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  1. #331
    Advanced Member Valuegrowth's Avatar
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    I believe Auckland and Sydney housing market will follow both AUD and NZD. We could expect massive fall in properly prices in overvalued markets such as Auckland and Sydney etc. Sooner than later, we should see end of property boom surprise to many. Chinese factor will push down property market further.

  2. #332
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    Just read this

    http://www.nzherald.co.nz/business/n...ectid=11571162

    I don't mean to rant much but the following made me a little upset being locked out of the market


    • The optimist says he isn't worried by talk of a slump in property prices, saying that would only enable him to buy more places.
    • he says he'll be putting his rents up soon.
    • started buying property in June 2010 with a $200,000 wedding gift from his father.
    • He and his wife Cindy bought one place for as little as $173,000.
    • And he reckons that property investment is within everyone's reach.


    Honestly good on him for making good investment decisions!

    But I don't agree with property below $300,000 being snapped up by investors

    We are in a housing crisis in Auckland.. Shouldn't we put restrictions on this as well??
    Last edited by NeverQuestion; 09-01-2016 at 03:39 PM.

  3. #333
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    Quote Originally Posted by NeverQuestion View Post
    Just read this

    http://www.nzherald.co.nz/business/n...ectid=11571162

    I don't mean to rant much but the following made me a little upset being locked out of the market


    • The optimist says he isn't worried by talk of a slump in property prices, saying that would only enable him to buy more places.
    • he says he'll be putting his rents up soon.
    • started buying property in June 2010 with a $200,000 wedding gift from his father.
    • He and his wife Cindy bought one place for as little as $173,000.
    • And he reckons that property investment is within everyone's reach.


    Honestly good on him for making good investment decisions!

    But I don't agree with property below $300,000 being snapped up by investors

    We are in a housing crisis in Auckland.. Shouldn't we put restrictions on this as well??
    He started with a $200,000 handout from his folks in 2010 and now has 11 properties. Gross rental $275k Asset Value $6.5mill (4.2% gross yield). I can't imagine his rental income would be providing him with enough cashflow to be purchasing this many properties. Obviously the 10-20% annual gain in prices over this time would have seen his equity grow but he must be pretty heavily leveraged. He could be taking a big risk with leverage so it is hard to begrudge him his success. No worries as long as interest rates stay low. He is only investing as per world central banks policy. Inflation will save him and he would have been much worse off leaving $200,000 in the bank.

  4. #334
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    Quote Originally Posted by Aaron View Post
    He started with a $200,000 handout from his folks in 2010 and now has 11 properties. Gross rental $275k Asset Value $6.5mill (4.2% gross yield). I can't imagine his rental income would be providing him with enough cashflow to be purchasing this many properties. Obviously the 10-20% annual gain in prices over this time would have seen his equity grow but he must be pretty heavily leveraged. He could be taking a big risk with leverage so it is hard to begrudge him his success. No worries as long as interest rates stay low. He is only investing as per world central banks policy. Inflation will save him and he would have been much worse off leaving $200,000 in the bank.
    It's difficult to see how he could be making a profit if initial input was only $200,000. But even if his borrowings now are only around $3,500,000 he won't be showing a surplus. Not enough detail to know the full picture but certainly not as rosy as painted in the article I read.

  5. #335
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    I get the feeling he purchased a few flat units.

    Sure they will give a good rental income but poor capital gain.

  6. #336
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    Quote Originally Posted by brend View Post
    I get the feeling he purchased a few flat units.

    Sure they will give a good rental income but poor capital gain.
    Portfolio valuation of 6.5 million means average of $590,000. Assuming his purchase price was half that (started in 2010 so unlikely many will have doubled in value) he will have mortgage of 3.25 million which will not be showing a profit on 275,000 income. Looks like his rental income has been capitalised at 4% to produce 6.5 million over 275,000 income. There's something wrong with this story OR he has another substantial income source, OR he's heading for trouble. It's easy to buy loads of residential property, but keeping the whole thing running is far from easy without substantial cash input in initial years. There's plenty of burnt fingers from those who have grown too fast.

  7. #337
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    Regarding the comment about property investment being within everyones grasp...

    Because of my job, I am privileged to have access to a lot of NZ property data. Last month I pulled a report that told me that over a 3rd of people who own at least part of a house, own a share in more than one house. The number drops by 5-10% for each house you add to peoples portfolios. for example, 30% of people with an investment in a house will have an investment in more than 2 houses; 25% will have an investment in more than 3 houses... Etc.

    Personally, I would argue that property investment is within everyone's grasp. I earn about what the average couple earn, and (despite paying more tax than the average couple) I am able to do property investment. It's a case of deciding to save money for a few years instead of spending it on fun things like nice cars and holidays, in order to save a deposit. You then wait a few years (saving or not) and leverage the debt to buy another. Done! It's not hard by the time you factor in Kiwi saver. compare this to when I lived in Englandistan, at age 26 I couldn't even afford to buy a house in a pretty bad area.

    What I do think is hard (but not something people are concerned about), is building a reliable, decent retirement without investing in property in NZ.

    That's why the NZ govt has to be very careful around curbing house prices with it's policies - they could do a lot of damage here.

  8. #338
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    The story is well documented and discussed over here http://www.propertytalk.com/forum/sh...urney-Gary-Lin for those that are interested.

  9. #339
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    Quote Originally Posted by jmsnz View Post
    The story is well documented and discussed over here http://www.propertytalk.com/forum/sh...urney-Gary-Lin for those that are interested.
    Thanks jmsnz it doesn't sound so glamorous when you look at his strategy. Good on him for his success, the only thing first home buyers could get upset at is that his Dad gave him the head start most others won't get. He is pouring his own money back into it. He is not really keeping first home buyers out of the market as I guess they would be looking at a minimum of three bedrooms. Amazing how little balanced information newspapers provide. I should cancel my herald subscription as I only really read it for entertainment and to make me worry about a lot of things that probably aren't all that bad once you know the full picture.

  10. #340
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