NZ 1st homebuyers are ScReWeD...

[fungus pudding]

Ive never claimed at any stage I was an expert.

I am a property investor myself and cashed up 2-3 years back. I have started buying again, always on the look out for more under valued properties to buy. I started buying properties again late last year with a long term view.

Good luck to you Upside. If you are right and the market has not bottomed, then it is an opportunity for me to buy more at a cheaper price.

Why do you call yourself a property investor? Cashing up, or selling, then buying more is property trading - not investing.

[upside_umop]

I reckon we should tie this thread up. What we have is a couple of young bucks with a lot of confidence, and good on you two (shrewd and upside). However bowling out of University you guys have no idea of the 'real world' I know because I was just like you about 6 years ago.

It would pay to respect the opinions of older posters and learn from them. This downturn is no different to any other.

Umop your comment about liking to see unemployment rise 'to let the market work it out' shows an arrogance which you'll lose quite quickly once you leave university. High unemployment causes all sorts of social problems that no one needs.

Good Luck.

BTW upside what sector are you moving into in 2009?

Fair enough, this thread has gone on for a bit...I'd like to see it out though. Share more experiences as they come along. I'll definitely be getting advice from the likes of MacDunk on what to look out for with leaky homes etc as he knows what he is talking about.

I feel I have a reasonable understanding of the real world...maybe not fully yet. I have held a job throughout the last 3 years of university, but know that a tight job market doesn't do any good. If the govt was to come out and try keep unemployment below 4% it would be madness. I don't think we would see any social problems at large if it were to rise to 6-7%...maybe 10-12% would though? Sorry wasn't trying to come across as arrogant! But I dont like it how people come and say "I'm never buy Fisher and Paykel Appliances again, because they'd rather employ overseas workers...." I mean would they rather have FPA around as a company in 10 years or not is the question? Just that sort of thing you know. Also, real estate agents, financiers, etc have all had it good for a while...now there is just a little downturn, they choose the high reward job but also have to have the high risk/volatility in earnings. Its all part of the game but unfortunately some people arent prepared.

I'm heading into accounting, so even a lot of my peers are at severe risk of not finding employment next year but I'm sure those that have worked hard will be ok.

what do you do? did you buy a house straight out of uni?

[MrDevine]

Upside, my wife and I work as a designers in Auckland. My company does good work for a range of clients, and what we are seeing is that across the board, from suppliers and clients – barring government work – is that things are quite slow and a lot of work is going on hold, layoffs are occurring - nobody is hiring in our industry.

Conversely my wifes' company does a lot of work in Australia, and they are still quite busy. Advertising and media spend is always the first to be cut in a recession, which I think is counter intuitive if you still want to broadcast your products or services to your market, and encourage punters to spend.

We brought our house two years ago on low deposit (I've been out of uni for 6 years, my wife is a 'bit older') primarily for the reason that we wanted somewhere to live. I was in two minds about it – didn't expect any capital gain, and was prepared to weather any losses. Our position is secure if we keep our jobs, under that scenario low interest rates are fine as we can pay our mortgage back faster and move onto other things. If we lose our jobs, then you can buy my place! Life is all about timing, and sometimes you come into things at the right time, sometimes you don't. I hope I'm in the former category.

Point is, if you come out and land a sweet job next year, earning good coin, you'll be sweet and miss any of the uncertainty etc.

On another note, how is your share portfolio going? I am almost back on parity where I was in September, so I'm stoked with that.

Mr D.

[tricha]

Ive never claimed at any stage I was an expert.

I am a property investor myself and cashed up 2-3 years back. I have started buying again, always on the look out for more under valued properties to buy. I started buying properties again late last year with a long term view. Unlike a few people, I do not pretend to know everything and I am not a fortune teller so I cant predict the bottom of the market.

From my previous experiences, I know for certain that property goes in cycles and experts and analysts always gets the timing wrong. I am only voicing my opinion based on my previous experiences.

In a down trending market you can always negotiate a fantastic price, esp with cash unconditional offers. In a up trending market it is much harder to negotiate a good price.

Good luck to you Upside. If you are right and the market has not bottomed, then it is an opportunity for me to buy more at a cheaper price. Nothing stays cheap for ever.


ps: Shrewdy.. watch out for the girls from Shanghai, they will chew you up alive.

Yes its time to buy rental properties if u think this recession will blow over in 12 months.
Toss that coin

1 - market has bottomed in certain areas.

2 - interest rates are the key to positive gearing and this next rate drop will make it happen. 5% on $200,000 = $200 a week
8% on $200,000 = $320 a week

3 - Do not be surprised to see John Key do as in OZ, offer house grants to get the timber, building, forestery, suppliers, realestates etc moving

4 - If u r young who cares if u make a mistake or 2, u have plenty of time to catch up.

5 - As Dr Who states the so called sheep (experts) get it wrong.

Fortune follows the brave.

P.S I have received 20 calls in the last 24 hours to rent a house in Greymouth.
Looking at trademe, there are some reasonable cheap houses for sale that get u straight into positive return on the next interest rate cut.

[upside_umop]

Upside, my wife and I work as a designers in Auckland. My company does good work for a range of clients, and what we are seeing is that across the board, from suppliers and clients – barring government work – is that things are quite slow and a lot of work is going on hold, layoffs are occurring - nobody is hiring in our industry.

Conversely my wifes' company does a lot of work in Australia, and they are still quite busy. Advertising and media spend is always the first to be cut in a recession, which I think is counter intuitive if you still want to broadcast your products or services to your market, and encourage punters to spend.

We brought our house two years ago on low deposit (I've been out of uni for 6 years, my wife is a 'bit older') primarily for the reason that we wanted somewhere to live. I was in two minds about it – didn't expect any capital gain, and was prepared to weather any losses. Our position is secure if we keep our jobs, under that scenario low interest rates are fine as we can pay our mortgage back faster and move onto other things. If we lose our jobs, then you can buy my place! Life is all about timing, and sometimes you come into things at the right time, sometimes you don't. I hope I'm in the former category.

Point is, if you come out and land a sweet job next year, earning good coin, you'll be sweet and miss any of the uncertainty etc.

On another note, how is your share portfolio going? I am almost back on parity where I was in September, so I'm stoked with that.

Mr D.

I see, its good to get a perspective from business owners/operators to see whats going on out there. I always thought advertising was reasonably resilient, as you say its counter-intuitive. Warren Buffets likes the industry though...

I see what you mean with your home, and its been stated before with Minimoke being the leading proponent in that there are intangible benefits associated with owning your own home. That's fair enough for your situation. I hope to be able to gain some of them once I settle a couple of medium term financial goals which would enable me to be reasonably doubt free of future finances..

My portfolio held up pretty well this year. I disclosed mostly what I was doing buying/selling etc...was with a couple of the sharetrader favorites! NZO, PRC, PPP...had a few LMPOA's which I sold on April the 8th (my birthday I remember!) and still have a couple VPE to see what happens with them. At this stage I'm around 5% in the market and 95% cash on call. Ended the year up around 50-60%...which I was extremely happy with considering market conditions. If I play it conservatively I'll have the deposit 'required' for my first house purchase...But I'm already eying up a few 'all ins' during the year!

[arco]

.

Anyone noticed how many agents 'For Rent' signs have been appeared recently? (North of Auckland)

Must be a glut of rentals out there at the moment. Never seen agents advertising rental signs outside residentials before

[minimoke]

.

Anyone noticed how many agents 'For Rent' signs have been appeared recently? (North of Auckland)

Must be a glut of rentals out there at the moment. Never seen agents advertising rental signs outside residentials before

Nothing new there. 1991 saw loads of signs on fences. This was a time when property values stagnated for a while before taking off like a rocket in 1995. Its just another natural stage of a cycle.I've seen rental signs on fences in christchurch for years - what we'll see now is more of them.

[minimoke]

Hi Arco ... Could NZ tax law be the reason for it?

Belg. Tax law becomes important if IRD are likely to follow up on compliance. IRD are struggling with property investors who bought for capital gain. It will be a while, if ever, before they chase boarder/ flatmate taxes.

[fungus pudding]

Hi Arco ... Could NZ tax law be the reason for it?

In NZ you can have 2 rooms rented out to boarders for up to $220 per week with each room after that at $179 before you pay tax on it!

If you're an upper income tax payer this is how much extra you'd have to earn to get the same benefit by earning the money ...

1 room - 18k
2 rooms - 37k
3 rooms - 52k
4 rooms - 67k
.. assumed 52 weeks rented per year and 39% tax ...

IRD link for boarders: http://www.ird.govt.nz/income-tax-in...ers-flyer.html

IRD guide: http://www.ird.govt.nz/resources/1/e...4a30/ir264.pdf

Sorry - haven't checked the numbers or tax issues very thoroughly as I have to run. ...

PDYOR!

edited: In the IRD guide, poorly worded and lacking definitions!, I understand a 'boarder' to be someone who lives in your property when you own it and pays you rent; a 'flatmate' to be someone who you live with equally when the property is owned and rented from a landlord; and a 'tenant' to be someone who lives with you when you are the leaseholder and you have sub-let an area of the property to someone else. Can anyone confirm my definitions?

A boarder pays board, not rent. Board usually includes items which are normally divided up between occupants in a flatmate situation. e.g. toilet provisions, electricity, telephone use and often meals. There is no reason (unless excluded by the lease) why a tenant cannot have a boarder. Someone renting on a shared basis is a flatmate, and someone renting just a room with nothing else included would most usually be considered a tenant or sub-tenant (lessee or sub-lessee) whether renting from the owner, or a tenant respectively. Definitions do get confused and are arguable due to an almost limitless number of arrangements.

[fungus pudding]

Thanks fungus ...

Is there any IRD guidance or legal presidence as to what one would need to provide a 'boarder' to be absolutely certain to qualify for the (I think) generous 'standard cost method'? ...

The reason I ask is that the media is pushing the 'take in a boarder' option to those struggling to pay their mortgages ... If this is poor advice as they open themselves to unforseen tax liabilies ... I think a letter to Mary Holm to investigate might be useful.

The best place to get an answer is from the IRD. Just phone them - you can be anonymous if you wish. Obviously to get a written answer, which is better, you will need to give a name. Contrary to anything you may have heard they are excellent to deal with in my experience. Obviously if you do own the property and advertise for a boarder, and supply at least some meals, then you are offering board. From there-on you could get into grey areas, which is why you are unlikely to see published definitions. With many things like this the IRD tends to consider each case on its merits. So ask them.