NZ 1st homebuyers are ScReWeD...

[cantab]

TGM, "not paying dead money in interest" - I like that one.

It's costing the landlord 10% in costs(interest 8%, other costs 2%) to rent at a 5% gross yield. Pay rent of $300pw and the landlord is effectively giving almost $300pw to pay for the tenants petrol, restaurant meals, bar tabs, winter holidays to Queensland, etc. Alternatively for all that dead interest money one could rent a far superior place than that $300,000 house.

When the yields get to 8 -10% again then start buying the investment properties.

[SEC]

Grandmaster, I rent too, I share your views, and a logical and rational analysis would conclude that buying property at the moment is currently not a good investment. However rational thought often goes out the window when significant other halves have an influence.

quote:Originally posted by cantab

When the yields get to 8 -10% again then start buying the investment properties.

Yep, agree there. The 'rental PE' is currently too high. Something has to give, and depending on where the house is located, it could go either way. Property prices stagnating/falling, rentals rising above inflation. The Sydney market is probably a good indicator of what will happen in NZ (and Akl/Wlg/Chc in particular). In Sydney, there is net immigration, rents are rising but that hasn't stopped property prices falling since 2003 - not surprising with gross rents near 3%!

SEC

[cantab]

quote:Originally posted by SEC
The Sydney market is probably a good indicator of what will happen in NZ (and Akl/Wlg/Chc in particular). In Sydney, there is net immigration, rents are rising but that hasn't stopped property prices falling since 2003 - not surprising with gross rents near 3%!

SEC

Agree that it is worth following Sydney. In nominal terms the fall hasn't been great - 10% perhaps however the falls have been major and catastrophic in SW Syney I think, (lower income - local economy/employment not doing so well) whereas the better areas and closer in have been much more resilient, so Sydney is a number of markets performing quite differently.

The thing I take from Sydney is that people are choosing to rent whereas investors are not buying rentals, accordingly the vacancy rate is now very low, about 2% and rents are rising strongly. In some cases accomodation agents have so much interest from renters that they are conducting rent auctions! To a much lesser extent we should see the same thing happen in NZ.

[Crypto Crude]

"The real Estate institute is warning people not to expect houses to get cheaper in the near future.... Latest figures show the median house price in NZ is more than 7 times the average salary - a 72% increase on five years ago...The institute says experts have been saying the bottom is going to fall out of the market for quite some time but out in the field there is no sign of the market slowing"-source Newstalk ZB
as if REINZ would downtalk housing market to start with...Biased view.... a few intereting points though....

response for being called a wannabe...
SEC.... the current expensive property market situation and the outlook for us 20 something year olds is the reason why I created this thread...The very first post on this thread sums it up for me... So i cant see your point when U say that im a wannabe property owner, ... I could buy a house tomorrow, more like a cannabe but wontabe..[]...
other than that i totally agree with what you are saying
...all im saying is that a downturn is required for me...

trackers... theres two years that seperate us if I got into housing now... but 5,6,7 years that seperate us in paying off the bank, (and growing)... u have done well!
[8D]
.^sc

[JoeKing]

Shrewdy
Lots of interesting posts on your thread. It is very easy to pick out the haves and hopefuls, the half full and half empty attitudes. There is some sound avice, and bad advice. Your problem is going to be "who/what do you take on board".
Truth is, it really is comparativley NO more difficult to buy a house today than it was in your parants time, or their parants time. In fact I get calls from banks almost every week with offers of more money, which I don't want.
Four years ago I set out with a goal to use $20,000 equity and turn it into 1+ million $$'s in 3 years, from property. I discussed the idea with a friend who had $40,000 saved to buy first home.
2 years later I had bought 34 houses (3.8 million $$s) using NOT ONE PENNY of my own money. My friend had "invested" $20,000 of his $40k in books, tapes, videos/DVD's on investment strategies, siminars, boot camps... etc etc.
At the end of 3 years I had sold 16 by financing 98% of sale to (first home) buyers at 3% above bank rate, invested $400,000 in refunded GST at bank rates (by paying off existing mortgages) produced a cash flow of over $100k a year and still owned over $3 mil. property with all tax advantages.....
The only downside was last year 8 of the deals were able to refinance with traditionl bank (just as I had promised) and I had to pay over $200,000 tax, from proceeds. I didn't mind one bit!

My current goal is to turn $40k into 1 mill. on stock market in 3 years. In just over 2 years it is today $411k nearly half way.
There are some basic rules you must learn, one is:
There are ONLY 2 ways to make money...
1. You can work for it... (which is what 95% of people do.
2. You can make IT! work for YOU! ie. decide to become a 5 percenter!!
Another, mentioned earlier by none other than the shrewd Scotsman McD.." SHREWD CRUDE, What you must remember is the idea is to use other peoples money not your own on the path to riches.
Attitude is everything!!!If you really WANT TO! You CAN do it! Don't let yourself become SNIOPed!
Cheers
JK
Oh! my friend still has not bought his house ("the price has gone up") but he has managed to re-save the $20k. He now rings me every week to ask what shares to buy..
edit: And after nearly 2 years still has not bought any. He does have a great collection of books/videos/DVD's/tapes on sharemarket investing tho.

[wns]

Hi JoeKing, sounds like you did some vendor financing deals - lease options or wraps or similar. Well done on your success.

[JoeKing]

WNS
Yes, WRAPS. SO!! easypeezy, gratifying and rewarding having someone ring and say "thank you for the opportunity to buy our own home, come for coffee and see the new bathroom", instead of "Mr Landlord someone ran over the letter box when ya gonna come fix it!"
Cheers
JK

[Year of the Tiger]

I'd like to throw my tuppence worth in here.

My son-in-law and daughter started out about 8 years ago with Sweet FA. My son-in-law could hardly read or write when he left school but decided to self teach himself by reading books on property investment ( I guess I don't have to say who the author is). While working on a farm and with 3 kids under 4, they bought their first investment. A cheap section in rural Waikato and a "house to go" in Hamilton. The house and section were married up, a bit of tarting up on the inside and out (by the kids themselves and they are not builders by any means) and putting in a tenant who is still there 8 years later. Total cost to the kids (or should I say their bank, $65,000.) Three years later this was followed by a stint in Oz for about 2 years. When they came back, they started back into the propery market while all the time, milking cows twice a day, seven days a week.

Second house, a mortgagee auction in very rural Waikato. House was pretty run down so they lived in it for a year while still working on a farm. (They rented out the farm cottage they could have had with the job). They put in a basic kitchen, basic bathroom and a bit of paint inside and out. Put in a tenant after a year. Cost of purchase two and half years ago, $49,000 plus the cost of a bathroom and kitchen which they bought all the bits from a guy who recycles house bits and pieces. Last week they got a contract to sell the place for $205,000.

Third house, again in another rural Waikato town. Bought another Mortgaee auction about 2 years ago for $65,000. Now have a contract to sell for $165,000. They've done nothing to this place.

Latest project, bought a Dairy Company house for removal. Bought a section in Rotorua and currently relocating the house to the section. They'll sell it when completed.

Two years ago they bought an acre of urban land for about $35,000. Sold it a year later for $115,000.

They've decided to pack up and move to Oz because their boss had sort of promised them a 50/50 sharemilking opportunity next season. He's decided to wait another couple of years and leave the kids milking for him.

Well, no way Jose, by the time they have sold up their properties plus some farm equipment that they've managed to accumulate, they will be heading off to Oz with the best part of $600,000 cash in their pockets. I don't know all the details about interst rates, rental incomes etc etc but I do know the rental income has always more than covered their outgoings.

So when I hear people moaning an groaning about how they will never get the chance to own their own home, I'm afraid it is falling on deaf ears here.

[JoeKing]

Year of The Tiger
BRAVO!!! Your daughter and hubby!. Just LOVE to hear success stories from/of ordinary people with extra-ordinary determination and attitude.(5 percenters)
Yep! it's true... YOU CAN! IF YOU BELIEVE YOU CAN!
For those who may be interested there is a DVD available called simply "the secret" a google search will show you where you can buy it. It will not be for everyone but for those genuinely looking for "the secret" to success it will be the best $60 you will invest.
Cheers
JK
Discl. I have absolutely no financial interest in sales of "the secret" DVD.
PS. I had breakfast with Robert K. a few years ago. A real down to earth guy, we talked about everything but property.

[Dazza]

gj

yes its great

but i live in auckland.........

thats the thing peeps.... akl = 500k for a decent home...

my my has property gone off!


and SEC, dun u worry im all tied up in the ASX