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  1. #21
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    Quote Originally Posted by voltage View Post
    Everything is up for auction and you are competing with so many competitors.
    But that sounds like just like the sharemarket

  2. #22
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    Quote Originally Posted by voltage View Post
    it is so easy to buy shares and so difficult to buy an investment property in this market. Everything is up for auction and you are competing with so many competitors.
    Mistakenly you posted this twice, but the hog thinks that's just perfect as your observation is correct and merits being stated at least twice.
    warthog ... muddy and smelly

  3. #23
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    Quote Originally Posted by voltage View Post
    it is so easy to buy shares and so difficult to buy an investment property in this market. Everything is up for auction and you are competing with so many competitors.
    With real estate, all your purchases are for sizeable sums as you cannot accumulate small parcels in the same way you can with shares. Comparative transparency of pricing is an advantage about buying publicly listed shares over property, especially houses sold "by negotiation" or "auction". Buying a house through an auction is a nightmare, when you have to put in so much "due diligence" prior to making a bid, which is all wasted when you are out-bid on the day.

    However, with property, if you have deep pockets and are prepared to pay "top dollar", you will get the property. By definition, all bids under the winning bid are "at below market price". Just like if I put an offer with my broker to buy Share "A" for $1.00, when the market price turns out to be $1.05. The difference being that I would be able to see (more easily) the change of market price for the share, provided I had an account with access to immediate pricing and provided I was glued to my computer....

  4. #24
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    And, of course, shares in (say) Fletcher Building are traded daily, whereas the houses you want to buy are traded infrequently.

    Which makes price discovery for Fletcher Building quite easy. And which makes price discovery for 56 Grantham Road quite difficult.

    Especially when coupled with the need to physically inspect the property.

  5. #25
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    And, of course, shares in (say) Fletcher Building are traded daily, whereas the houses you want to buy are traded infrequently.

    Which makes price discovery for Fletcher Building quite easy. And which makes price discovery for 56 Grantham Road quite difficult.

    Especially when coupled with the need to physically inspect the property.

  6. #26
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    Quote Originally Posted by Bjauck View Post
    very little tax is made from residential property investment as most gains are untaxed capital gains. Even when tax is paid in the form of rates, they are often paid grudgingly,,,At the very least perhaps, stamp duties could be paid on investor and foreign purchases.

    IFT is definitly one of my better investments, However it was floated in the 1990's whereas Skid bought his house in 1984. It would have been interesting to see how IFT would have coped with the 1987 meltdown.

    A great investment and amazing that you could do it without leveraged finance. You put in hard work to turn it around - and have got a good return for your efforts. Most of that return has added value - mostly capital value - to your property, which will not be taxed when you sell. Similarly you have enjoyed periods of increasing land values. Other people work hard and their effort is rewarded by earning a high income, all of which is taxed. Society needs to determine if that is fair.

    As you say maintaining a rental property, if you do it yourself, does require hard work and there can be periods when you do not have a tenant.

    As property has increased in value so much more than inflation and incomes since 1984, I wonder if people could do what you did, without needing to borrow.

    Certainly unleveraged landlords could pay more in the way of income tax as they do not deduct interest charges from rental income. However rental returns would still be a minor part of their total investment returns and the expectation of capital appreciation must be a dominating motivating factor especially in a market like Auckland where average gross rental return is about the same as a 1 yr term deposit interest rate.
    I have real doubts that it could be done today,especially in Auckland --which makes the original question hard to answer--The fairness of it all is another debate (Ive just been a lucky bystander in many ways)--to me the whole capital gains thing would most likely work better if they determined the value of props when the law came into affect and work from there--trying to go retrospective would just be to hard and most likely wouldnt work--so at the moment Ive got big gains on paper--not a very big cash flow--high rates-and tenants--and then perhaps a tax to come--9Ive been pretty much buy and hold---those that flick are a different animale.
    Im also perfectly aware that this (what I believe)crash thats coming to the share market may well spill over to the housing market and reset values(but not rates)

    I still cant figure out why they dont use the existing tracks to Huntley and Hamilton for a decent commuter train into Auckland(thus opening up lots more affordable properties in those areas for those working in auckland.

  7. #27
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    Quote Originally Posted by skid View Post
    I have real doubts that it could be done today,especially in Auckland --which makes the original question hard to answer--The fairness of it all is another debate (Ive just been a lucky bystander in many ways)--to me the whole capital gains thing would most likely work better if they determined the value of props when the law came into affect and work from there--trying to go retrospective would just be to hard and most likely wouldnt work--so at the moment Ive got big gains on paper--not a very big cash flow--high rates-and tenants--and then perhaps a tax to come--9Ive been pretty much buy and hold---those that flick are a different animale.
    Im also perfectly aware that this (what I believe)crash thats coming to the share market may well spill over to the housing market and reset values(but not rates)

    I still cant figure out why they dont use the existing tracks to Huntley and Hamilton for a decent commuter train into Auckland(thus opening up lots more affordable properties in those areas for those working in auckland.
    There was a commuter train Hamilton - Auckland that was shut down 5? years ago due to lack of patronage.It may be better patronized now & be time to bring it back.
    https://www.facebook.com/HamiltonCommuterTrain

  8. #28
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    Quote Originally Posted by kiora View Post
    There was a commuter train Hamilton - Auckland that was shut down 5? years ago due to lack of patronage.It may be better patronized now & be time to bring it back.
    https://www.facebook.com/HamiltonCommuterTrain
    The distance from Hamilton to Auckland, would be commuting distance for many people going into London. If Auckland does not get its act together to meet demand, a fast motorway and train service to Hamilton (and not forgetting potential development of Mercer and Huntly en route) may be a solution.

  9. #29
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    Just recieved the annual report for year ending 30/06/015 and the return before taxation is 9.30%.
    A return of 8.29% if you are using 28% PIR.

  10. #30
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    Quote Originally Posted by Bjauck View Post
    The distance from Hamilton to Auckland, would be commuting distance for many people going into London. If Auckland does not get its act together to meet demand, a fast motorway and train service to Hamilton (and not forgetting potential development of Mercer and Huntly en route) may be a solution.
    Its a good idea, but they can't even get a train to the North Shore (which is just a few km from the CBD), which is in desperate need of one, and has been in desperate need for several years... so I doubt they can build one to Hamilton
    Last edited by trader_jackson; 09-10-2015 at 02:14 PM.

  11. #31
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    Quote Originally Posted by kiora View Post
    There was a commuter train Hamilton - Auckland that was shut down 5? years ago due to lack of patronage.It may be better patronized now & be time to bring it back.
    https://www.facebook.com/HamiltonCommuterTrain
    Probably the key to that would be an efficient and relatively rapid train(which is probably no easy feat)

    Just a note on my earlier post about property--When I said I didnt do it like some investors (over leveraged) I did have mortgages,but just made sure I had a high amount of equity--(none of this 95-100% of value borrowing)

    I think the whole thing would work better these days in a place more like Hamilton or somewhere out side Auckland where the prices were more affordable--unless of course there is a crash.

  12. #32
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    Quote Originally Posted by kiora View Post
    By my rough calculation it works out out at 20% compounding return/yr
    Infratil is close to that
    My historical past 5 yr return on sold shares is between 15 - 20% annualised depending on which market (UK, US or NZ). This does include the down years. Overall, as I run both property and shares, on a straight non-leveraged return my shares do better but as I am only leveraged for property, wealth comes from good property. I keep a portion of money in the sharemarkets and when I deem my investment to be over my fair value, I sell it and put it into property principal reduction.

  13. #33
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    Quote Originally Posted by nextbigthing View Post
    Here's an interesting stat that may prove useful, in the 24 months following Black Tuesday, the market cap of public property companies in NZ fell by nearly four fifths!
    The property companies of that time were carrying on as though there was no tomorrow. Landmark and RJI were prime examples. And anything called a share reached absurd levels, therefore a long long way to fall.Current LPTs are quite different

  14. #34
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    In my opinion their are 2 main problems for a commuter train from Hamilton to Auckland.
    It would have to leave Hamilton around 6am which is when a lot of freight trains are arriving in the area from south and freight would get preference.
    2nd the Whangamarino swamp has only 1 line so thats where all the hold ups would be.

  15. #35
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    Quote Originally Posted by beetills View Post
    In my opinion their are 2 main problems for a commuter train from Hamilton to Auckland.
    It would have to leave Hamilton around 6am which is when a lot of freight trains are arriving in the area from south and freight would get preference.
    2nd the Whangamarino swamp has only 1 line so thats where all the hold ups would be.
    It would cost a lot of money to make the line into a higher speed double track. However it could be worth it, if Auckland prices remain high and new builds remain below what is needed.

  16. #36
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    Quote Originally Posted by BeeBop View Post
    Overall, as I run both property and shares, on a straight non-leveraged return my shares do better but as I am only leveraged for property, wealth comes from good property.
    Why are you allocating your debt against propety? Just because thats what it is secured over?

    Consider it different way.

    You have property worth $X, and shares worth $Y. Deduct from that portfolio debt of $Z (which just happens to be secured over property to give you a low interest rate).

    My guess is you are probably overweight in Property yet your returns on an EBITDA basis are probably alot lower.

    You could argue the counterfactual that without the property, you wouldn't be able to get debt, which is a far comment. Always compare like for like, while being mindful of the benefits of each.

  17. #37
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    Quote Originally Posted by Harvey Specter View Post
    ...
    My guess is you are probably overweight in Property yet your returns on an EBITDA basis are probably alot lower.

    You could argue the counterfactual that without the property, you wouldn't be able to get debt, which is a far comment. Always compare like for like, while being mindful of the benefits of each.
    That is the advantage of (real estate) property...you can easily borrow money against it...so I guess you could argue that the profits derived from shares bought with the mortgage moneys should be allocated as being derived from the real estate.

    The current NZ tax system plus ability for investors to leverage all add up to owner occupiers being gradually priced out of the residential property market in NZ (esp Auckland).
    Last edited by Bjauck; 12-10-2015 at 09:34 AM.

  18. #38
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    Quote Originally Posted by Bjauck View Post
    The current NZ tax system plus ability for investors to leverage all add up to owner occupiers being gradually priced out of the residential property market in NZ (esp Auckland).
    Its not the Tax System!!! Its the banking system which allows for much lower interest rates for property.

    I have debt secured over shares and it is treated exactly the same as debt secured over property, the only difference is the interest rate is 1.2% higher and the loan to value is much lower (and not even allowed on some shares).

  19. #39
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    Quote Originally Posted by Harvey Specter View Post
    Its not the Tax System!!! Its the banking system which allows for much lower interest rates for property.

    I have debt secured over shares and it is treated exactly the same as debt secured over property, the only difference is the interest rate is 1.2% higher and the loan to value is much lower (and not even allowed on some shares).
    It's both. You have to pay more in interest because shares can individually be more risky and prices fluctuate more.

    You are able to more easly get amortgage against real estate for a greater percent of capital value which coupled with the tax system means you can become negatively geared and end up getting an income tax refund whilst earning leveraged capital profits on your real estate investment.

  20. #40
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    Quote Originally Posted by Harvey Specter View Post
    Why are you allocating your debt against propety? Just because thats what it is secured over?

    Consider it different way.

    You have property worth $X, and shares worth $Y. Deduct from that portfolio debt of $Z (which just happens to be secured over property to give you a low interest rate).

    My guess is you are probably overweight in Property yet your returns on an EBITDA basis are probably alot lower.

    You could argue the counterfactual that without the property, you wouldn't be able to get debt, which is a far comment. Always compare like for like, while being mindful of the benefits of each.
    that depends on whether you are going for absolute maximum profit or more of an element of saftey(in terms of more equity in your properties)
    Its hard to see what the economic future is atm but there is certainly real chance that things could get ugly and that is not an environment you want to be over leveraged in--even with low interest rates,paying off a greater % of your debt on property is not a bad place to be.


    Meanwhile --Train to Hamilton--Is a rush hr delay for freight more important than helping to solve the housing crises? (especially considering some of the massive housing projects in all ready overcrowded Auckland to solve the housing crises ,but at the same time ,add to the traffic crises.---no easy answers --I wonder how a rail upgrade compares to a major road work (like the Northwest motorway extension incl tunnel)
    Hamilton is pretty well equipped with the hospital and all--train line would also incl. Huntley.
    Last edited by skid; 12-10-2015 at 10:58 AM.

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