsetting falling prices ... BUT, I am certain the share market will crash, with the large number of BB's pulling out of shares in the near future... My view on this wont change...
Bling Bling, im sure The chinese banking system could one day crash, but I'm thinking a crash will be due to Baby Boomers... Im going to China in April and will have a good look when Im there... China's impact on world markets will only increase over time as they continue their run of super normal growth and superpower status...

This thread is great, we have such a diverse set of peoples with a bunch of different arguments... we have this new set of kids coming up, and looking to the future....
and then we have the 'been there done that' (yeah i've been around the block group)... who are looking back in the past... and then the ones in the middle... where theres mixture of support for young and old...
House price to income ratio cannot continue at 7:1...and every 10% property price increase from here justs makes it 8:1 , 9:1....
massive interest rates have done nothing to slow property growth... (yet)
a slow down is for sure on the cards....
Prices are set to fall,... which is late on expectations 2 years ago
Do you 'yeah I've been around the block group' at least agree with us that house prices are set to fall??
And if not, why no??
[8D
.^sc

cantab
11-01-2007, 04:19 PM
Renters suffer as owners get smug

http://www.smh.com.au/articles/2007/01/10/1168105052409.html

JoeKing
11-01-2007, 04:49 PM
quote:Originally posted by Heavy Metal
Wow - endless wealth using other peoples money. A dream come true. This seems priceless information - why don't you start a company that runs WRAP seminars and charge $1000 a pop?

Heavy Metal.
check out the wealthiest people/businesses throughout history, they have ALL used other peoples money to gain wealth, it is niether a dream, nor unusual.
There are already gazillions of seminars around, most are designed to get YOUR! money. And $1000 bucks a pop cheap. You can go spend a week in Aust or USA at a bootcamp for $10grand plus if you want.
I am quite happy to have proved that "TRUE" WRAPS work and willing to pass on what I have learned FREE! I spent approx 18 months and $15,000 putting the paperwork together, the most important part. I will be happy to accept $100 for the paperwork.
I am not doing this for money. I get a kick out of helping someone succeed!
Unfortunately it does not matter haw successful any plan is there will always be the greedy who set out to rip someone off. Thats why NZ banks will have nothing to do with "rent to buy" schemes. Most are a rip off designed to fail so the vendor makes a killing from hopeful purchaser, reclaims the house and "sells" to another sucker.
Every single WRAP deal I set up will qualify for a conventional bank loan within 3 years as promised! The buyer gets a chance to own their home, the bank gets paid, I do OK, the guy I bought the house from is happy... eeezy peezy.
Would you believe every house I bought to resell the Govt gave me 12.5% back as a FREE nontaxable loan, that I invested at 9.5%. (yes the gst!) Work it out, for every 8 houses I bought the IRD GAVE! me one to sell, all legal!
JK

duncan macgregor
11-01-2007, 06:50 PM
quote:Originally posted by broke


quote:Originally posted by JoeKing
Would you believe every house I bought to resell the Govt gave me 12.5% back as a FREE nontaxable loan, that I invested at 9.5%. (yes the gst!) Work it out, for every 8 houses I bought the IRD GAVE! me one to sell, all legal!
JK



Do you pay GST back on the resell?
All gst gets paid back at the end. When selling a farm for instance it is sold plus GST if any. The buyer simply takes over your commitment to pay it back. They pay it and get it back in other words. I registered my home property eight acres plus a house. It is only the land other than the bit round the house that you can claim. That part is subject to capital gains, plus the business that is derived there off. On the credit side, i got at that time $16000 in the hand plus all the gst back on rates and expences tractors mowers etc:D. When i sell it will be plus gst if any. The land must be part of a business. Example Trees, orchard, builders yard etc. macdunk

srotherh
11-01-2007, 07:59 PM
MacDunk
Sure you did not buy a lemon:Dor two;)

trackers
11-01-2007, 09:35 PM
quote:Originally posted by Bel

I'm going to try hard not to be offensive but i've read so many of these misleading statements.
You say youve made 70K in paper profits but why do you count interest payments, real estate agent fee, insurance, inflation, bank fees, maintenance and rates as being irrelevant?

Owning your own home is awesome and i envy you for that, but thats what it is, your home. Not the be all end all investment. (IMHO)


No, I never said I'd come out with $70,000 profit, thats the cash increase in house value I'd come out with. Never said it was the be all and end all... My figures were rough, and the general idea of it all was to illustrate how I was in a similar position, and how if you think it is bad now, consider that it could get worse... If it came across as a 'look at me, look at me' or some smug post that wasn't my intention.

The real figures?

Bought $235,000
QV from 5 months ago $290,000
Deposit $20,000

Mortgage $215,000 @ 7.65%

Rent Saved: $240 * 52 = $12,480
Interest Paid: $16,447 + $1,000 rates = $17,445
'Real' Cost over flatting: $4965

So, $65,000 less ~$5000 interest/rates less $6000 Real Estate Agent fees less Lawyer fees both ways ~$3000 Less Maintenance/Improvements $3000 = $48,000 profit.

The actual dollar amount as I've paid most of the money in normal day to day expenses would be $65,000 + $20,000 deposit less $6000 R.E Agent Less $1500 Lawyer so $77,500

JoeKing
11-01-2007, 10:41 PM
quote:Originally posted by broke
Do you pay GST back on the resell?

Of course, and on profit, lets not be greedy. I do get to keep 2/3rds of the profit from sale of "free" house. (less GST) [8D]

Crypto Crude
11-01-2007, 11:47 PM
good question Broke......
also adding to that... JK, and why did you only invest 40K of it into shares?... (if u mind me asking)
Mackdunk, taken from your 14 step guide to property #13: the property market runs in cycles which are easier to predict than the share market, use this to your advantage
....I would like to also know what you think house prices will do over the next two years??
seeing that im sitting out for a further two years and all :D

as you mention in your 14 step program...Paint paper, simple plumbing, carpentry jobs, doing up one room at a time, gardening... how many hundreds of hours am I looking at?
if you look at it from the point that if you were a working man, and you just picked up extra hours at work then some of the profits are lost in countless hours spent doing these jobs...
may I add, these house jobs are usually picked up in the weekend... the working man could pick up extra hours above his 40hours per week at over time rates...pay and a half buddy....
just thought I'd mention the opportunity cost... If he earns $20 per hour, then you can cost the house work out at $30... In australia that man could earn double pay on weekends and even triple pay
so profit (on increased house value) less opportunity cost wages ($30 pr hr) less expenses associated in fixing up house equals real profit...
Its all about opportunity costs... my OC maybe to spend more time studing up the next potential doosey of a company [:p]... cost it out at 50... lol...
[8D]
.^sc

Heavy Metal
12-01-2007, 12:07 AM
quote:Originally posted by Shrewd Crude

as you mention in your 14 step program...Paint paper, simple plumbing, carpentry jobs, doing up one room at a time, gardening... how many hundreds of hours am I looking at?


Macdunk probably doesn't follow his own advice, particularly 7, 8 and 10.

Simultaneously having tenants and doing up rooms? Having to top up your equity after 3 years so you can match rent with outgoings???

There is indeed good money for builders/renovators like Macdunk who buy houses in the right location in need of TLC, do them up, and flick them off for a good profit. But builders do not put up the renovated properties for rent afterwards, they sell as quickly as possible for the capital gain. That's where the money is - NOT the rent.

duncan macgregor
12-01-2007, 08:15 AM
In every type of investment you have winners and losers. The losers bleat on about what, and if, and are normally that bloody lazy they will fail at everything in the end. The winners work at learning all about the business, then get stuck in 7 days a week 16 hours a day if need be. The losers wont put in that effort, i see some of you even quote real estate fees when buying a house[:o)].
Then we have double time, and time and a half mentioned if you think like that go back to bed and dream on:D.ASPEX comes up with a tongue in the cheek get rich quick idea. The average person would lose doing that. Property is not for everyone some people are to lazy or stupid, or have other business interests.
A normal kiwi plodder with a lower scale income, and education, that starts in the property market will end up filthy rich. Getting your feet on the ladder is the hard bit, the rest is easy. You should double your property numbers every three years, its that simple. ITS THE BANKS MONEY, INTEREST,RATES,INSURANCE,UPKEEP,VERSUS RENT, AND CAPITAL GAIN.
The capital gain is greater than the interest.
The rent is greater than the expences.
Only have enough equity in the property to cover out goings is the secret thats why 3 year fixed interest is the way to go refinance to buy another one. macdunk

minimoke
12-01-2007, 08:41 AM
quote:Originally posted by trackers
So, $65,000 less ~$5000 interest/rates less $6000 Real Estate Agent fees less Lawyer fees both ways ~$3000 Less Maintenance/Improvements $3000 = $48,000 profit.

Thanks for the figures Trackers – always useful to see the real thing rather than just theory.

If I could perhaps suggest a slight change in your views. It seems you think you have made a $40 - $70 k profit. I’m not sure you have as you will only gain a profit on the sale of your property – and at that point you are probably going to buy another house to live in which will cost you even more – so all your doing is riding the escalator to ever increasing property values – even if they are funded by ever increasing mortgages.

What you have now achieved is an increase in equity and this is the real value of your property purchase. You’ll find you can now go to the bank and ask them to lend you more money and it is what you do with this money which will help determine your future. Borrow for a new car or holiday and you are doomed. Borrow to buy an asset and you’ll be right.

You’ll also finds it a darn sight easier getting money out of the bank using property equity rather than share equity so well done!

Heavy Metal
12-01-2007, 09:10 AM
quote:Originally posted by duncan macgregor

You should double your property numbers every three years, its that simple.


Now I KNOW you don't follow your own advice! If you started doubling your property numbers every three years in your 20s and you're 60ish now you would have 2000 - 4000 rental properties. With not one cent of capital gain realised.

C'mon, you know it's far more profitable for a builder like yourself to buy, renovate and sell for capital gain (where the real profits are) and not ever have to deal with any tenants.

Crypto Crude
12-01-2007, 10:23 AM
Mackdunk... its not ment to be a trick question.... But what are property prices GoInG to do over the next two years?? you understand the cycles much better than this new kid on the block... I feel I have a great chance in two years...

for someone like Mary holm, or Tony radford their Opportunity cost probably would be so high that it would be far more lucurative to do what they do now rather than plod away fixing up a house... I'm Sorry Mack dunk, its all about OC...i will keep dreaming at costing out at $50...
It depends how you look at it... If you think like an accountant then i'm well up...if you think like an economist, and taking into account what my wealth would be had I instead got into the housing market, then im probably down or sideways.....
(only two years been in shares though)
[8D]
.^sc

duncan macgregor
12-01-2007, 10:57 AM
SHREW CRUDED, The next two years will see a general election plus numerous other changes that will influence any market. If the worst happens people will only sell if they must, its supply and demand. The cost of building is rising faster than inflation, so the house prices will rise faster than inflation. We have had a period where house prices in most areas have doubled in the last ten years. Take a chart of the historical price spiral in property, if it was a company on the share market would you sell?. Remember your first deposit was your only personal money involved which you loaned yourself for three years. That was an investment that would be worth hundreds of thousands of dollars over the last ten years. My view is the next ten years will be much of a muchness. Most property investors like rises, and falls in the market place, bring it on.:D
Great drop in any market is buy time, great rise in the market is sell time. You wont pay to much for a good property at anytime, in time it will be a bargain. You work it out as it happens its a numbers game, that will leave your share portfolio for dead. macdunk

rmbbrave
12-01-2007, 12:02 PM
What does WRAP stand for?

JoeKing
12-01-2007, 12:41 PM
quote:Originally posted by broke
Why did you decide to go into shares after making 3.8 milli on property?


Broke. For the same reason I set out to "make a million" in property.... the challenge.

Shrewdy... why $40k? For no particular reason it was just a number, could have been 20 30 or 60.
Cheers
JK

trackers
12-01-2007, 02:28 PM
quote:Originally posted by minimoke


quote:Originally posted by trackers
So, $65,000 less ~$5000 interest/rates less $6000 Real Estate Agent fees less Lawyer fees both ways ~$3000 Less Maintenance/Improvements $3000 = $48,000 profit.

Thanks for the figures Trackers – always useful to see the real thing rather than just theory.

If I could perhaps suggest a slight change in your views. It seems you think you have made a $40 - $70 k profit. I’m not sure you have as you will only gain a profit on the sale of your property – and at that point you are probably going to buy another house to live in which will cost you even more – so all your doing is riding the escalator to ever increasing property values – even if they are funded by ever increasing mortgages.

What you have now achieved is an increase in equity and this is the real value of your property purchase. You’ll find you can now go to the bank and ask them to lend you more money and it is what you do with this money which will help determine your future. Borrow for a new car or holiday and you are doomed. Borrow to buy an asset and you’ll be right.

You’ll also finds it a darn sight easier getting money out of the bank using property equity rather than share equity so well done!



Yep you're bang on, and thats the problem that im bouncing around in my head at the moment.

Situation A. Sell up, invest the proceeds
Situation B. Sell up, buy one rental one 'home'
Situation C. Sell up, buy a business...Go flatting lol
Situation D. Find a bargain and 'upgrade', at no extra cost...
Situation E. Do Nothing
F, like you say borrow more money on the back of the increased value, and do something positive with it

A through C look good, but theres the problem of the missus' view on things ;)

Crypto Crude
12-01-2007, 03:28 PM
Auckland property bucks naysayers... The auckland property market has refused to bow to negative commentary, leading to a bumper 2006 for the regions biggest realtor. Barfoot and thompson's figures for the year show the average price of properties increased 4.8%, averaging out at just over 480k. Director Peterr Thompson puts the citys resilience down to the regions rising population Source, teletext

My friend went to ask about a loan for his first house.... they told him 8.5%...
they also said If he was to buy a second house then the interest rates would rise to 12.5%....
he was deemed as high risk... so they slap on a savage interest rate to boot... I guess if he did buy, and if house prices fell by a little over the value of his deposit... then this kid is deemed bankrupt...
I guess housing is a way to get things going if your up for starting in the deepend in the short term...
[8D]
.^sc

Crypto Crude
12-01-2007, 03:31 PM
quote: Shrewd Crude Posted - 12/01/2007 : 4:28:00 PM

I guess housing is a way to get things going if your up for starting in the deepend in the short term...



I agree SC... good point...haha

JoeKing
12-01-2007, 04:10 PM
quote:Originally posted by rmbbrave

What does WRAP stand for?

The term "wrap" is an anomalie. It refers to a mortgage "wrapped" around an existing mortgage, but in reality there is only one actual mortgage that is held by the original purchaser's bank.
Simply it is vendor finance.
I buy a house and borrow the money from the bank at say 7%. I then sell the house to you and finance you at say 10%. The contract is based on immediate possession, delayed settlement(like 20 years)paid in installments, pretty much like a hire purchase agreement. The contract uses a standard law society agreement form with added special conditions (the tricky bit), is legal and binding. Title is not transferred until final installment is paid which can be at any time.**
Hope this helps
Cheers
JK
edit** the average length of a mortgage in NZ is about 7 years.
My WRAP deals are designed so that the buyer can qualify for a bank loan within 3 years.

Gofor Broke
12-01-2007, 04:22 PM
quote:Originally posted by JoeKing
I buy a house and borrow the money from the bank at say 7%. I then sell the house to you and finance you at say 10%.


ok Joe a dumb question. why would I borrow the money from you at 10% if I can get from the bank at 7%

wns
12-01-2007, 06:16 PM
The target market for a wrap is someone who can't qualify for a loan from the bank at 7%. eg. credit problems, ex bankrupt etc etc.

AND / OR they have good income but don't have enough deposit money.

trackers
12-01-2007, 06:40 PM
So that begs the question, what sort of hoops would you make the purchaser jump through before handing the house over? Run some credit checks?

trackers
12-01-2007, 06:42 PM
quote:Originally posted by Shrewd Crude


quote: Shrewd Crude Posted - 12/01/2007 : 4:28:00 PM

I guess housing is a way to get things going if your up for starting in the deepend in the short term...



I agree SC... good point...haha


random

Steve
12-01-2007, 08:24 PM
quote:Originally posted by JoeKing

[quote]Originally posted by rmbbrave

I buy a house and borrow the money from the bank at say 7%. I then sell the house to you and finance you at say 10%. The contract is based on immediate possession, delayed settlement(like 20 years)paid in installments, pretty much like a hire purchase agreement.

It doesn't make sense to me as it appears that the 'vendor' would have missed out on the capital appreciation, so I will do an example showing the first year:

Assume house costs $300k, house prices increase 10% pa


BASED ON A WRAP:
Your CASH Income $30,000
[u]Your CASH Expense $21,000</u>
Your CASH Profit $ 9,000

Your 'lost' capital appreciation ($30,000) which suggests that you are down a net $21,000 overall.


BASED ON CONTINUED OWNERSHIP:
Your CASH Income $18,000 (based on a 6% rental yield)
[u]Your CASH Expense $30,000</u> (int $21k, ins $1k, rates $3k, r&m $5k)
Your CASH Loss ($12,000)

Your capital appreciation of $30,000 makes you a net $18,000 up overall.


CONCLUSION:
Overall, while a WRAP appears good on a CASH basis, in actuality a WRAP only benefits the vendor when property prices are stagnating or decreasing. The WRAP will cost the vendor when property prices are appreciating!

trackers
12-01-2007, 09:34 PM
quote:Originally posted by Steve


quote:Originally posted by JoeKing

[quote]Originally posted by rmbbrave

I buy a house and borrow the money from the bank at say 7%. I then sell the house to you and finance you at say 10%. The contract is based on immediate possession, delayed settlement(like 20 years)paid in installments, pretty much like a hire purchase agreement.

It doesn't make sense to me as it appears that the 'vendor' would have missed out on the capital appreciation, so I will do an example showing the first year:

Assume house costs $300k, house prices increase 10% pa


BASED ON A WRAP:
Your CASH Income $30,000
[u]Your CASH Expense $21,000</u>
Your CASH Profit $ 9,000

Your 'lost' capital appreciation ($30,000) which suggests that you are down a net $21,000 overall.


BASED ON CONTINUED OWNERSHIP:
Your CASH Income $18,000 (based on a 6% rental yield)
[u]Your CASH Expense $30,000</u> (int $21k, ins $1k, rates $3k, r&m $5k)
Your CASH Loss ($12,000)

Your capital appreciation of $30,000 makes you a net $18,000 up overall.


CONCLUSION:
Overall, while a WRAP appears good on a CASH basis, in actuality a WRAP only benefits the vendor when property prices are stagnating or decreasing. The WRAP will cost the vendor when property prices are appreciating!


Quite true, never noticed that... But I believe JoeKing mentioned that he charges higher for the property than he would to a 'normal' buyer

JoeKing
12-01-2007, 10:07 PM
quote:Originally posted by Gofor Broke
ok Joe a dumb question. why would I borrow the money from you at 10% if I can get from the bank at 7%



quote:Originally posted by wns

The target market for a wrap is someone who can't qualify for a loan from the bank at 7%. eg. credit problems, ex bankrupt etc etc.

AND / OR they have good income but don't have enough deposit money.


Wns you've done this before ;))
Add self employed, new immigrants without a local savings history, beneficeries (with guaranteed income), Students with wealthy parants (banks want self earned/saved deposits), people with "cash" deposits they are reluctant to disclose to bank, people deemed as "part time or temporary" workers like "relieving" teachers/ nurses etc, that are in fact full time employed, people employed on casual basis eg Chefs... etc etc.

Steve it is late and Ive had a big day, not wanting to debate numbers which can go on forever, just quickly, your numbers...
"BASED ON A WRAP:
Your CASH Income $30,000
Your CASH Expense $21,000
Your CASH Profit $ 9,000"
You have not accounted for rates and insurance, say $3,500, maintenence say $2000, now paid for by purchaser. So are you saying even $14,500, per year profit after puting up not one cent of your own money PLUS a one off $37,500 interest free loan from IRD (gst refund) which is non taxable, BAD?? And of course we have not yet counted in the day to day tax benefits, phone, petrol, office space, power allowance, advertising, new lawn mower, garden tools, paint, garden improvements.. shall I continue till breakfast?.
Cheers
JK

Halebop
12-01-2007, 10:26 PM
The wrap model works well in the same kind of market the pretty much everything else works well in - a rising one.

Buying a house at a lower price and selling it again at a higher price is a time honoured trading strategy enjoyed by developers, flippers, wrappers and everyday garden variety property investors.

Borrowing to buy the house with a provision for deferred settlement to a subsequent 3rd party is a profitable strategy in a strong and rising market because often you can purchase more property on the back of the superior interest income than you could if you just wacked down 20% deposits on standard rental investments. The downside as has already been pointed out is the capital gain is capped if and when the purchaser properly settles and refinances externally at a price set "x" years before.

The true downside is the total borrowing risk still rests with the vendor. If the employment market takes a dive and property prices diminish, the small margin made on the initial sale price may not cover the potential capital losses. Its often deemed that the superior strategy is to have more property, more debt, more sources of cash flow to hedge against the statistical probability of individual default. The downside again is that a sustained or sharp correction will not only erode profits but also the financial stability of the vendor. Like many more highly profitable lending strategies, there is an element of "borrow short, lend long" in that the property could potentially be stuck on the books, in a falling market, while borrowing costs rise or perhaps the loan is even called in by a nervous bank.

I have a friend who trades 4 to 5 properties per year, generally no more than 1 at a time. He typically keeps another 1 or 2 "bargains" for capital appreciation and to defer tax. He sells the properties himself using simple advertisements in the Newspaper offering 100% finance for a tidy family home. Over the last 4 years he normally sells a house on the 1st advert. He has a pet mortgage broker with sources of Low Doc loans who arranges the 100% finance directly with the purchasers. Because he buys well, contains costs during refubishment, works quickly and doesn't pay real estate agent fees, he averages +$35,000 per house that he sells, typically +$30,000 after financing. His "Keepers" require no equity because they are bought cheaply enough and value is added to borrow the entire purchase and refurbishment cost. Cash flow on these still tends to be tight in this market. Over 4 years he has roughly a million in equity tied up in his modestly cash flow positive "keeper" portfolio and clears another $150,000+ before tax from his trading activities. He still works his day job. More recently he's been looking at commercial property for his surplus cash but I suspect on current yields this could be an expensive lesson in "new markets".

The real secret, just like JoeKing's Wrap strategy, is that this is a trading business and not a passive investment. Anyone who couldn't make money operating a business in the last 4 years has obviously been in the wrong place or is a bit light in the brain matter department. I prefer my friend's model to JoeKings, despite its unsexy pedigree, because in a downturn his trading risk is restricted to the 1 (sometimes but rarely 2) properties he has "on the go". The secret of any trading business, be it supermarketing, car dealing or property trading is stock turn. Even in a strong market Wraps can have a very slow turn cycle, leaving a trader open to the vagaries of a softer trading environment. A "sale" made 2.5 years ago can also turn out to be anything but.

JoeKing
12-01-2007, 10:32 PM
quote:Originally posted by trackers

So that begs the question, what sort of hoops would you make the purchaser jump through before handing the house over? Run some credit checks?

Trackers
No hoops, just a very simple basic credit application. And title is not transferred until final payment. Any improvements, alterations etc are covered in special conditions of s&p agreement
Most applicants are desperate wannabe home owners who have exhausted all other avenues. (which makes them vulnerable to scoobie "rent to buy " Rip off bastards!GRRR.
In my experience, when a renter becomes a home owner their whole attitude changes! Of the 16 (only) deals done we have only had one defaulter. The problem was a relationship bust up. We got together and decided their best course of action was to sell the house. They were charged penalty interest from time of default, the house was sold to an investor who kept the Mrs and children as tenants, who after all settlement payments came out with $12k profit.
Allways remember what goes 'round comes 'round.
Cheers
JK

JoeKing
12-01-2007, 10:53 PM
Halebop it is late and I'd rather be asleep. I agree with most of your post but this:
quote A "sale" made 2.5 years ago can also turn out to be anything but.unquote
Quite misleading! An unconditional "wrap" deal is excactly the same as a conventional unconditional "sale". The paperwork includes a standard Auckland Law society Sales and Purchase agreement, penalties for any breaches are the same.
Cheers
JK

Halebop
13-01-2007, 08:20 AM
quote:Originally posted by JoeKing

quote A "sale" made 2.5 years ago can also turn out to be anything but.unquote
Quite misleading! An unconditional "wrap" deal is excactly the same as a conventional unconditional "sale". The paperwork includes a standard Auckland Law society Sales and Purchase agreement, penalties for any breaches are the same.

Joeking my comment is not misleading and yes, a wrap sale agreement is very similar except for one key detail. An unconditional agreement does not mean the purchaser can settle, it just means they are obligated to settle. Next time you talk to your solicitor ask them if "unconditional" sales ever fall over? Ask them about recourse. The contract is only as good as the financial standing of the 3rd party and the value of the security (This is why in a rising market your single defaulter still came out ahead and you still made money). In a wrap deal the purchaser makes an assumption based on their standing several years rather than several weeks or months from the point where they must settle. If they become ill, divorced, underemployed, their business fails etc the assumptions they made many years before are going to be inadequate. If the purchaser has no money, no job, whatever, your right to enforce the contract will be a phyrric victory if the purchaser can't afford the penalties (let alone the house). You could spend more money via your solicitor to achieve nothing more than forcing the 3rd party into bankruptcy and still having to mark the house to market. Banks, with all their probity checks and lower interest rates still have to enforce mortgagee sales in even a robust property market.

JoeKing
13-01-2007, 11:20 AM
Halebop
your comment..
"a wrap sale agreement is very similar except for one key detail. An unconditional agreement does not mean the purchaser can settle, it just means they are obligated to settle."
In this respect there is no difference between a deferred settlement or immediate settlement. Of course "unconditional" contracts fall over, but the occurance is very rare, and yes invariably involve an emotional, costly legal battle.. The advantage with a wrap sale is it is completely flexible. You have control and it and can be altered at any time by mutual agreement to cover unforseen events as you describe. The bottom line is the 3rd party has to live somewhere. Knowing that the probability of my wrap deals settling within 5 years is great, if the 3rd party runs into diffulties it is a simple matter to extend settlement term to reduce payments, or offer a payment holiday for a period once your buyer has built up equity, and allow them to use part of that equity in the form of penalty (a horrible word) % increase. All repayment schedules in the wrap deals I did were about the same as, or less than current rent at the time, so if they could not afford their repayments, they could not afford to rent. In the case of the default mentioned earlier the woman and her children made no repayments for 12 weeks, no problem, it just meant an adjustment to final settlement figure. This relieved her of some stress during a difficult time, we made a bit more in extra interest, she still came out better than she started with some cash to get restarted... again everyone happy. Remember by applying gst, deposits, extra cashflow to mortgages repayments my debt/equity ratio is only about 40%, so I had more than enough cashflow from other properties to cover the outgoings.
Banks are like computers, unemotional non caring and dictatorial. There is no advantage to me in causing extra hardship on a purchaser experiencing hard times. We all have them occasionally.
You say "In a wrap deal the purchaser makes an assumption based on their standing several years rather than several weeks or months from the point where they must settle."
Again there is no difference. Unless the purchaser is paying the total purchase price in cash of course. Repayments are repayments irrespective of to whom they are paid.
Halebop, I do agree, property investment has its risks like any other life scenario.
My Mum used to say.. "don't go near dogs they will bite" Well I have trained hundreds of dogs, during my 14yr stint as sheep station manager, and have never (yet) been bitten by one.
I'm sure someone will get some benefit from these discussions, keep em coming
Cheers all, hope its a better day at your place
JK

Crypto Crude
13-01-2007, 01:09 PM
Tracker.... I have an alter ego know as slim trady.... seeing that we are talking about rapping and all... haha... if you dont get my joke, its all good... just a little light humor...
[8D]
.^sc

Steve
13-01-2007, 05:49 PM
quote:Originally posted by JoeKing

Steve it is late and Ive had a big day, not wanting to debate numbers which can go on forever, just quickly, your numbers...
"BASED ON A WRAP:
Your CASH Income $30,000
Your CASH Expense $21,000
Your CASH Profit $ 9,000"
You have not accounted for rates and insurance, say $3,500, maintenence say $2000, now paid for by purchaser. So are you saying even $14,500, per year profit after puting up not one cent of your own money PLUS a one off $37,500 interest free loan from IRD (gst refund) which is non taxable, BAD?? And of course we have not yet counted in the day to day tax benefits, phone, petrol, office space, power allowance, advertising, new lawn mower, garden tools, paint, garden improvements.. shall I continue till breakfast?.
Cheers
JK

1. Of course I have not accounted for these under the WRAP scenario as they are the responsibility of the purchaser - they have no bearing on 'your CASH profit' under the WRAP agreement!

2. The day to day tax benefits such as home office, travel etc will be applicable to both scenarios so it makes no difference as they have been left out of both.

3. You have not made any comment on the $30,000 price appreciation that you would have 'forgone' under the WRAP agreement.

I am not disputing that WRAPs are good on a pure cashflow basis, just that they are not the way to go in a rising market such as what we have just been experiencing

JoeKing
13-01-2007, 11:08 PM
Hi Steve, we have to be careful not to get bamboozled with numbers here. Yes WRAPs are designed to produce cash flow, as opposed to ending up in a an asset rich, cash poor scenario that most new investors find them selves in. It is important to note here wealth is cash FLOW not cash.
So: 1. OK. 2. OK. 3.I bought HARD. In most cases at 15%-20% discount, then had a registered valuation done by QV which in most cases was about the original asking price of the property, then expecting my purchaser to qualify for a conventional bank loan in 3 years (and settle then) I added 3 X 8% (a reasonable capital gain)to Reg val. and that became my sale price. You do the sums. Remember I put no money in at all.
Cheers
JK

Steve
14-01-2007, 09:57 AM
JK, thanks for the explanation. I must have missed where you mentioned the origional purchase was at a discount...

Crypto Crude
14-01-2007, 12:52 PM
Future grim for world economy[

sunday star times article, I have just picked out some of the interesting points,

A series of intensifying global risks, from climate change to TuMbLiNg HoUsE pRiCeS, pose a mounting threat to the longest period of sustained growth in the world economy since the 1960's according to a report released last week.
Global risks 2007, a study prepared for the World Economic forum, called for urgent action to mitigate the potential devastating impact of global warming, international terrorism and pandemics after warning that the international community was ill equiped to cope..........almost all of the 23 risks on which the Global network has been focusing on rose last year............
The study found that five major economic risks- an oil price shock, a plunge in the US dollar, a HaRd LaNdInG In ChInA, BuDgEt cRiSeS CaUsEd By AgEiNg PoPuLaTiOnS were more acute than this time last year... (it will become more and more acute as BB's become closer and closer to retirement for sure)
outlook for inland flooding had also worsened since last year...
Climate is now seen as the most defining challenges of the 21st century..
The way in which climate change is dealt with at the global level will be a leading indicator of the worlds capacity to manage globalisation in an equitable and sustainable way...
guardian news and media
[8D]
.^sc

Crypto Crude
15-01-2007, 02:50 AM
Has anyone though about how rising sea levels are going to impact on the NZ property market???

here are some of the facts
-since the end of the last ice age 18,000 years ago... sea levels have risen by over 120 metres....
-A further 1 metre rise in sea levels would destroy half of Bangladeshs rice fields, millions of people would be forced to migrate... other low lying rice growing countries affected are China, Vietnam, India, Thailand
-we are looking at a 1 metre rise in sea levels by 2100
-10 warmest years ever recorded in History of the Earth were since 1983
-7 of those warmest years ever were since 1990...
-I think last year was the warmest ever, or was it 2005?
-average temperatures are set to rise between 1.4 and 5.8 degrees celcius by 2100...
-glaciers are melting on 5 continents
-Majuro (marshall islands) beachfront has decreased by 20% in the last decade.
-since the industrial revolution atmsopheric concentrations of carbon dioxide have increased 30%
-the list goes on and on and on....
I am not a dooms dayer, these are all facts....

global temperatures are rising on an expodential scale.... it will just become larger and rise at an increasing pace over time....

how can we stop global warming?..... fossil fuels to run cars is the biggest cause to carbon dioxide levels... I doubt that we are going to see any response from large oil producers, (shell, BP,exxon) they will continue to make payments to Bush, and keep him happy... Oilers will continue to buy out competition in the terms of substitutes to their oil products... Large oil producers will not allow change easily at all!!!

how can you as a first homebuyer get ready for global warming? buy land on a high mountain or hill... If you live in Christchurch, then try Cashmere Hill... (start looking at the top)... because in 100 years maybe no one will want to buy the houses on the canterbury basin floor..... I for one will surely buy up high....
[8D]
.^sc

delgary
15-01-2007, 09:16 AM
Global And NZ Temperatures Are Cooling, Not Warming
Wednesday, 10 January 2007, 4:31 pm
Press Release: New Zealand Climate Science Coalition
Media release
10 January
Global And NZ Temperatures Are Cooling, Not Warming

Figures just released by the U.S. National Space Science and Technology Center (NSSTC) show that mean global temperature for 2006 was 0.24 deg C cooler than it was in 1998.

The seven years 1999 to 2005 were also cooler than 1998.
...
"We know that emissions of carbon dioxide are still occurring, which prompts a further question: for how much longer can NIWA support claims by the present government that CO2 causes catastrophic warming, and needs to be curbed by the imposition of special taxes or emission charges. Surely it's now time to put a stop to these sensationalist claims, which are not supported by verifiable scientific data" said Professor Auer.
http://www.scoop.co.nz/stories/SC0701/S00011.htm

duncan macgregor
15-01-2007, 10:32 AM
SHREWD CRUDE, Global warming is BULLSH*T the way that the uninformed spout about it. Ice below sea level that melts decreases in volume, its only the ice above sea level that adds to it.
I would think that the natural bushfires in AUSTRALIA would account for more global warming than mankind last year. What about my pine trees i get nothing for growing them and penalised if i cut them down. Its all namby pamby crap my friend to get money out of you very similar to the police speed cameras. The sooner this global warming gets going the better:D:D. MACDUNK

cantab
15-01-2007, 10:45 AM
quote:Originally posted by Shrewd Crude

Has anyone though about how rising sea levels are going to impact on the NZ property market???



No

foodee
15-01-2007, 11:18 AM
Macdunk
I know how you feel about your plantation. It is legalised robbery!
A lot will be cutting before the dateline. Big mistake by govt.
Didn't GH sold most of his forests.

Cheers

trackers
15-01-2007, 11:34 AM
quote:Originally posted by cantab


quote:Originally posted by Shrewd Crude

Has anyone though about how rising sea levels are going to impact on the NZ property market???



No

cantab
15-01-2007, 12:02 PM
Well done on your house purchase trackers - BTW, went to Maki Mono yeterday after watching first 5 painful overs of the Kiwi batting. Much more enjoyable studying Asian culture. I see there are now more Asians than Maori in Christchurch.

cantab
15-01-2007, 12:16 PM
quote:Originally posted by duncan macgregor

SHREWD CRUDE, Global warming is BULLSH*T the way that the uninformed spout about it. Ice below sea level that melts decreases in volume, its only the ice above sea level that adds to it.
I would think that the natural bushfires in AUSTRALIA would account for more global warming than mankind last year. What about my pine trees i get nothing for growing them and penalised if i cut them down. Its all namby pamby crap my friend to get money out of you very similar to the police speed cameras. The sooner this global warming gets going the better:D:D. MACDUNK


Totally agree Macdunk.

As for government forestry proposals, they will have the opposite affect of what the government is going to achieve. A recent study by scientists concluded that the affect on global warming of tree plantations depends on where the trees are located. In climates such as NZ planting trees is neutral because while the trees absorb carbon, the darker green colour of the trees supposedly absorbs more heat. Lighter green of pasture land doesn't absorb as much heat from the sun, on the other hand the cows fart a lot. Planting trees works in hotter climates, but in polar areas tree planting results in a net increase in global warming because the darker green of the forest supposedly absorbs a lot of heat - snow reflects it.

Steve
15-01-2007, 01:01 PM
quote:Originally posted by Shrewd Crude

Has anyone though about how rising sea levels are going to impact on the NZ property market???

Not me either

Crypto Crude
15-01-2007, 01:08 PM
delgary- with statistics you can find information to support any argument... no matter how ridiculous your source is....its just baloney... maybe 1998 was a super hot year, and those other years are cooler in comparison.... but we definately have a trend of much warmer world wide temperatures, the changes are not natural changes....

small island nations are starting to disapear.....
go ask Majuro where its beachfront has gone...
There is evidence that in America retreating shore lines are occuring as well....

trackers-you should be concerned....
mac dunk- you are right that the ice on the top that counts the most when it melts.... well the ice on the top is melting....

Sea levels rise for 2 reasons
1- ice melting, (we already have this)....
sea ice in the Artic Ocean is thinning, massive antartic ice sheets have collapsed into the sea with alarming rapidity
and 2- thermal expansion of water as the temperature rise the sea becomes less dense and then expands....

the ice cap on mount Kilimanjaro may be gone in 20 years... about 1/3 of kilimanjaro ice fields have dissapeared in 12years....and 82% has vanisheed since it was first mapped in 1912.... what do you have to say about that delgary?

all I no is that we have icebergs floating off the coast of Dunedin, natural disasters world wide are worse than ever before, we in NZ have had the worst summer of all time... ice sheets are melting and delgary says temperatures are falling but yet sea levels are rising..... I could show you one million articles supporting global warming for every 1 that you show me against it...
hahhaha, classic buddy
[8D]
.^sc

Steve
15-01-2007, 01:16 PM
Yes, there WERE icebergs off the Dunedin coast because I saw one with my own eyes. Unless it was the distant breaking crest of a wave...

Crypto Crude
15-01-2007, 01:25 PM
And another thing Delgary I would not listen to anything commisioned by the US of America.... remember that they are the ones trying to cover up the Whole global warming issue.... because they are the ones that produce all of the omissions...
If it came down to user pays, then the USA is bankrupt along with all the debts that they currently have... they choose to deny Global warming, and therefore refuse to deny what they have done...
find me an article not commissioned by USA....[:p]...... and thats the ball game!

[8D]
.^sc

Bel
15-01-2007, 03:51 PM
Couple of points:

1. USA doesn't produce all of the green house gas emissions.
2. Most tellingly, USA isn't a single identity. There are millions of people with millions of different opinions with the ability to do there own research and publish there findings.

Lumping them all into one brand called USA is just silly.

JoeKing
15-01-2007, 09:43 PM
Saw part of an interesting doco Tv1 over the weekend. Seems earths polarity is reversing, this will create a lot more havock than your little old "global warming" But don't panic it happens occasionally every few million years and apparantly has happened several HUNDRED! times in earths history. So Shrewdy if you would like a nice little retirement home at the very top of the north island sometime in the future, maybe you shold start looking in Bluff. (aha! so that's why its called Bluff).
Cheers
JK

cantab
15-01-2007, 09:48 PM
Screwed, did you know that 1 million years ago it was 1 degree hotter than it is today - what does that tell you? :)

Crypto Crude
15-01-2007, 10:06 PM
1-usa doesn't produce all of the greenhouse gas emissions.......
........no they don't (damn close though).... its closer to 1/3 of world wide greenhouse gas emissions.... they consume 24million out of the 80 something million barrels of oil per day... If China, India, Russia, Brazil was to consume barrels with the same strategy as the US (consume every barrel in sight) then the world would become a barren desert... for a population of 350something million people it is horiffic... The US could never accept the omissions they create, it would be far to costly for them by imposed taxes....

2-most tellingly, USA isn't a single identity. There are millions of people with millions of different opinions with the ability to do there own research and publish there findings....
.............All im saying is that im highly suspicious of any figures released by a government department of the USA in relation to global warming...(U.S. National Space Science and Technology center) (NSSTC) gets all its research grants from the govt.... they have every incentive to cover up, and create different excuses for the cause for Global warming...
[8D]
.^sc

Crypto Crude
15-01-2007, 10:15 PM
quote:cantab Posted - 15/01/2007 : 10:48:08 PM
Screwed, did you know that 1 million years ago it was 1 degree hotter than it is today - what does that tell you?

rehab- it tells me that something is awfully different this time...
we have a hole in our O-Zone layer because of all the omissions, u-v rays are aloud to enter....which heats up the earth unnaturally.... back 1million years it ago was natural.... and besides there weren't americans 1 million yrs ago either.... can't compare buddy...
[8D]
.^sc

minimoke
16-01-2007, 10:43 AM
quote:Originally posted by Shrewd Crude

Has anyone though about how rising sea levels are going to impact on the NZ property market???



Nope. Nor have I thought about the impact of fault line or volcanic activity – other than if you live near by when one is happening you are screwed. And others will do very well as the old demand/supply kicks in.

duncan macgregor
16-01-2007, 01:13 PM
quote:Originally posted by Shrewd Crude


quote:cantab Posted - 15/01/2007 : 10:48:08 PM
Screwed, did you know that 1 million years ago it was 1 degree hotter than it is today - what does that tell you?

rehab- it tells me that something is awfully different this time...
we have a hole in our O-Zone layer because of all the omissions, u-v rays are aloud to enter....which heats up the earth unnaturally.... back 1million years it ago was natural.... and besides there weren't americans 1 million yrs ago either.... can't compare buddy...
[8D]
.^sc
What the hell is wrong with you crude one, lets forget the shrewd. Every situation has a good effect in business if you read it right. Perhaps you want to save the world, which is completely different, if so join a church, and get crusading. Sell life boats, or air conditioning units for christ sake, or build a house at the top of Mt Cook to lease it out to the less fortunate. We had a volcano that shot that much pollution up that the moon looked blue in the not to distant past. Look at the AUSTRALIAN bushfires, why not fine them for that. This bullsh*t about global warming could not have come at a better time,Might stop the out of oil disaster. The Yanks are the biggest bull artists in the world today, but dont expect them to follow this crap.
The biggest polluter is natural pollution forget about cars and start to worry about volcanoes and bush fires.:D:D:Dmacdunk

Sideshow Bob
16-01-2007, 06:17 PM
I think there is a global warming thread somewhere.........

info
16-01-2007, 07:04 PM
quote:Originally posted by Shrewd Crude

delgary- with statistics you can find information to support any argument... no matter how ridiculous your source is....its just baloney... maybe 1998 was a super hot year, and those other years are cooler in comparison.... but we definately have a trend of much warmer world wide temperatures, the changes are not natural changes....

small island nations are starting to disapear.....
go ask Majuro where its beachfront has gone...
There is evidence that in America retreating shore lines are occuring as well....

trackers-you should be concerned....
mac dunk- you are right that the ice on the top that counts the most when it melts.... well the ice on the top is melting....

Sea levels rise for 2 reasons
1- ice melting, (we already have this)....
sea ice in the Artic Ocean is thinning, massive antartic ice sheets have collapsed into the sea with alarming rapidity
and 2- thermal expansion of water as the temperature rise the sea becomes less dense and then expands....

the ice cap on mount Kilimanjaro may be gone in 20 years... about 1/3 of kilimanjaro ice fields have dissapeared in 12years....and 82% has vanisheed since it was first mapped in 1912.... what do you have to say about that delgary?

all I no is that we have icebergs floating off the coast of Dunedin, natural disasters world wide are worse than ever before, we in NZ have had the worst summer of all time... ice sheets are melting and delgary says temperatures are falling but yet sea levels are rising..... I could show you one million articles supporting global warming for every 1 that you show me against it...
hahhaha, classic buddy
[8D]
.^sc


If you believe the shore line are retreating this could be a good investment for you, all you have to do is buy the cheaper houses one street back from the beach and soon it will be a beach front property.

JoeKing
16-01-2007, 09:46 PM
quote:Originally posted by info
If you believe the shore line are retreating this could be a good investment for you, all you have to do is buy the cheaper houses one street back from the beach and soon it will be a beach front property.

Better be quick. If maori foreshore and sea bed claim is ever ratified its gonna be very crowded on the little thats left in year 2121.
Shrewdie might be some available building sites along desert road. (Well the bit thats left after lahar flash flood)if you hurry. Best be quick before addy becomes SH1 central south Island.

coge
17-01-2007, 02:57 PM
Hello Shrewd Crude. Back on topic here, metaphorically speaking.

Here is a general concept. The young are rich in time but poor in assets, the older being poor in time & often rich in assets. Learning how to use the time factor is like a sailor learning how to use the wind.

Buying property is like catching a train on the Johnsonville line. If you can only afford a ticket to Crofton Downs, that will get you on the way to Johnsonville quicker than waiting around for the full price ticket to J'ville. I bought my first property at 24, I took on two jobs to get the deposit. Most people will say buying their first property takes sacrifices, & it is still true today. If it is important to you, you can find a way to do it. Don't dwell on it taking thirty years to pay off, if you're into investment at 22, that concern won't be an issue.

Worrying about various disasters is a waste of time, if one occurs you'll be screwed whether you hold property or not. Having faith in the future goes hand in hand with success. Watch people around you over a few years & this will be confirmed to you. Fretting is for losers. Don't get sucked in.

So here endeth the sermon.

Mr_Market
17-01-2007, 07:34 PM
quote:Originally posted by coge

Hello Shrewd Crude. Back on topic here, metaphorically speaking.

Buying property is like catching a train on the Johnsonville line. If you can only afford a ticket to Crofton Downs, that will get you on the way to Johnsonville quicker than waiting around for the full price ticket to J'ville. I bought my first property at 24, I took on two jobs to get the deposit. Most people will say buying their first property takes sacrifices, & it is still true today. If it is important to you, you can find a way to do it. Don't dwell on it taking thirty years to pay off, if you're into investment at 22, that concern won't be an issue.



Or you could walk to J'ville and invest your money in shares. :D

Halebop
17-01-2007, 09:48 PM
quote:Originally posted by aspex

c. A misture.

Lots of crying on a hot day? [:p]

I'm certainly not a property bull but I don't see terra firma apocalypse in the offing. There are no obvious triggers for the kind of income expansion that working women have created. Gareth Morgan has it right that the 2nd income hasn't been that beneficial - most of it has flowed through to mortgage payments. Pay Parity (between sexes) offers the prospect of somewhat rising incomes but with any sort of birth rate parity is not really practical - a proportion of partners will leave one parent at home at least part of the time - this impacts career prospects and earnings.

In practical terms we are probably close to full employment. There is a base of unproductive labour that will always be too stupid, lazy, undereducated or even physically / mentally handicapped to provide the same sort of benefits to the economy and the household that most of us take for granted. Even if unemployment drops from 4 to 2%, the incremental impact is little compared to the original drop from 10% and the benefits likely mixed given many of them will be the least productive labour available.

This tells me there needs to be a seriously different trigger* to the ones we have had to maintain real property growth. With Baby Boomers retiring and dying, we'll be competing hard with other countries just to maintain status quo. Immigration may achieve this but it will require a very different local mindset to double the number of immigrants each year even as locals (dare I say "pale skinned"?) are diminishing.

In short, no property implosion, just a reordering of "hot" versus "has been" and perhaps even extended periods of no or even negative real growth (but still managing nominal growth in dollar terms) without lots of new arrivals in one form or another.

Given even recent property performance is anemic compared to an actively managed equity portfolio, I see little need to switch from equities to real estate. While I fully expect equities to underperform current norms in the future, my expectation is that performance over longer time periods will remains at relative parity- i.e. both will be relatively subdued. I have an equity portfolio (Should call it a cash portfolio at the moment) worth many times the average house. When I double the value of that portfolio (as I have several times over the last few years without any debt), on a purely financial analysis opportunity cost of even 20% housing gains become apparent.



* I am interested in the "seriously different triggers" though! If such a thing exists in a positive form ...Robotics & AI? Transport improvements? whatever other productivity tools? ...there will be much more money to be made in those than in real estate.

trackers
18-01-2007, 06:18 AM
quote:Originally posted by aspex

Realism will ultimately prevail.
Income increases have not matched property i ncreases.
Whatever the reasons forthis one of a number of scenarios will work through.
a. property prices will fall.
b. Incomes will increase.
c. A misture.
Depending on the rate of correction an overshoot is possible and probably more certain if the correction is more severe.
With landlords unable to depend on capital gain, negative gearing will force the hand of some and many bargains will eventuate.
Steady hand on the tiller through rough waters will work out well.
Until the last few months buying to reside would be my choice. Now I believe that renting is the answer for the next three to five years or choosing to buy non-residential only.


Or D. Prices stagnate for several years

wns
18-01-2007, 03:50 PM
quote:
Wns you've done this before ;))



I haven't put any deals together myself but I was the money partner on 4-5 deals with another guy (who has done 50+ deals). A couple of the deals were installment contracts (wraps), one was done as a second mortgage deal and the other was a lease/option deal. The last two deals just cashed out completely in the last couple of months and we've put the $50k or so into our home loan interest saver account.

The longest deal went for about three years. Like you say, you want them to cash out quickly coz that's a win / win - the buyer gets conventional finance coz they now qualify, and your ROI is good coz you make your profit quicker.

JoeKing
18-01-2007, 09:34 PM
quote:Originally posted by coge

... Most people will say buying their first property takes sacrifices, & it is still true today. If it is important to you, you can find a way to do it. Don't dwell on it taking thirty years to pay off, if you're into investment at 22, that concern won't be an issue.

Worrying about various disasters is a waste of time, if one occurs you'll be screwed whether you hold property or not. Having faith in the future goes hand in hand with success. Watch people around you over a few years & this will be confirmed to you. Fretting is for losers. Don't get sucked in.

So here endeth the sermon.


CLAP! CLAP! CLAP! Well said Coge!

cantab
18-01-2007, 10:55 PM
Canterbury Property Investors Association magazine December 2006/January 2007

The Star 29/09/06
Steve Brooks is not old enough to go to the casino, but the 19 - year - old has been playing the property market since he was 14. Last week he signed up his biggest deal yet: a 3800m2 block of land on Buchanans Rd and now owns nine houses in Christchurch. He has recently set up his own business and is getting a book published, A Young Punter's Guide to Property Investing.

Steve
19-01-2007, 08:01 AM
quote:Originally posted by cantab

Canterbury Property Investors Association magazine December 2006/January 2007

The Star 29/09/06
Steve Brooks is not old enough to go to the casino, but the 19 - year - old has been playing the property market since he was 14. Last week he signed up his biggest deal yet: a 3800m2 block of land on Buchanans Rd and now owns nine houses in Christchurch. He has recently set up his own business and is getting a book published, A Young Punter's Guide to Property Investing.

Good on him! I wonder if he knows how to cope with a downturn?

JoeKing
19-01-2007, 08:51 AM
quote:Originally posted by Steve
The Star 29/09/06

Steve Brooks is not old enough to go to the casino, but the 19 - year - old has been playing the property market since he was 14. Last week he signed up his biggest deal yet: a 3800m2 block of land on Buchanans Rd and now owns nine houses in Christchurch. He has recently set up his own business and is getting a book published, A Young Punter's Guide to Property Investing.

Good on him! I wonder if he knows how to cope with a downturn?
[/quote]

mmm. 2 Steves, 2 attitudes, 1 winner. I wonder which one ;))

coge
19-01-2007, 09:44 AM
What an inspiring story of young Steve Brooks.

My advice for Shrewd Crude & other young punters, don't put on a hair-shirt & cloister yourselves. Abandon all thoughts of bird-flu, global warming, premature baldness, yellow peril, Y2k or whatever etc. Rather, spend your time thinking & creating positive things. And for Gods sake toughen up!.

Bel
19-01-2007, 09:53 AM
I want to hold proprty just not a mortgage.

From my future radar i can see property continueing to make 9% gains for at least another 2 years. We are about to hit a re-influx of liquid capital just waiting to find a new home. COmbine that with realestate popularity, population growth and steady economy...

coge
19-01-2007, 10:56 AM
We're in agreement Bel. The current momentum should continue for at least two years, although maybe not 9% PA across the board. If they want to slow it down they need to reduce interest rates a little, to limit the demand for the NZD & induce a mild credit squeeze. Instead Dr Bollard is tub-thumping about putting them up.

minimoke
19-01-2007, 11:28 AM
I’m picking perhaps a bit of a slow down over the next few years (but all the stats are proving me wrong at the moment) but am then picking a significant pick up in values late 2009 when the building regulations change. This will see DIY compliance costs go up as well as proper building costs. New housing will have to go up in price which will drag the value of used real estate up with it. City Councils will need more desk wallies so costs will go up and infrastructure / light industrial construction pressures will see continued shortages of skilled and semi skilled trades which will also push up prices. There is only one way for values to go medium term!

Steve
19-01-2007, 11:34 AM
quote:Originally posted by JoeKing


quote:Originally posted by Steve
The Star 29/09/06

Steve Brooks is not old enough to go to the casino, but the 19 - year - old has been playing the property market since he was 14. Last week he signed up his biggest deal yet: a 3800m2 block of land on Buchanans Rd and now owns nine houses in Christchurch. He has recently set up his own business and is getting a book published, A Young Punter's Guide to Property Investing.

Good on him! I wonder if he knows how to cope with a downturn?


mmm. 2 Steves, 2 attitudes, 1 winner. I wonder which one ;))
[/quote]

Come on JK, you are being a bit harsh on him - he is still young and starting out! I would say that there are 2 winners ;)

cantab
19-01-2007, 12:02 PM
Steve Brooks is a member of the Canterbury Property Investors Association (600 members) of which he runs 'The Young Punters Group'.

Crypto Crude
19-01-2007, 04:07 PM
quote:coge Posted - 19/01/2007 : 11:56:58 AM
We're in agreement Bel. . If they want to slow it down they need to reduce interest rates a little, to limit the demand for the NZD & induce a mild credit squeeze. Instead Dr Bollard is tub-thumping about putting them up.

On the other hand decreasing interest rates will mean people will pay less interest on their loans, and will incourage more people to borrow, and more people will buy houses


quote:JoeKing Posted - 18/01/2007 : 10:34:56 PM
quote:
Originally posted by coge
... 'Most people will say buying their first property takes sacrifices, & it is still true today. If it is important to you, you can find a way to do it. Don't dwell on it taking thirty years to pay off, if you're into investment at 22, that concern won't be an issue.

Worrying about various disasters is a waste of time, if one occurs you'll be screwed whether you hold property or not. Having faith in the future goes hand in hand with success. Watch people around you over a few years & this will be confirmed to you. Fretting is for losers. Don't get sucked in.


"Dont dwell on it taking thirty years to pay it off".... Ok, shall I just ignore the truth then...
I cannot ignore the three figures of 799k, $512, and 30yrs... I've done the figures don't even for a second try an tell me that I shouldn't be concerned and shouldnt dwell on it...
"If you're into investment at 22, that concern wont be an issue".... well it is an issue, and it is a concern...I willnot be a 52yr old man with a house only! I was always told to put my money where I could get the best return.... and its not housing....

"worrying about various disasters is a waste of time", true
"if its important to you, you will find away to do it"..... 5 years experience with wages, then a business, then a house... I agree with Bel in that I want to hold property just not a mortgage

I never expected any house buffs to talk down the housing boom, you's need us coming through to buy your houses...
at least with my goal of holding shares in the short term that there is no chance that I could become bankrupt... [:p]
[8D]
.^sc - proud and without regret to go against all that I was told to believe in...

coge
19-01-2007, 06:25 PM
For Gods' sake, Shrewd Crude, toughen up!

If I'm employing a professional, I want one who tells me what I can do, not what I can't do. The latter type gets the sack, cos they're no use to me. Concentrate on what you can do & take it from there. So what's your plan? Define your goals for us.

BTW I do agree it would be best for the boom to be contained, the best way would be to reduce the availability of mortgage finance. Raising interest rates has the opposite effect.

Jess9
19-01-2007, 07:43 PM
Several books I've read seem to sensible indicate that at this stage of the market (late boom to very early slump) 1st home buyers should rent, and save the required deposit for a future rental investment.

This would be purchased during the recovery stage of the market, and equity increases then recycled into another (rental) property etc and etc. After several rentals are purchased, and market has risen further sell off some, to freehold a "home" property. The power of leverage, apparently : )

Sounds simple but like much in life, the practice/plan I think is far harder to maintain, over a number of years ; )

cantab
19-01-2007, 07:51 PM
quote:Originally posted by Shrewd Crude
I never expected any house buffs to talk down the housing boom, you's need us coming through to buy your houses...
at least with my goal of holding shares in the short term that there is no chance that I could become bankrupt... [:p]
[8D]
.^sc - proud and without regret to go against all that I was told to believe in...




Screwed, we need people like you to rent our houses. :D

Crypto Crude
19-01-2007, 10:02 PM
quote:coge Posted - 19/01/2007 : 7:25:38 PM
For Gods' sake, Shrewd Crude, toughen up!
If I'm employing a professional, I want one who tells me what I can do, not what I can't do. The latter type gets the sack, cos they're no use to me. Concentrate on what you can do & take it from there. So what's your plan? Define your goals for us.

Coge- 1st of all, thankyou for showing interest on my outlook...
I study finance and economics at canterbury Uni.... I previously worked at a bank for 6 months... now working part time.... over the last two years I was able to get away investment equal to the total value of my student loan,(after a careful 2 year research and just watching stocks) and I have almost doubled it.. I'm looking at three more years in volitle stocks..I want 5 years work experience...I want to be a employer not an employee....

I can understand that many think property is god, and always will be...
I just cannot understand why other posters can't see it from the 1st homebuyers point of view... If you put aside the leverage, the past performance of housing, the benefits of rental savings... And look at it from my view, in that i'm looking at debt, to 52years of age... I get a larger asset, but I also pay debt equal to 2.4 times the value of the house... I'm tied down to paying the house off, and can't free the dough up for other opportunities.... My whole arguement has been that house prices are out of reach for the income that we earn to pay the loans off...
in 1976 my dad bought his first house for 16,000 his individual income was 5,000
.... house value is now at 350,000 income 40,000(max) 35k if your early 20's,
the more that these barriers get streached, the more people will choose to rent instead...
My barriers have been met at this stage...
Coge would you buy a house for 350k (average house price in NZ) if your income was 35k?.... im sure you would have to think about it... in 1976 there was nothing to think about!
[8D]
.^sc

Crypto Crude
19-01-2007, 10:20 PM
quote:coge Posted - 19/01/2007 : 7:25:38 PM
For Gods' sake, Shrewd Crude, toughen up!
If I'm employing a professional, I want one who tells me what I can do, not what I can't do. The latter type gets the sack, cos they're no use to me

so what you are saying is that on a COST BENEFIT ANALYSIS, you are only looking for a person who gives you all the benefits.... cost analysis (cons) is as important to me as the benefits(pros) ,when I way up any decision... closing your mind to the other side goes against all decision making processes that consumers stand for.... lets hope you do a lot more employing rather than alot more sacking [:p]....

Ok coge, you have it.... to all posters....lets weigh up all the pro's and con's for housing in the present time... at the end we can put them all on one list... and debate the whole package, rather than just the benfits which you stand for... and the costs for which I stand for.... and somehow we may be able to come to a compromise.
[8D]
.^sc

Crypto Crude
19-01-2007, 10:31 PM
here we go.... I will start things off

Benefits- leverage, (able to gain control of total value of house with small cash outlay)
- rent free, cost savings on not paying rent
- house price growth....

costs -debt payments which currently stand at 2.4 times the value of the house
-extremely high interest rates (7.25%), which bump up debt payments
-30 year loan
-have to pay rent
-tenant risks, (eg not having them, trashing your house,)

just to name a few.... one rule, disasters and unforseen events like earthquakes, volcanos, etc donot come into the equation on the costs side..
[8D]
.^sc

trackers
20-01-2007, 06:36 AM
quote:Originally posted by Shrewd Crude


quote:coge Posted - 19/01/2007 : 7:25:38 PM
For Gods' sake, Shrewd Crude, toughen up!
If I'm employing a professional, I want one who tells me what I can do, not what I can't do. The latter type gets the sack, cos they're no use to me. Concentrate on what you can do & take it from there. So what's your plan? Define your goals for us.

Coge- 1st of all, thankyou for showing interest on my outlook...
I study finance and economics at canterbury Uni.... I previously worked at a bank for 6 months... now working part time.... over the last two years I was able to get away investment equal to the total value of my student loan,(after a careful 2 year research and just watching stocks) and I have almost doubled it.. I'm looking at three more years in volitle stocks..I want 5 years work experience...I want to be a employer not an employee....

I can understand that many think property is god, and always will be...
I just cannot understand why other posters can't see it from the 1st homebuyers point of view... If you put aside the leverage, the past performance of housing, the benefits of rental savings... And look at it from my view, in that i'm looking at debt, to 52years of age... I get a larger asset, but I also pay debt equal to 2.4 times the value of the house... I'm tied down to paying the house off, and can't free the dough up for other opportunities.... My whole arguement has been that house prices are out of reach for the income that we earn to pay the loans off...
in 1976 my dad bought his first house for 16,000 his individual income was 5,000
.... house value is now at 350,000 income 40,000(max) 35k if your early 20's,
the more that these barriers get streached, the more people will choose to rent instead...
My barriers have been met at this stage...
Coge would you buy a house for 350k (average house price in NZ) if your income was 35k?.... im sure you would have to think about it... in 1976 there was nothing to think about!
[8D]
.^sc


Firstly, all these talks of gains of 9/10%.. These are gains on Hundreds of Thousands of dollars of bank money, lets not forget...

Also, yes back when your dad bought a house the ratio of income to house price was a hell of a lot higher, yes... Interest rates (i.e dead money) were also a hell of a lot higher...

Yes the ratio is high, thats why you need to supplement with a second income if possible, and flatmates if not possible (2 wages of $40k = $80k into a good house of $300k sounds a lot better don't you think)..

And anyway, where's this $350k coming from? You can get a decent enough house in ChCh (where you live iirc) for $250k

Jess9
20-01-2007, 08:38 AM
Re above. When comparing affordability, remember to compare during the same stages of the property cycle, and as trackers rightly points out, for better or worse, the pervasiveness of dual incomes these days.

Crypto Crude
20-01-2007, 12:17 PM
350k is the average house price in NZ...
yes I could get a 250k house in chch.... but it would be a scrappy bare minimum squallor, or in the worst areas... hornby, heihei,aranui,wainoi,parts of new brighton, linwood.... scum areas mate...
you need to spend 50k more at least, to get a 4 bedroom decend house in a decend area...

if you do decide to buy a house in a scrappy area, and do work to the house, (painting, fixing up rooms etc), then your wasting your time.... because no one else in your area are fixing up their homes, you will end up having the best house on the street... and when comparing selling prices in your area, your house value will be pulled down...
[8D]
.^sc - sc says no thankyou to hornby, heihei, aranui, wainoi, etc...

cantab
20-01-2007, 01:01 PM
Amazing, a 3br house in Christchurch on a 837m section, street facing, for neg over $175,000!

http://www.realestate.co.nz/363612

Jess9
20-01-2007, 01:14 PM
...selling fast...the above now sits at no.6 when viewed via the sites "most popular" filter. Cantab, you're not an agent are you ; )

Crypto Crude
20-01-2007, 02:05 PM
cantab, ReAl aMaZiNg.... I new something was up...
aranui........ I'd rather live in a 40 foot container... [:p]

quote- "heres your opportunity to own your own home and take the time to make improvements your way... get your imagination going"

ok.....you will need bullet proof windows..bulgular alarms...two locks on the front door, three locks on the back door...maybe a weapon to protect the family... barb wires on the top of boundary fences.. living in a cage... (looks like a cage)
.......aranui is the most dangerous suburb in chch (or maybe second to wainoi)... theres no way you could stroll the street at night (or face the consequences [B)])
... neighbours for drug dealers... ex state house, probably was ex drug dealer to...

"make improvements your way"- so it needs improvements eah...well you never make improvements in these areas... money spent here is a waste of time..( so its best to be leaving those holes on the walls etc)

"exterior cladding - concrete block"... (a jail cell without the steel bars)
Cantab oh cantab.... sometimes price just don't matter...
I don't care if its 125k...I still wouldn't want to send the kids to Aranui High school...
[8D]
.^sc

Heavy Metal
20-01-2007, 03:04 PM
quote:Originally posted by cantab

Amazing, a 3br house in Christchurch on a 837m section, street facing, for neg over $175,000!

http://www.realestate.co.nz/363612




Sounds expensive for Aranui. Is it one of your properties you're trying to sell?

Year of the Tiger
20-01-2007, 05:04 PM
quote:Originally posted by Shrewd Crude


-extremely high interest rates (7.25%), which bump up debt payments
-30 year loan


Shrewdie, I really don't see you getting anywhere with your extremely blinkered vision of the future.

When my ex and I bought our first house well over 30 years ago, we were faced with all the same fears that you seem to have. We were in our late teens and early 20's, there were kids to come so that meant dropping to single income etc etc...... But I think the difference is, we chose not to weep into our weeties and got on and did it. We mortgaged ourselves to the hilt to build that house. Before 30 years were up, we had bought and sold 7 houses (family homes, not rentals), and at times (mid 80's) mortgage interest rates were up to around 18%!!!!!

So my recommendation is that you just think about the next couple of years and believe me, if you are prepared to put in the hard yards, the following 28 years will look after themselves.

YOTT

JoeKing
20-01-2007, 10:54 PM
Shrewdy, congratulations you have started a thread that effects a lot of people, and there is some real good stuff coming thru. It is interesting observing the various attitudes of the posters. Positive, pensive, negative, winners, losers, stirrers, those with axes to grind trying to find a scapegoat for their own failures, hopefuls, desperate, whatever.... the fact is what ever catagory you fit into is 100% YOUR CHOICE! Don't blame high interst rates, property prices, global warming, Black caps losing (again), El nino weather patterns. Where ever you are NOW! is where YOU! chose to be. Where you will be 3-5-10 years hence is where YOU decide you will be. Instead of asking why not? just learn to ask HOW?!.
Cheers
JK
PS Shrewdy quote "I was always told to put my money where I could get the best return.... and its not housing...."so I am curious to learn, WHERE? I suspect you will answer "the share market"... bollocks mate!!. Let me let you into a little secret... EVERY! super successful entreprenuer throughout history has made their fortunes via Real Estate eg. McDonalds/KFC own the primest retail sites in town! Henry Ford made more money selling distributor ships than cars, Billy Gates makes more money letting his promotion venues than software (I stayed in one Squaw Valley Neveda 1995 $2,000 USD a night,(a present) and an experience!)
PPS Realy want to be rich? recommended reading " The richest man in Babylon" its only about 10mm thick, but contains all the wisdom you will need to be wealthy.
JK

Mr_Market
21-01-2007, 07:29 AM
quote:Originally posted by JoeKing
Let me let you into a little secret... EVERY! super successful entreprenuer throughout history has made their fortunes via Real Estate

Have you not heard of Warren Buffett. Second richest person in the world (after Bill Gates). Made his fortune in in stocks, averaged over 20% return pa for over 40 years.

Tim
21-01-2007, 07:51 AM
Property does so well because of leverage which magnifies returns. In the long term prices always rise.

duncan macgregor
21-01-2007, 07:51 AM
quote:Originally posted by Mr_Market


quote:Originally posted by JoeKing
Let me let you into a little secret... EVERY! super successful entreprenuer throughout history has made their fortunes via Real Estate

Have you not heard of Warren Buffett. Second richest person in the world (after Bill Gates). Made his fortune in in stocks, averaged over 20% return pa for over 40 years.
I suppose he lived in a rental all his life.:D:Dmacdunk

foodee
21-01-2007, 08:42 AM
Ah JK
The richestman in Babylon by G Clason. Have given this book (besides recommending it to a lot of friends and this forum-doubt anyone here would have bothered) to each of my children - incidently they are mortgage free apart from my daughter(who would have been also until she bought into a high country station in the south island).

Cheers

Steve
21-01-2007, 08:45 AM
quote:Originally posted by duncan macgregor
[brI suppose he lived in a rental all his life.:D:Dmacdunk


Nope, I do believe that he owns his own house

Mr_Market
21-01-2007, 09:58 AM
quote:Originally posted by Steve


quote:Originally posted by duncan macgregor
[brI suppose he lived in a rental all his life.:D:Dmacdunk


Nope, I do believe that he owns his own house



Which no doubt he bought when undervalued. :)

Crypto Crude
21-01-2007, 10:06 AM
joeking.... I never said one time that I have a future in the sharemarket.... I said that I've got 2 or 3 more years there.... enough to build up a deposit of 50%.... already on track....
a sideways market for 2 years at minimum, a falling market even better is all it may take....

"ok jK, I will have a look at the richest man in babylon.... do you have a spare copy?"

JK, so whats your advice about that Aranui squallor....? where has that cantab gone.....?
Cantab....the agent that carrys a weapon to open home reviews for his clients protection
[8D]
.^sc

Crypto Crude
21-01-2007, 10:27 AM
at the moment Im only earning about $300 after tax.... am I wrong to assume that I can't get a house now?... on such little income.... although I do have 40k liquid assets......
my view is that I've got to wait until I graduate at year end....
The thing is no matter what decision I make, that I have a strong group of people that I can get advice from....
you can't sqeeze someone into a catagory from internet posts buddy... It dont matter what catagory I fit into in your views.... It has been interesting in trying to take a view against property... just to see what response I would get...
give me two years, and then talk....
[8D]
.^sc

Steve
21-01-2007, 11:27 AM
The BNZ are doing their best to keep the property market ticking over

BNZ in pre-emptive strike on loans (http://www.stuff.co.nz/3935302a13.html)
The mortgage war is back on as Bank of New Zealand yesterday produced a special offer two-year fixed rate of 7.85%, 0.5 percentage points below the other big banks.

JoeKing
21-01-2007, 11:38 AM
[quote]Originally posted by Shrewd Crude
".... enough to build up a deposit of 50%.... already on track...."

Shrewdie, good luck. Don't lose site of the fact that most people caught in the rental rut are desperately trying to save for that illusive initial deposit. If you chase a rainbow it will keep moving, turn around and walk away it will follow you.


"ok jK, I will have a look at the richest man in babylon.... do you have a spare copy?"
I bought my copy 50c at a weekend market 25 years ago. It is getting a bit tattered but I would not part with it. You can get a copy here
http://www.goodreturns.co.nz/books/product_info.php?products_id=333

"JK, so whats your advice about that Aranui squallor....?"
I guess every town has its better suburbs, arn't we lucky to be able to choose? My guess is people who live there are probably quite happy

FOODEE
Good to see there is at least one other on this thread who sees wisdom can come in little packages.
I have given all my kids a copy of Og Mandino's "The greatest salesman in the world" too, and they regularly come to borrow from my extensive library. "Affirmations" by Stuart Wilde I would also highly recommend.
Cheers
JK

JoeKing
21-01-2007, 11:49 AM
quote:Originally posted by Mr_Market
Have you not heard of Warren Buffett. Second richest person in the world (after Bill Gates). Made his fortune in in stocks, averaged over 20% return pa for over 40 years.

Well actually yes. -- lives in a house he bought for $31,500, He's worth $36 billion ... give or take a few mil.
And made his money buying and selling WHOLE COMPANIES.
I don't think Shrewdy is that far advanced.... yet.
Cheers
JK

Mr_Market
22-01-2007, 07:06 AM
quote:Originally posted by JoeKing


quote:Originally posted by Mr_Market
Have you not heard of Warren Buffett. Second richest person in the world (after Bill Gates). Made his fortune in in stocks, averaged over 20% return pa for over 40 years.

Well actually yes. -- lives in a house he bought for $31,500, He's worth $36 billion ... give or take a few mil.
And made his money buying and selling WHOLE COMPANIES.


Do you think he bought whole companies when he was starting out? Don't be ridiculous. He spent years building up to that level by investing in small portions of companies (i.e buying stocks). You are very selective with the truth JoeKing.

Bel
22-01-2007, 07:46 AM
If you were to buy a $300K family home with the banks aid you will end up paying $800K for the privilage.
Seems to me like banks are the real winners.

The average return on housing (which incidentatly despite ALL the hype is what is currently being returned in most parts of NZ) is 4.4% after inflation.

Steve
22-01-2007, 08:14 AM
With this current train of thought that considers the total repayments over the term of the 25 year mortgage, we should not forget that historically generations of kiwis have been happy to sign up to the 25 year mortgage as part of the kiwi dream...

Crypto Crude
22-01-2007, 12:38 PM
<center>NZ HOUSING AMONG MOST EXPENSIVE</center>
article on teletext.......

The third annual demographia International Housing Affordability survey makes grim readings for Kiwi's.....
IT found Auckland is one of the most expensive housing markets in the world once incomes are taken into account... Its ranks 21st on the list, ahead of melbourne and equal with outer London. Los Angeles is the least affordable.
Christchurch ranks 31st while Wellington comes in at 47th....
[8D]
.^sc

JoeKing
22-01-2007, 12:48 PM
quote:Originally posted by Mr_Market
Do you think he bought whole companies when he was starting out? Don't be ridiculous. He spent years building up to that level by investing in small portions of companies (i.e buying stocks). You are very selective with the truth JoeKing.


Are we splitting hairs MM? I didn't say he started out buying whole Companies, I said thats where he made his money. That is the truth.
Warren Buffet made his first property investment at 14 when he bought 40 acres for $1,200 and leased it to a tenant farmer.
Cheers
JK

JoeKing
22-01-2007, 12:54 PM
quote:Originally posted by Steve

With this current train of thought that considers the total repayments over the term of the 25 year mortgage, we should not forget that historically generations of kiwis have been happy to sign up to the 25 year mortgage as part of the kiwi dream...

Fact:
Thae average length of a mortgage in NZ is only seven (7) years. Usually within that time Mr./Mrs. average mortgage owner will move house, at which time the mortgage is settled.

Steve
22-01-2007, 02:02 PM
quote:Originally posted by JoeKing


quote:Originally posted by Steve

With this current train of thought that considers the total repayments over the term of the 25 year mortgage, we should not forget that historically generations of kiwis have been happy to sign up to the 25 year mortgage as part of the kiwi dream...

Fact:
Thae average length of a mortgage in NZ is only seven (7) years. Usually within that time Mr./Mrs. average mortgage owner will move house, at which time the mortgage is settled.

True, but most likely they require a new mortgage on the new house meaning that they are still making repayments.

Then again, they may switch banks 4 times during the 25 years they are mortgaged, resulting in a 7 year average mortgage!

FACTS CAN BE DECPTIVE!;)

Mr_Market
22-01-2007, 02:13 PM
quote:Originally posted by JoeKing


quote:Originally posted by Mr_Market
Do you think he bought whole companies when he was starting out? Don't be ridiculous. He spent years building up to that level by investing in small portions of companies (i.e buying stocks). You are very selective with the truth JoeKing.


Are we splitting hairs MM? I didn't say he started out buying whole Companies, I said thats where he made his money. That is the truth.
Warren Buffet made his first property investment at 14 when he bought 40 acres for $1,200 and leased it to a tenant farmer.
Cheers
JK



No, not splitting hairs. I'm simply refuting your assertion that "EVERY! super successful entreprenuer throughout history has made their fortunes via Real Estate".

You seem to be trying to turn Shrewd Crude off stocks with blanket statements like that. From my point of view there is plenty of scope for profiting from stocks at the present time.

Crypto Crude
22-01-2007, 03:45 PM
quote:The average length of a mortgage in NZ is only seven (7) years. Usually within that time Mr./Mrs. average mortgage owner will move house, at which time the mortgage is settled.

At the beginging of the loan sentence (sorry to make it sound like a prison term)... You find that in the first 5-8 years the principal component (the amount coming off the loan balance is low...
its not until you get to the 10th year and beyond, when the loan size decreases at a faster and faster rate..
as time passes incremental payments off the house mean that more of the weekly interest is coming off the house and less in pure interest... (a negative sloping enponential curve).... I guess 7 years is when the bank is only to happy to regig the loan schedule...
to suite the bank...(so that the interest component can be as high as possible)
[8D]
.^sc

JoeKing
22-01-2007, 11:23 PM
Shrewdy, it seems to me you are hell bent on finding all the reasons why you cannot buy a house. Try finding just one reason why you can ... and it will work!
When beginning this thread you said:
The housing success stories are all to common for people who are 5plus years older than me and beyond... when you get that that stage maybe (hopefully) you will see that the probable reason is in most cases, a few years more wisdom and "smart."
Rather than use hypothetical scenarios I don't mind using my own experiences as an example. I bought my first property in 1986. After saving for some 15 years I had $7k deposit, the best interest rate we could get was 24%. While my peers were crying in their shandies I figured if I could afford to make the repayments then, it would be easier when interest rates dropped. In 1989 interest rates dropped to around 9% property prices went up 50%, my peers were still crying in their shandies and by 1992 my modest 2 bedroom unit was paid for. We still have it, plus the other 4 in the same block that it helped pay for.
In 1999 I bought the section (2 acres) where I now live. Paid $158k cash, borrowed $280k to build and landscape. A registered valuation 2003 valued this property at $380k. (As there had been no properties sold in this new developement, the valuer had difficulties finding something to compare). About 8 months ago a property 3 away from ours sold $2.2mil. (yes it was pretty nice), around 2 months ago my neighbors' put their property on the market for $1.4, I believe there are 2 contracts on it. I would expect our property to be worth about the same...
My friends from 1986 are still crying in there shandies cause "first home buyers are getting screwed" and rents have just gone up... again sob! sob!
Shrewdy in 20 yers time I sincerely hope you are not like them. But the longer you stay in the rental rut the deeper it gets.

MM. This thread is entitled: "NZ 1st homebuyers are ScReWeD..." I am merely trying to point out that they are not being "screwed" as much as becoming SNIOPed. (Susceptable to the Negative Input of Other People) You will never know how many people I have helped make the first move toward first home ownership, or satisfaction and pleasure I have enjoyed from doing so.
As a home owner I consider myself very fortunate. Not because I own my own home, but because I finally realised I COULD own my own home.... could've/should've done it 20 years earlier!
Cheers
JK

clips
23-01-2007, 07:20 AM
well said Joe, i've had a very similar property path, yep paid 24% on the first house i bought, still own it and the three more that i leveraged into off the first. Built and live in the big house out in the country ..... all this only happened because i wanted it to happen and took the plunge

Bel
23-01-2007, 07:40 AM
quote:Originally posted by JoeKing

In 1999 I bought the section (2 acres) where I now live. Paid $158k cash, borrowed $280k to build and landscape. A registered valuation 2003 valued this property at $380k.

Can you please tell us in dollars how much money buying this section has put in your pocket.

This is a forum for investors not farmers counting there chickens before they hatch.

Converting useless money into securities such as property will always be a great scheme but the points are that property is not the only vehicle for investing nor is taking out a mortgage the only method of purchasing a house.

A a great question would be how much money has you buying this section put in the banks pocket.

duncan macgregor
23-01-2007, 07:52 AM
Whats wrong with you guys dont you understand the crude one is young and stupid, the same as us at his age. Jeeze was i ever the dumb one at his age, its lucky i fluked my way into the house market.:D:D
I remember i was so smart that i thought POISIDEN mining shares in Australia were over priced at $15, and watched them go up to $230-00.
The crude one thinks the share market is the way to go, up to the first slump, then perhaps hopefully he fluked buying a house before that happens. When you understand the property market and how easy it is to make money then sharemarket is only for a bit of fun.
macdunk

Steve
23-01-2007, 08:44 AM
You could always find somewhere cheaper to rent to help build up your deposit? CLASSIC!

Pigs may fly before people live in this converted sty again (http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10420424)
A pig farmer converted a sty into four residential flats that she then rented out for $150 a week to Aucklanders desperate for accommodation.

In one of the most unusual tales to come from Auckland's super-heated housing market, a building where up to 150 piglets a week were born was turned into flats that were soon snapped up by eager tenants.

But, when the local council got wind of the unusual redevelopment, it was underwhelmed and took the owner to court.

JoeKing
23-01-2007, 09:15 AM
quote:Originally posted by Bel

Can you please tell us in dollars how much money buying this section has put in your pocket.
Bel sorry cannot put an exact figure, but somewhere else (maybe another thread?) I briefly outlined how I used $20,000 equity in our home and turned it into more than $1 mill in less than 3 years, and used not one penny of my own! At one stage I owned 37 houses. At a guess I would say probably 2mil+ (without selling our home) Could have been a lot more but I gave up property investing a couple of years ago.

This is a forum for investors not farmers counting there chickens before they hatch.
Ahem... this thread is entitled NZ 1st homebuyers are ScReWeD...

Converting useless money into securities such as property will always be a great scheme but the points are that property is not the only vehicle for investing nor is taking out a mortgage the only method of purchasing a house.
I don't think anyone is disputing this, tho I have never actually had any "useless money"

A a great question would be how much money has you buying this section put in the banks pocket.
Perhaps a more relevant question might be "how much money has the bank put in my pocket"? If the bank has done ok as well thats fine by me.
I have a very nice orchard, people say virtually everyday when they come to pick fruit "look the birds are murdering your plums - peaches - nectarines - grapes whatever," my reply is "as long as I get what I want, they are welcome to what is left, the same as you are"


There a literally millions of people who would dearly love to own their own home. Most don't, simply because they have been told, and believe they can't.
When I bought my first property as above I was 43 and had been adjudged bankrupt 6 months. I approached the Official Assignee and asked "is it illegal to have a mortgage" he said NO! "so long as you disclose your position to a lender, but the chances of a bank lending to you are pretty slim." True! I tried every lending institution I could find and got knocked back. Then the newly founded United Building Society opened an office in Rotorua and I found a sympathetic ear and became the first(and possibly only) undischarged bankrupt in NZ to have a mortgage. A little later I became the first (and again possibly ony) undischarged bankrupt to be registered for GST.
It is true... If you believe you can, you are right. If you believe you can't, you will also be right.
A wise word from me for all you doubters:
Unlike a marriage, a mortgage is just as easy to get out of, as into. If you decide it is not for you, you can always just sell the problem, with a chance of coming out better off.
Cheers
JK

Crypto Crude
23-01-2007, 11:42 AM
Joeking what did you pay for your first property back in 1986? have any ideas what it may be worth now?
[8D]
.^sc

JoeKing
23-01-2007, 12:08 PM
quote:Originally posted by Shrewd Crude

Joeking what did you pay for your first property back in 1986? have any ideas what it may be worth now?
[8D]
.^sc

Hi Shrewdy, It was/is a 2 b/r concrete block unit strata titled in a block of 5, close to city centre.
We paid $39k (GV was $43k) for first unit (lived in it 5 years) and purchased the rest over 12 years as they became available. Latest RV (rateable value) around $118k each, but as we own the total block and zoning has recently been changed to allow for hotel construction, although the units are not all that flash..I do all the maintenence and enjoy pottering with a hammer and paintbrush to keep them in good repair. (under rented but still returning 20%+) the total section is very valuable. I had thought of demolishing existing units and constructing 8 multi level nice apartments then flicking them at around $360k each,(about the going rate) but have instead decided to wait till someone else wants to do something similar and comes a knockin with a hand full of dollars, or alternatively sell them one at a time for say $125k each.
MMM not a bad return for $39k outlay, oops-(plus interest of course I'm sure someone will figure how much over 5 years). All the subsequent unit purchases and maintenece have been paid for by their own incomes/rents, and we have been able to claim all GST and tax incentives to boot.
Cheers
JK

Crypto Crude
23-01-2007, 12:43 PM
JK awesome....
Using historical performance and comparing it with present/future performance is a waste of time... your return is approximately 300%
using your historical return and putting it into present time you get
Say I bought a house for 280k
280k * 3= 840k
in dollar terms your $ increased 118-39=79k
in dollar terms mine has to increase = 560k
for us to be equal
mine has to increase 700% in dollar terms more than yours....!


quote:duncan macgregor Posted - 23/01/2007 : 08:52:28 AM
Whats wrong with you guys dont you understand the crude one is young and stupid,
The crude one thinks the share market is the way to go.
then perhaps hopefully he fluked buying a house before that happens.
When you understand the property market and how easy it is to make money then sharemarket is only for a bit of fun.
macdunk

"Whats wrong with you guys dont you understand the crude one is young and stupid" ... I maybe young but certainly not stupid... I am certainly not wrong to way up all the costs rather than ONLY look at the benefits...
in present tense, there are costs.... namely a falling market amongst MaNy...
but you guys don't seem to want to talk about the costs....
the way to get around this is to talk past performance.....

"The crude one thinks the share market is the way to go"
....I don't think the share market is the way to go.... I have said (more than once) that I only have a 2-3 years left in shares... I believe the last 3-5 years performance can be put down to Baby boomers that have kept markets liquid.... they will pull out.... and I will be out of this game.... (or maybe I might go short!)

" then perhaps hopefully he fluked buying a house before that happens"
.... IF I buy a house it will be no fluke....

"When you understand the property market and how easy it is to make money then sharemarket is only for a bit of fun"
this is not a house vs sharemarket thread.... you cannot compare leverage vs non leverage... with sharemarket leverage my AED would kick house butt... not comparable buddy...

you cannot compare past to future.... as you cannot compare 79k to 560k....
[8D]
.^sc

clips
23-01-2007, 01:12 PM
hey joe... how do you claim gst on residential property ?

trackers
23-01-2007, 02:01 PM
This would set you up shrewd:

http://www.trademe.co.nz/Trade-Me-Property/Residential-Property/Houses-for-sale/auction-85131008.htm?key=298346

trackers
23-01-2007, 02:11 PM
quote:

"Whats wrong with you guys dont you understand the crude one is young and stupid" ... I maybe young but certainly not stupid... I am certainly not wrong to way up all the costs rather than ONLY look at the benefits...
in present tense, there are costs.... namely a falling market amongst MaNy...
but you guys don't seem to want to talk about the costs....
the way to get around this is to talk past performance.....

"The crude one thinks the share market is the way to go"
....I don't think the share market is the way to go.... I have said (more than once) that I only have a 2-3 years left in shares... I believe the last 3-5 years performance can be put down to Baby boomers that have kept markets liquid.... they will pull out.... and I will be out of this game.... (or maybe I might go short!)



A falling market? ROFL... since when?


quote:
"When you understand the property market and how easy it is to make money then sharemarket is only for a bit of fun"
this is not a house vs sharemarket thread.... you cannot compare leverage vs non leverage... with sharemarket leverage my AED would kick house butt... not comparable buddy...


Haha, thats a good one... We can't talk about leveraged gains? In a property investing forum? that's brilliant

Crypto Crude
23-01-2007, 03:25 PM
quote:
trackers Posted - 23/01/2007 : 3:11:37 PM
quote:
1....A falling market? ROFL... since when?
2....Haha, thats a good one... We can't talk about leveraged gains? In a property investing forum? that's brilliant


1.... we are due for a falling market....... thats all im saying... have alook at this graph, I have shown it before... in particular look at the years 91-92, 98-99, 00-01
www.rbnz.govt.nz/keygraphs/fig4.html ..... as mac dunk said, its all about cycles... whata ya no... the next downward cycle is due....

2....you can talk about anything you want....all i'm trying to say is that...
My position has nothing to do with houses vs shares...
for me there is no argument about comparing one to the other...
all I said was if my shares had leverage then I wood eat housing alive... (dollar for dollar)
at the moment I don't stand for housing....I have shares... that Don't mean that shares&gt;housing....

Mack dunk... im not in the rental rut either... I live at home rent free, I exchange free rent for financial advice with me old man....
[8D]
.^sc

JoeKing
23-01-2007, 03:37 PM
quote:Originally posted by clips

hey joe... how do you claim gst on residential property ?

Clips,
firstly congrats on your success story.
Re gst. I just asked my bookeeper (wifey) and she says I was wrong. You can't claim GST on residential properties, only depreciation and tax deductions on repairs and maintenence.... my apologies. I fix leaky taps she pays the bills and counts the money... the way it should be.
I got confused with trading entity that handles WRAP's and properties that have intentially been bought to onsell, and is GST registered.

Shrewdy
"you cannot compare past to future.... as you cannot compare 79k to 560k...."
But you can always compare the past with the past. My Dad bought his first house 1954
Hull road Mt Maunganui in amongst the gorse and lupins. Cost 900 pound. I was brought up there as a boy, but cannot even find the section now, it is all industrial/commercial. I have often wondered how many millions it would be worth today? Don't be frightened by the zeros!Do you think we would ever be able to imagine our little 2 bedroom concrete block flat would EVER be worth over a HUNDRED GRAND!!

Historically you can safely bet on property appreciating around 8-10% per. an. on average.
Just take any average property and trace its sales history via QVNZ. I think you will be surprised.

Trackers
Re ChCh house. Great find! A few years ago I would have bought it over the phone, then called a management agency.

Cheers
JK

Mr_Market
23-01-2007, 05:35 PM
quote:Originally posted by JoeKing
MM. This thread is entitled: "NZ 1st homebuyers are ScReWeD..." I am merely trying to point out that they are not being "screwed" as much as becoming SNIOPed. (Susceptable to the Negative Input of Other People)

In that case I think you will find that more people will be convinced by your agruments if they are based upon FACT.


quote:
You will never know how many people I have helped make the first move toward first home ownership, or satisfaction and pleasure I have enjoyed from doing so.

Congratulations, you deserve a medal. I'm sure everyone is familiar by now with your great charity - you haven't missed an opportunity to tell us so.

JoeKing
23-01-2007, 07:13 PM
[quote]Originally posted by Mr_Market
... I think you will find that more people will be convinced by your agruments if they are based upon FACT.

Thats why I prefer to use my own experiences, they ARE fact, if you want to question anything I say please just do so.

Congratulations, you deserve a medal. I'm sure everyone is familiar by now with your great charity - you haven't missed an opportunity to tell us so.

OOOh! do I detect some sarcasm? Don't want a medal, and can't be bothered argueing! This thread was started for discussion, would you rather I go away? sorta leaves a hole in the discussion tho don't you think?
Cheers
JK

Steve
23-01-2007, 08:13 PM
quote:Originally posted by JoeKing
[brThis thread was started for discussion, would you rather I go away? sorta leaves a hole in the discussion tho don't you think?
Cheers
JK

Better if you stayed IMO...

patsy
24-01-2007, 06:41 AM
quote:Originally posted by Shrewd Crude

[quote]

My position has nothing to do with houses vs shares...
for me there is no argument about comparing one to the other...
all I said was if my shares had leverage then I wood eat housing alive... (dollar for dollar)
at the moment I don't stand for housing....I have shares...

.^sc



I entirely agree with your position and outlook. However, I don't understand with you are not leveraging shares. If you don't like the rates charged for margin lending, you can always use a revolving credit facility against your home and buy relatively low volatility shares like KIP and achieve a significantly higher return than if the funds were invested directly into commercial property (and you don't have to deal with tenants, and you have high liquidity as well).

cantab
24-01-2007, 10:25 AM
quote:Originally posted by patsy


quote:Originally posted by Shrewd Crude

[quote]

My position has nothing to do with houses vs shares...
for me there is no argument about comparing one to the other...
all I said was if my shares had leverage then I wood eat housing alive... (dollar for dollar)
at the moment I don't stand for housing....I have shares...

.^sc



I entirely agree with your position and outlook. However, I don't understand with you are not leveraging shares. If you don't like the rates charged for margin lending, you can always use a revolving credit facility against your home and buy relatively low volatility shares like KIP and achieve a significantly higher return than if the funds were invested directly into commercial property (and you don't have to deal with tenants, and you have high liquidity as well).


LOL, Patsy he hasn't got a home, however interesting that you mention borrowing against his home at a lower interest rate. ;)

Are you absolutely certain that your statement

"...like KIP and achieve a significantly higher return than if the funds were invested directly into commercial property"

is correct? Please supply the numbers if you have them.

cantab
24-01-2007, 10:59 AM
quote:Originally posted by Shrewd Crude
My position has nothing to do with houses vs shares...
for me there is no argument about comparing one to the other...
all I said was if my shares had leverage then I wood eat housing alive... (dollar for dollar)
.^sc


Shrewd, your shares can't get leverage, the bank isn't interested, what does that tell you?

Found another great first home, even room for a sandpit for the kids and the missus will do some great fryups in the kitchen:

http://www.harcourts.co.nz/listing/details.do?rul=%2Fsearch%2Fprocess.do%3Fpg%3D5%26o %3DB%26ts%3D115209545%26qst%3DEnter%2BID%2B%2523%2 Bor%2BStreet%26qss%3Dfendalton&id=347911

Pack a few photos to show the local lasses in China. ;)

trackers
24-01-2007, 11:47 AM
quote:Originally posted by cantab


quote:Originally posted by Shrewd Crude
My position has nothing to do with houses vs shares...
for me there is no argument about comparing one to the other...
all I said was if my shares had leverage then I wood eat housing alive... (dollar for dollar)
.^sc


Shrewd, your shares can't get leverage, the bank isn't interested, what does that tell you?

Found another great first home, even room for a sandpit for the kids and the missus will do some great fryups in the kitchen:

http://www.harcourts.co.nz/listing/details.do?rul=%2Fsearch%2Fprocess.do%3Fpg%3D5%26o %3DB%26ts%3D115209545%26qst%3DEnter%2BID%2B%2523%2 Bor%2BStreet%26qss%3Dfendalton&id=347911

Pack a few photos to show the local lasses in China. ;)




Haha... That first bit of the link, "harcourts.co.nz" told me all I needed to know ;)

Mick100
24-01-2007, 01:38 PM
quote:Originally posted by cantab
[

Shrewd, your shares can't get leverage, the bank isn't interested, what does that tell you?






I'v been following this thread - didn't plan on commenting until I saw the above remark

The fact is that you can borrow against shares - it's called margin lending

You can borrow between 40 and 80% against many of the shares listed on the NZX and ASX.

eg, You can borrow 70% against GPG. GPG has an average return of 18% pa while you can borrow the money to buy them at 10% pa - what's wrong with that.

You can't borrow 90% of the value of the asset as with housing but, depending on the shares you buy, you could easily borrow 50% of the value of your portfolio.

I'v made great use of leverage in the sharemarket.
.

duncan macgregor
24-01-2007, 05:33 PM
MICK, With property you can borrow more at cheaper rates so why would anyone wish to borrow for shares?. I would mortgage the homestead if i were into that, but would much rather buy more property with the money. It might be different for our young friend SHREWD CRUDE to risk the lot at the start of his investing career.
Property leveraged to the hilt gives a capital gain of 10 pc in my experience on a fixed mortgage of 8pc. Add the rent deduct the expences get all your own money back in three years start again double your size.
Why would anyone think that a 2pc gain is good when you can do that?.
I would rather have hundreds of thousands in mortgages on properties, than borrow five bob to buy shares. Buying shares involves greater risk than property. macdunk

cantab
24-01-2007, 06:14 PM
quote:Originally posted by Mick100

eg, You can borrow 70% against GPG. GPG has an average return of 18% pa while you can borrow the money to buy them at 10% pa - what's wrong with that.



Nothing wrong with that Mick, if you're comfortable with it and know what you are doing, I do know about margin lending, wouldn't do it myself, however my point to Shrewdie was related to his particular shares "your shares" - he has told us what shares he owns, perhaps Shrewdie can refresh us all with his portfolio and you can tell us how much the bank will lend to him, from memory there are a couple of oilers and a couple of uranium stocks. Come in Shrewdie :)

I can understand some people being prepared to leverage against defensive, high dividend paying, Aussie blue chips such as banks however I wouldn't use margin lending to do it.

Mick100
24-01-2007, 06:20 PM
quote:Originally posted by duncan macgregor

I would rather have hundreds of thousands in mortgages on properties, than borrow five bob to buy shares. Buying shares involves greater risk than property. macdunk


Buying shares on margin is a very risky practice for those people who don't know what they are doing in the markets. Let me put it another way - if I were you macdunk, I sure as hell would not use margin either.

As for myself, I consistantly (last 5 yrs) make well in excess of 10% pa in the markets so I'm quite comfortable borrowing at 10% pa.
,

Mick100
24-01-2007, 06:33 PM
quote:Originally posted by cantab


quote:Originally posted by Mick100

eg, You can borrow 70% against GPG. GPG has an average return of 18% pa while you can borrow the money to buy them at 10% pa - what's wrong with that.



however my point to Shrewdie was related to his particular shares "your shares" .












Good point cantab

One of the things, that those of us who use margin, would consider when buying shares, is whether those shares are on the lending list.

Successful investing doesn't depend entirely on picking the right shares - money managment is also quite important in my opinion.
.

Crypto Crude
24-01-2007, 07:45 PM
quote:patsy Posted - 24/01/2007 : 07:41:54 AM
I entirely agree with your position and outlook. However, I don't understand with you are not leveraging shares. If you don't like the rates charged for margin lending, you can always use a revolving credit facility against your home and buy relatively low volatility shares like KIP and achieve a significantly higher return than if the funds were invested directly into commercial property (and you don't have to deal with tenants, and you have high liquidity as well).

thanks patsy...
I don't have a house though....
It is not my goal to invest in low volatility shares... im chasing
high risk shares (with research)... and prepared to put it on the line.... now that I'm up 10k plus, I can afford more downside....
sold my NZOOD 1 day ago... its down 10% today... bought NWE with big announcement coming up....

Mack dunk.... at least we agree on one thing!... I have too sent every dollar I own and put into australia assets/dollars.... a future exchange rate fall guaranteed... wanna get back into NZOOD some time though


quote:cantab Posted - 24/01/2007 : 11:25:46 AM

LOL, Patsy he hasn't got a home,

thats not amusing at all... I hope you are around in two years so we can debate what will happen after a falling market...
cantab- squallor to 2.4 million dollar... which one is it?...

Mick100.... how many dollars leveraged could I borrow against AED? how can I use leverage in the share market? I have an email...

[8D]
.^sc

Crypto Crude
24-01-2007, 07:49 PM
quote:duncan macgregor Posted - 24/01/2007 : 6:33:20 PM
--------------------------------------------------------------------------------
MICK, With property you can borrow more at cheaper rates so why would anyone wish to borrow for shares?.


If that person didn't like the outlook on property... and if that person thought they could return way more on shares compared to the associated lending rate
[8D]
.^sc

Mick100
24-01-2007, 08:30 PM
shrewd, AED is not on the lending list at my broker - NZO is, so I'm a bit surprised that AED isn't - I don't know the criteria that is used in determining which companies go on the list.
I have been expecting AED to get added to the list for a while now. ARQ and TAP are both on at 60%, NZO at 50%, PSA at 40%, STO at 70%.
May see AED get added in the next 6 months hopefully.
,

Crypto Crude
24-01-2007, 09:11 PM
Mick100...
thanx...in 6 months the horse would have bolted... AED will be 10... It will be a 6bagger for me...feeling most confident about this stock over all others...

quote:
cantab
Posted - 24/01/2007 : 7:14:11 PM
quote:
Originally posted by Mick100
my point to Shrewdie was related to his particular shares "your shares" - he has told us what shares he owns, perhaps Shrewdie can refresh us all with his portfolio and you can tell us how much the bank will lend to him, from memory there are a couple of oilers and a couple of uranium stocks. Come in Shrewdie

cantab... I have regigged my portfolio of late to include NWE (to increase my exposure to the PUFFin announcement coming up)..... other stocks are AED, URA, 30k of UOGO...
tried to push out all my NZOOD at 13.3 ... pushed out 70% or so at 13.3... and now only hold 20 something k NZOOD.... thats all.....
I can answer that question now on how much the bank will lend me.... zero leverage....
It doesnot deter me on my path to cut that 30year loan to 10years...
and two years sideways / falling market shall be enough...
I hope that the one's going against my thoughts will be around in two years!
the risks of holding out two years vs 30year loan is defintely worth it...
[8D]
.^sc

cantab
24-01-2007, 09:38 PM
quote:Originally posted by Shrewd Crude
thanks patsy...
I don't have a house though....


quote:cantab Posted - 24/01/2007 : 11:25:46 AM

LOL, Patsy he hasn't got a home,

thats not amusing at all... I hope you are around in two years so we can debate what will happen after a falling market...
cantab- squallor to 2.4 million dollar... which one is it?...


[8D]
.^sc


Shrewdie, you read that wrong buddy, I wasn't laughing at you, I was making a joke with Patsy who somehow couldn't work out after 12 or so pages on this topic that you don't yet own a home. I sincerely hope you get a home however I'm already on record as saying I don't believe it is necessary to ever own one's own home. I've currently got a tenant who owns a number of houses in Christchurch. That thinking changes everything - areas that you wouldn't live in suddenly become attractive, for example Hornby which happens to be a great letting location - close to ever increasing industry and warehousing - therefore growing employment - close to major shopping centres - not that far away from Westfield Riccarton Mall - attracts good stable family tenants - old man hops on the bike and cycles down to the same factory for 20 years - rents for life.

You wrote off linwood - walking distance to Cathedral Square! Take a look at the people walking around - it's changing - increasing numbers of Asian students, etc

Shrewdie, you've certainly started something interesting. :)

Aranui or Fendalton - your call