proprty investment.

[duncan macgregor]

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

[troyvdh]

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

[Runswifscissors]

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

[stephen]

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

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

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

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

[Runswifscissors]

quote:Originally posted by stephen

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

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

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

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

Good point well argued. Except one caviat. Property is better security for Banks so the fees for using Other Peoples money tend to be lower.

[Wanderer]

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

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

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

You just have to have that balance

[halcyon9]

couple of simple points.


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


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


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

[Dough Boy]

halcyon9,

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

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

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

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

[Dough Boy]

One point I forgot to mention,

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

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

[ari]

quote:Property investment is the simplest easiest way to make money.

On paper it is, but one of my new p/y's has been on the market since 10/3/05.
http://www.open2view.com/Property/10...31335&offset=0
Open homes every weekend till last weekend when I stopped them. Hopefully if someone takes the time to phone off signs they will be more genuine. Just sick of the wall kickers comming for ideas (even with cameras)and wanting it for $200K below listing price. The average 41 days to sell in this area has certanly gone.
Anyone else suffering.I could well use the funds on next project