Im 25 and from Auckland, NZ. I'm currently living in London but moving back home in about a year and looking to get started in real estate investing when I arrive home! I'm in the fortunate position where my Mum is very keen to help me get started with investing (and keen to invest some money in a project), and therefore would be willing to help me with a first deposit. A couple of questions:
Firstly, House Flipping has definitely stood out to me as the strategy that I want to learn about and get into, however, starting out, I want to buy a house that I can live in (potentially multi-family to take the house hacking approach?). Also, if I am going to get an investment from my Mum, this is the route I know would work. My question is: will I be able to use this to finance my next purchase in order to start House Flipping? How can I go from owning my own house to financing a first flip? Do I have to build up cash again for a down payment?
Secondly, what are your thoughts on having a brother as a business partner? I have read lots about not working with family but this seems like a good opportunity. We have a good relationship and he owns a construction company / has been a builder for around 15 years. Therefore, he has a great experience with rehab pricing and project management and would have a lot of handyman contacts etc.. I also know he would be keen to get into a project and willing to put money towards it.... Is this an obvious yes?
I'm very much a newbie so apologies if any of these are silly questions! I'm currently working my way through the beginners guide but wanted to get my first post out there and say hi :)
I am not familiar with the real estate market in NZ but I recently purchased a duplex and am house hacking. It's great that your mom is willing to help out with your first investment property, I would encourage you to have in-depth conversations with her to determine what her expectations are. Would she be expecting you to repay her in full, or pay her a percentage of rental income, or not repay her at all? If you purchase a multifamily you must calculate how much money you will have left after paying all expenses and saving for future expenses. If you find a solid deal it could help you save for your next project. One thing I would like to mention is that it's always good to have cash reserves when starting. Expenses pop up sometimes and it's not always wise to pay for those expenses on credit.
As for saving up cash for a down payment I suggest reading books, searching online, or speaking real estate investors in NZ to see how paying no money down may be possible. You also have to think about how you will finance the flipping part of the deal (your brother can probably speak to that). I also encourage you to look into cutting your expenses along with making more money. If you are able to reduce your expenses in your personal and business life, you will have more to reinvest.
I would talk to your brother to see what he thinks about partnering. It's definitely worth the conversation to see if it's something he would be interested in. Before you have the conversation think more about how you could contribute to the partnership. He would be bringing his renovation skills, what would you bring to the table?
Often circumstances force us to do things that are not ideal. I have seen many families blow apart over JV deals that go wrong. So best practise is never involve relatives when you are trading. Risk your own or the banks money, not family.
In terms of getting started, the more equity you can buy or create in your first home to live in, the faster the banks will let you access that equity for your next deposit. Just be aware that the banks have become very retarded in the last 3 or so years so actually borrowing money can be really difficult these days.
TAlk to a good broker and make sure when you buy your first home with your mum that it has equity in it.
@Brook Boatman thanks very much Brook! Very helpful.
@Dean Letfus . Awesome, cheers for that Dean.
@Sam Hurdley Hi Sam ! I'm a kiwi too great to be connected on here!!! I'm excited to watch your journey because I invest in the states but would one day like to buy something bak home in NZ but housing prices are crazy I have noticed! I think currently there are no capital gains tax so that makes flipping ideal until they bring that law in ( I know they are trying). What areas are you thinking to invest?
@Kata Walters . Hi Kata! Nice to meet you too! I'm hoping to look in Auckland as that's where I have lived my whole life and therefore the area I know best. But as you mentioned, the prices are really high, especially in Auckland... I think some of the outer suburbs could be affordable, however.
How is it going for you in the US? How long ago did you get started?
@Sam Hurdley Auckland makes sense ! You will find deals !! So exciting ;) I starting only 3 years ago ;) I wish I had been smart enough to start when I was your age so great job !
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