NZ 1st homebuyers are ScReWeD...

[JBmurc]

In times of high inflation the nominal price of assetts rises while the value of cash erodes. Likewise the percentage of debt secured against a debt lowers.

yes I agree tis the reason why the USA's only hope is to create mass inflation in turn reducing their dept which now rivals world annual GDP can't see them increasing rates till inflation has increased their housing value stats & decreased their dollar value an increasing their export earnings which will be the true catalyst of a US economy recovery

[fungus pudding]

I agree completely with Martin Hawes that residential investment has become the domain of the speculator, and is no place at all for an investor.
First class analysis in the Herald.

http://www.nzherald.co.nz/business/n...0592526&pnum=2

[voltage]

good article by Martin Hawes. Totally agree if you cannot get 7% net yield, then walk away. LPTs are looking good as an alternative.

[fungus pudding]

good article by Martin Hawes. Totally agree if you cannot get 7% net yield, then walk away. LPTs are looking good as an alternative.

7% is nowhere near enough. Interest, rates, insurance, vacancies, management and the real biggie - maintenance, add up to a helluva lot more than 7%. At a 7% return buyers are relying on capital growth. And very often that only offsets the operating loss - so it becomes little more than a compulsory savings scheme. IOW buying the capital gain.

[stanace]

7% is nowhere near enough. Interest, rates, insurance, vacancies, management and the real biggie - maintenance, add up to a helluva lot more than 7%. At a 7% return buyers are relying on capital growth. And very often that only offsets the operating loss - so it becomes little more than a compulsory savings scheme. IOW buying the capital gain.

He said 7% net, not gross. Everything you mention is already included.

[fungus pudding]

He said 7% net, not gross. Everything you mention is already included.

Oops! Yes - so he did. I must learn to read.:o:o

[voltage]

it is very hard to find 7% net yield properties unless you pick the worst areas in town which means the worst tenants with it.

[fungus pudding]

Depends on your deposit ... The larger it is the easier it becomes ... And I'd add you can still use the capital in the property as collatoral for other leveraged purposes which increases the net yield ... Hawes makes the point that the average property investor isn't very savvie ... He's not wrong on that account ... I'd go a step further and say they're mainly "me-too" morons that are just following the herd and/or do it because its trendy to have "a couple of investment properties"

The yield is the yield and doesn't change whether you borrow nothing at all or 100%.

[minimoke]

Gross yield is realively easy. Weekly rent x 52 weeks divided by purchase price x 100. So a $350,000 house at $300 rent a week is 4.45%

Cash on Cash Return (CoCR) or Internal Rate of return (IRR) are other good measures

[JBmurc]

Gross yield is realively easy. Weekly rent x 52 weeks divided by purchase price x 100. So a $350,000 house at $300 rent a week is 4.45%

Cash on Cash Return (CoCR) or Internal Rate of return (IRR) are other good measures

then you have to minus all the costs of having that property-rates,insurance etc soon becomes -4%

Not saying owning a rental isn't a good investment the last one I had in inver-vegas cost me 145,000 at auction(I was the only one to turn up)was getting 300pw from the 4brm 1930's brick home that was alright for a couple yrs spent 20k tidying it up sold it for 187,000
I see it now is for sale again 5yrs after I brought it for 245k

Still rather have my funds in the market an silver bullion these days unless property becomes cheaper -IMHO buying a high priced low yeild property isn't very savy investing which is what many NZ'er have been doing over the last 3-4yrs