Investment property ideas

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15 years 2 months ago #16000 by spoook
I am thinking of buying a property for rental. My brother and I already have one. earning and not expending.
My thoughts are ..... if we buy another property we may be able to offset the existing income against the new one that MAY run a loss.
(Or I suppose it could make us more profit and we are more in the tax poo.)

The existing house is in a trust and the new would be bought by the trust, we are the beneficiaries so are entitled to the profit / loss. No need for an LAQC.

One we have looked at is controlled by a Body Corp,

So........ what pitfalls should I lookout for????

There are no bad questions only those that are not asked.
"You are responsible, forever, for what you have tamed"

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15 years 2 months ago #241955 by beedee
Replied by beedee on topic Investment property ideas
Ohh Spoook I have no idea about money BUT did visit my banker sister today and they hope to get rid of their rental as soon as viable.. the tenant has missed two payments as he lost his job.. and she feels they are stuck in a dead end tunnel, to kick him out wont bring back the money they have to find to pay the mortgage on it.. and the next tennant may be one in the same predicament... so its going to be a vicious spiralling emploding situation.
As long as you look at the problems of leaky buildings etc etc and who actually owns the property and can they actually sell it.. then I guess if you arent running a mortgage to own it you can float thro the bad times YET to come..
Check that the folk have a good governemnt job and not likely to be made redundant!!!!
otherwise just wait for the true investors to come on.. with many more words of wise-dom

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15 years 2 months ago #241963 by The Kats Place
We had rental flats for a few years and the stress they caused wasn't worth the money they made.

Tenants missing payments or doing a runner in the night leaving a mess for me to clean up. I foung benificaries made the best tenants as Winz would always pay their rent (I guess thats like having a government job Beedee). I also found flats build of block construction with block internal walls were harder for the tenants to damage. Actually I feel sick just thinking about it. I wouldn't go down that road again.

kats
Live your life in such a way that it will be easy for people to say nice things at your funeral [;)]

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15 years 2 months ago #242004 by PRU2
Replied by PRU2 on topic Investment property ideas
I'd be looking at land, rather than a house or building Spoook, lots more options too, with a house there is only one thing you can do, and you can't see inside what your tenants are up too [:0]. With land , it could be leased out, grazed by yourselves, run grazers, cut hay etc and sell it, or sell it standing. We have had rentals in the past, not as investments only cause we moved due to work, and didn't want to sell incase we decided to return. :)
Ain't making any more land, and there is only so much to go round. :D [;)][;)]

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15 years 2 months ago #242014 by spoook
Replied by spoook on topic Investment property ideas
Great idea Pru, but the bank don't loan on land alone. :(
I forgot to mention my brother will be renting most of the house so checking on the tenant will be his job. [;)]
I have looked around and there are some nice little blocks for reasonable prices but...... miles away.
In the two other properties we have there are some good tenants (right now), hopefully they will stay long, long term.
The unit is in a good area for resale, close to shops, schools and uni.
Have seen a couple of brokers, thought they might get better deal than me going to my bank direct, they will be getting back to me by tomorrw.
Going to have another look tomorrow too, then we will decide.
Have to write down all the pros and cons to see how it weighs up.

There are no bad questions only those that are not asked.
"You are responsible, forever, for what you have tamed"

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15 years 2 months ago #242015 by terralee
Replied by terralee on topic Investment property ideas
You read my mind Pru2 ... Spoook land would be the easiest option if you don't need the regular rental to pay a mortgage ..... now is a good time to buy any property tho' ... we were landlords for a short while when we lived overseas and rented out our home ... we were lucky as the 2nd lot of tenants actually bought it:)
Cheers

Leonie & Zoo!!! :silly: :woohoo:

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15 years 2 months ago #242021 by Westermans
how about land but have one of those small A1 homes that are already built dropped onto it (about 85k)...that way its not just land and you can rent a nice piece of land with a small propery on it too ...and the bank may lend on that...jsut a thought...or a batch property..i have been scouring the net for batches and they are not cheap to rent...2 thoughts and im all done... :) good luck with whatever you decide to do.

Multitasking is my speciality:-)
www.westermans.co.nz

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15 years 2 months ago #242039 by Seaside
Replied by Seaside on topic Investment property ideas
I would say the most important thing is to buy when the market reaches the bottom. If it's at the top or on the way down, you'll have to hang on to the property for longer to realise your investment. I'm no expert, but I have a feeling we haven't reached the bottom yet, in fact it may slowly drift downwards for the next few years.

As an idea of timelines in the last economic downturn, I was in the UK. The stockmarket crash was in 1987. Before then, the house we bought (in the UK) would have sold for about 100K (sterling). We bought the house in 1991 when we thought the market had bottomed out (ho ho) for 67K. The market in fact reached the bottom around 1995, when we wanted to sell up to go travelling. The highest offer was 52K, so we rented it. However, when the market did start to inflate, it did so quickly, and we sold for 67K in 1998. By 2005, those houses were selling for 160K.

Sorry, a bit of a novella, but in hindsight, had we bought in 1995 and sold in 2005, we'd have been flush, so it's all in the timing! From what I can tell, recessions last about 10 years from the first crisis, so if you buy your investment property right now, you might find it's a decade commitment at the very least.

There is a NZ property forum that I used to lurk on when we had a rental property here, there's heaps of tips about investment properties and discussions about the housing market. I can't remember the URL, but a search engine will find it easily enough.

Kids, beasts, and chillies in Swannanoa South.
www.farmaway.co.nz

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15 years 2 months ago #242057 by cantyguy
Replied by cantyguy on topic Investment property ideas
I'd being buying commercial. Security of a lease and the tenant pays all outgoings including rates and insurance.

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15 years 2 months ago #242060 by clover
Replied by clover on topic Investment property ideas
Seriously consider using a rental manager if you're new to the system. Ok, so they take a percentage of rent, but a good manager will know the ins & outs of tenency tribunal and what avenues are available if tenant defaults on payment. We've had a couple of tenants who have been ordered by court to pay back rent via auto deductions from DPB or dole, or have had to forfeit bond. Rental managers also seem to have access to a range of records for reference checks & generally have maintenance contractors they use regularly. Quite a lot of real estate firms have rental managers & they can take a lot of the day to day stress off you. That said, we're looking at selling our rental house to buy more land in the hope that will be a less problematic investment!

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15 years 2 months ago #242062 by devan
Replied by devan on topic Investment property ideas
AMI do a fantastic insurance for rentals, covers usual stuff like damage etc but also covers loss of income. Not that much dearer than normal house insurance either.

The trouble with some women is that they get all excited about nothing,and then they marry him.

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15 years 2 months ago #242102 by max2
Replied by max2 on topic Investment property ideas
Righto, firstly there is a great website called www.propertytalk.co.nz that another LSB member intro'd me into some (couple) years ago when i asked questions here.

Pose some questions there, but also read, read, read. I am there but under another login, the same LSB member uses his one from here and is well up the food chain with ideas and experiences.

Secondly, there are heaps of scenerios on there re 'holding vehicle'' for your investment and IRD implications.... changes all the time. Put the questions to the forum. Watch for cynics and idiots, every forum.:rolleyes:

thirdly, keep a low profile on what you do re investments in life in general.

Years ago I learned that people who own more than 1 home are looked on as greedy, the reason why others child/sister/themselves cannot afford a first home as its a general (wrong) belief that landlords push up property prices... :rolleyes: thus making them unaffordable to the rest of the population, yadda yadda yadda....

don't rely on WINZ beneficiaries. yes their benefit can and does stop, I had some and because they diddle the system with work, it quickly stops and the property manager doesn't find out until they are in arrears. By then the tenant has scampered off to another property leaving debt.

However please learn from my experience (and I will name them privately if you wish) don't hire a PM attached to a real estate agency (as a rule).

Hire an independent one and one that is attached to the independent PM body. I have been through a couple of PM's attached to agencies here, idiots.

When things are going great, great but when not they are not interested or don't know, but my private PM is great!!!!! If you are looking at south Auckland and south of our area, I can give you her name.

She is brilliant and has taken much off my shoulders in recent times, whilst I wait for a Pukekohe based agency to get their rubbish into gear re orders against a former tenant. (same one delayed sending out TT notice to tenant until after 60 days and then told me she couldn't find him, TT told me agent left it too late to serve notice and had they served it under 60 days it could have gone to the former residence that the fellow damaged at cost to us of roughly $3000 which general house insurance doesn't cover).

Her former employer (licensee) at another agency refused to reply to me or return calls when I had another difficult situation in the past and instead his office manager replied repeating what their PM had said. No independent back up or assessment.

I wonder now if they know their PM is failing to pay suppliers promptly and thus why she cannot get any established trade to do their maintenance. (yes I do have a bent view but based on my experience to date, now that I am here it hasn't changed at all).

fourthly if there is something you have your eye on, knowing the area, market etc, then buy hard. an offer can never go lower, but can always go higher. Be aware of selling agents telling you they have another bid, my experience tells me they don't, but want to push the price up for the vendor....

pm me if you want to talk more.

afterthought, working people can give as much grief as WINZ beneficiaries.... we had one couple in the house at Beachhaven and they also left in arrears and the place a pig sty. fortunately the bond covered the debt but PM's attached to agencies seem reluctant to register collection issues....

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15 years 2 months ago #242186 by Seaside
Replied by Seaside on topic Investment property ideas
Propertytalk, that's the one! Thanks Swaggie. It's full of good stuff.

Just an afterthought from me, capital gains tax. You might want to do a bit of research into whether it's on the cards with the National government, and if so, whether it would be retrospective (ie would it apply to the sale of a property purchased before the tax was introduced?). If so, it might be something that you should factor into your return on investment forecast in the long-term.

Kids, beasts, and chillies in Swannanoa South.
www.farmaway.co.nz

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15 years 2 months ago #242238 by NZ Appaloosas
With a body corporate, read, read and then RE-READ the entire corporation documentation. It could very well be that the body corporate does not allow rentals, that there could be a committee of some sort that has to okay your tenant or has power to evict your tenant, or who knows.

Me personally, I will never have anything to do with something that is a "communal" set-up, be it a housing association, body corporate, or the like. Been there, done that, and can't stand the idea of people ever again being able to tell me what colour to paint my trim, or that I can't have a certain pet...

Diane


Featuring Wap Spotted, sire of the first Wap Spot 2 grandget in Southern Hemisphere and New Zealand

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15 years 2 months ago #242259 by max2
Replied by max2 on topic Investment property ideas
actually that reminds me, check the body corp outstanding fees. One fellow who I use to go out with lived in a block of flats in aussie and he said to me the committee secretary and president owed thousands in back fees but no one took action because it was ''them''.

the building maintenance showed neglect.

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