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  1. #461
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    Quote Originally Posted by winner69 View Post
    Do family keep rent payments up ....and how ‘tough’ is the landlord if rent gets behind?
    Yes, no rent problems at all. The 'rules' are clear from the beginning and APs are required. One arrangement has been in place for nearly 20 years, over 2 properties and 2 relationships. One of the younger generation, tenancy has been in place 2 years and the commercial one couple of months.

    Also to add that the young generation get interest free loans to buy a vehicle, APs required though slow repayment is Ok. One is 18, one is 21. The rule there is they can negotiate more interest free loans for approved purposes after discussion, but the tap gets turned off if they sign up for a credit card. So far so good. I am actually not bothered about the money, but very keen they take responsibilities very very seriously. That is why I do it. Bit unusual maybe but work for me.

    ETA I did provide a short rent holiday of 3 weeks when a new baby arrived and the saved amount for rent did not quite cover the parental leave. Present from gran!
    Last edited by artemis; 31-12-2018 at 05:37 PM.

  2. #462
    percy
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    Quote Originally Posted by Bjauck View Post
    Percy - my hat off to you to be able to help your daughters whilst still living comfortably.

    However it underlines the fact that kids, without parents with money they can afford to co-invest with their chIldren in their first homes, are all but shut of NZs expensive market. It also indicates that the tax advantages of leveraged home ownership is increasingly becoming a subsidy for the children of wealthier people.

    For those shut out of home ownership (and for those for whom home ownership is not a convenient or desired option) there needs to be a beefed up retirement scheme with the level of tax advantages that NZ home ownership has. (untaxed net benefit of occupation/ leveraged gains)
    Had we not had been in the position to have helped out the daughters I think they would be having a very hard time of it.
    I went through very hard times through illness,stress and near business failure in 1987.Took a very long time for my health and finances to recover.I woud not like them to go through that.Once I was mortgage free my finances improved,so it was important to me they had no mortgages. .

  3. #463
    Speedy Az winner69's Avatar
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    Quote Originally Posted by artemis View Post
    Yes, no rent problems at all. The 'rules' are clear from the beginning and APs are required. One arrangement has been in place for nearly 20 years, over 2 properties and 2 relationships. One of the younger generation, tenancy has been in place 2 years and the commercial one couple of months.

    Also to add that the young generation get interest free loans to buy a vehicle, APs required though slow repayment is Ok. One is 18, one is 21. The rule there is they can negotiate more interest free loans for approved purposes after discussion, but the tap gets turned off if they sign up for a credit card. So far so good. I am actually not bothered about the money, but very keen they take responsibilities very very seriously. That is why I do it. Bit unusual maybe but work for me.

    ETA I did provide a short rent holiday of 3 weeks when a new baby arrived and the saved amount for rent did not quite cover the parental leave. Present from gran!
    Agree with you about the responsibility bit ....that is a necessity in any of these arrangements and they will be better people for it.
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

  4. #464
    percy
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    Quote Originally Posted by winner69 View Post
    Agree with you about the responsibility bit ....that is a necessity in any of these arrangements and they will be better people for it.
    In our case Gunna never knew the meaning of the word "responsibility."

  5. #465
    ShareTrader Legend Beagle's Avatar
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    Quote Originally Posted by voltage View Post
    Beagle, you have lots of common sense and would appreciate to hear more. Partnering, is this joint ownership? or do you help repaying loans?
    Thanks. I use the word partnering with your kids in the loosest possible way as this can take many forms. A partnership where ownership is joint, or co-ownership in a company or family trust are the main ownership vehicles. Unless you are super comfortable financially I think any investment in a house through a co-ownership arrangement should place the sole emphasis on the occupant being able to service the bank mortgage. If they can't fund it themselves at the current interest rate then you probably should look at buying something more affordable unless the parent(s) are well prepared to meet the ongoing burden of chipping in for mortgage payments and (seeing as they can't afford the mortgage) this leaves them also exposed to meeting the ongoing burden of other running costs including maintenance, insurance and rates. Parents should think very, very long and hard before putting their head in an ongoing perpetual liability situation for their kids in my opinion as this can lead to nasty surprises down the track. For example what happens if there's some deep cycle maintenance required such as a full repaint inside and out..who pays for that ? What about if there's some moisture ingress issues ?...do parents want the long term exposure of the risk involved and are they financial comfortable enough to afford this as well as look after their own financial needs comfortably ?

    Another possibility is where parents partner with their kids by helping them save for their deposit and then the parents contribution is then treated as a loan either with or without interest and is repaid over time. I think this is the most common sort of help as most parents are not super wealthy and while they can help with the deposit they probably need that money paid back over a period of time for their retirement needs. I recommend loans be formally documented as kids relationships with their partners often end badly and parents need to protect their financial interests as well as the interests of their own child.

    Yet another possibility is this partnering is simply a process whereby wealthy parents partner with their kids to help them save the deposit, usually 1:1 contribution but sometimes 2:1 or even 3:1..but as mentioned above its very important that the kids do put in some of it and then the parents gift the money they've contributed either all at once or over a period of time with conditions, (such as the kids keeping the bank's mortgage payments up to date, rates, repairs and insurance current)...this sort of thing might be appropriate where parents want to help their kids heaps but feel they need to keep "trainer wheels on the bike" for a while so to speak.

    I don't think any one solution is the perfect generic fit for all. For example one might have very serious concerns, (I think many parents have some concerns lol) about their kids choice of partner, so ownership in a family trust with your own child as the primary beneficiary might give some much needed peace of mind if one feels their kids relationship with their partner is rocky or likely to end badly. What percentage of marriages (or unions if you want to call them that) fail these days...50% ?
    Maybe people should plan for the risks associated with that ?

    Hope that gives you some food for thought....but I will add one final note of caution. I have seen quite a few families of modest means go way out on a limb for one or more of their children and it can go very very wrong with very sad consequences. Business entrusted to one's child to run, run into the ground and worthless at the loss of hundreds of thousands of dollars of much needed capital, one example and rental properties so badly damaged by methamphetamine use and consequent other wild party damage the repairs nearly bankrupted one of my clients and nearly ruined their marriage, (both kids involved with both properties were step children of one and natural child of the other client which caused massive friction in and of itself). When things go wrong they usually go very very wrong so whatever help you are prepared to give your child to get into a house I think one is best to seriously consider the chance you'll never see that money again and limit one's help to what you're prepared to gift or lose. The other thing from a relationship perspective is if you really go out on a limb for your child and they let you down so badly it seriously affects your ability to have a comfortable retirement then its harder to have a good relationship with them going forward. Best to take a carefully measured approach making sure you look after yourself and your partner properly as your first priority...along the lines of the advice below, in my opinion.

    An old retiring accountant once gave me this very sage advice when I was a very young starry eyed bean-counter "Love many, trust few and always paddle your own canoe"
    Last edited by Beagle; 01-01-2019 at 01:39 PM.
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

  6. #466
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    Having recently been reviewing my retirement investment strategy and found this thread. I have a debt free house and $500k.

    Im considering a rental property purchase with the $500k but would be interested to hear what others think about REIT's as an alternative investment. Have not been following them lately so not sure about how they will perform looking forward.

  7. #467
    ShareTrader Legend Beagle's Avatar
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    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

  8. #468
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    Quote Originally Posted by ynot View Post
    Having recently been reviewing my retirement investment strategy and found this thread. I have a debt free house and $500k.

    Im considering a rental property purchase with the $500k but would be interested to hear what others think about REIT's as an alternative investment. Have not been following them lately so not sure about how they will perform looking forward.
    I imagine with 500k you will need to eat into the capital, as well as using the return. If that is the case -go for the LPTs. You can always flog off a few if you need 10 or 20k, or add to if you have a year with low expenses.
    Besides that it's a damn sight easier dealing with a share of a trust, than a tenant. Especially with the ones which are PIES e.g. ARG, PFI. GMT, PCT. Not even any paper work, with no tax to worry about. Augusta is not a PIE, and Stride. comes with stapled shares in a management company Stride is a PIE, but the stapled shares in SIML are not.

  9. #469
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    Quote Originally Posted by fungus pudding View Post
    I imagine with 500k you will need to eat into the capital, as well as using the return. If that is the case -go for the LPTs. You can always flog off a few if you need 10 or 20k, or add to if you have a year with low expenses.
    Besides that it's a damn sight easier dealing with a share of a trust, than a tenant. Especially with the ones which are PIES e.g. ARG, PFI. GMT, PCT. Not even any paper work, with no tax to worry about. Augusta is not a PIE, and Stride. comes with stapled shares in a management company Stride is a PIE, but the stapled shares in SIML are not.
    The million dollar question, or .5m in my case, is how do I choose this portfolio and secondly how do I manage it. I am not averse to researching the subject but I am afraid of getting it wrong.

  10. #470
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    Quote Originally Posted by ynot View Post
    The million dollar question, or .5m in my case, is how do I choose this portfolio and secondly how do I manage it. I am not averse to researching the subject but I am afraid of getting it wrong.
    How much do you have in KiwiSaver (and in any other pension schemes) and in what type of KiwiSaver fund? What type of debt-free house do you have. If it is a big house in an expensive location, then that gives you the ability to trade down to a cheaper property and gives you an extra cushion of financial security that could be drawn upon in retirement. Also depending on the KiwiSaver balance you may be able to make a more risky property or Real estate related stock exchange investment with your $500k

    Both house prices and stock exchange prices have had good increases in prices and may well be entering a consolidation phase now. Is your 500k currently in a big Aussie bank?

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