Investor, Buy and Hold, Rehabs · Wellington, Wellington · Member since 2016 · 44 posts · 27 votes
Let's get everyone who is a New Zealand based Real Estate / Property Investor to reply here, so we can try and form a group to share ideas both for investing locally and abroad. I know there are many of you out there, so put your name here!
@Kyle Elmer sorry for delayed reply but thanks for the local insights! If the strategy was to buy and hold for cashflow (i.e. an income generator in retirement), what are your thoughts on the newer build/refurb-ed studio blocks in Dunedin? They seem to be a good bet for cashflow and presumably will be compliant with the new standards, if the tests imposed are reasonable (to your point).
Hey guys I'm looking to start investing in property, I'm from Auckland and new to BP.
From what I have been reading on this thread, there are meet ups that happen now and then. When would be the next meetup and how could I find out as to when they regularly occur?
@Adriena Daunt the new or refurbed studio ones, you need to make sure they are council consented to be multiple room dwellings as with the new tenancy laws possibly coming in if the council has it as a large single dwelling but you are renting it by the room you might (you need to check case by case) fall foul of this rule that you are renting an illegal dwelling according to what is on the paperwork at the council and then potential refund rent, pay exemplary damages, have trouble with insurance and/or finance etc all come in to play. Under 5 rooms and with single only occupants on multiple leases there is a bit of room to make it work but you need to understand the risks of it not running right.
Feel free to PM me if you have specific cases you want to have a chat about and I can give you a heads up of what you're looking out for those and future ones? It is the same issue nationwide just not so well policed maybe?
@Josh Stirling The main one I know about up there is APIA. They are the property investors association in the region and they are part of the national body. Membership is relatively cheap for the amount of content they used to produce. Go here for more info https://www.apia.org.nz/
Hi all, I'm a Kiwi based in the tech industry in Berlin. Many thanks to all of the experts making contributions here, there are really many interesting posts.
My motivation for investing in property is to build passive income quickly, to free up my time and energy for more important things than the 9-5. Also to have more quality time to spend with family and friends!
I have one rental apartment in Wellington cash-flowing nicely, and will invest in a few more high cashflow properties over the next few years. I would prefer to be having cash-flowing properties sooner rather than waiting 10-15 years.
I wonder if anyone could give advice on resources to understand the pros/cons of particular regions in New Zealand, or how you guys would go about deciding where to invest in New Zealand (for cash flow). I'm looking for opportunities in New Zealand, because I understand how things work there, and think I will be able to get finance.
I came across rental yield figures here: https://www.interest.co.nz/saving/rental-yield-ind.... Some pretty impressive figures in such places as Hastings and Whanganui. I'm sure there are downsides though, perhaps such areas are not expected to grow.
@Josh Crozier, you really needed to get a revolving credit or similar set up while you were working. The best options now will be to find a JV partner with good income. Of course if you just want to trade houses you don't need any money but to buy any you'll need to get lending organised and you won't do that probably without any income.
Hi Dean
I'm a big fan of the revolving credit idea myself, alas still a small player with 0% credit cards, personal loans (which don't stick around long) and a new offset account I've started.
I was just wondering which facilities you have seen clients or yourself have success with? In either country (or Australia).
I'm in the mindset (as you mentioned) the more I can set up now, whole employed, the better
@Account Closed, we are definitely in a turning market so there are opportunities everywhere however vendors expectations are still from a year ago when things were crazy. you have to follow infrastructure and population in NZ so generally stick to Auckland and Hamilton or Wellington. Once you get outside of those cities you need to find a good reason to be there. I'm a fan of Palmerston North but it is a 1 trick pony so I only own in Auckland and Wellington these days. The provinces can provide cashflow but their capital growth often takes 2 cycles as opposed to the 3 main centres which usually go every cycle. Wellington has been slow but has caught up now. For more specific info go and visit propertytalk.com, that's an NZ forum full of investors all over New Zealand.
@Dave Sandford, NZ financing has changed a lot you need a good broker to find out what you can get. Strategies that work well are credit cards for smaller deposits and RC facilities. There is quite a bit of unsecured money on crowd funded platforms these days where you can get enough for a deposit on a lower end property. And of course the non banks are back. Talk to a good broker is my advice.
Many thanks for your advice Dean, it's appreciated. I will eventually look closely at data myself, but are rents in New Zealand pegged to capital gain? The reason I ask is that I'm really focused on rental return rather than capital gain. I will buy and hold and build passive income. Capital gain would be a bonus, but with my present job income I would not even be relying on it to build capital for further acquisitions (I would be saving hard from job income). As such, I'm wondering whether it's important for me to consider capital gain with my goals.
@Account Closed, that is a big discussion in NEW Zealand amongst investors but compared to the USA, NZ is quite different. I would never invest for cashflow in New Zealand. You have to spend a fortune to get a paltry cash return. But what you will get is growth. For example a house I bought in 2006 for $400,000 was renting then for $350 a week. It now rents for $650 a week but I could sell it tomorrow for 1.2 million.
Positive chasflow is hard to find anywhere in New Zealand as cheaper towns tend to have very high rates, (property taxes).
When I had students my primary strategy with them was as follows.
1. Work out what passive income you wanted, let's say 200K a year.
2. Assuming Auckland as the investment area that means you need 10 houses with no debt to generate that income.
3. Buy 20 houses, (over time), in Auckland
4. Wait until they have increased in value enough so you can sell the 10 with the lowest rental incomes and pay off the other 5. If rents have increased enough you may only need to sell 6 or 7 to reach your cash flow goal and retain some debt.
Thanks for the insight Dean. Interesting to hear that the approach is generally different in New Zealand. I had noticed that returns are often relatively low in New Zealand. Having said that, my apartment in Wellington generates a decent return (9% gross when I bought a few years ago, 10% now based on purchase price). I was thinking that, with the income level I'm seeking, if I managed that a few more times, I'd quit my 9-5. But perhaps it is better to try to take your approach to get properties free and clear quickly. Will think that over.
Unless you find a way to increase yields after purchase you will never repeat your apartment experience. Those days are gone in NZ unless you create the yield through adding rooms/dwellings etc. So creating equity you can crystallize is the way to go.
@Dean Letfus Hey Dean, I fully understand your point that NZ investing is much more about appreciation than cash flow, that is primarily how I have made any money with houses.
What is the best way then of actually holding onto properties long enough for them to appreciate without goibg broke in the meantime from mortgafw payments? I would have loved to have held onto the Auckland properties I owned, but I simply couldn’t afford to.
Do you need a lot of money to start with, or are you finding properties that while not cash flow positive are at least cash flow neutral?
@Dean Letfus Hey Dean, I fully understand your point that NZ investing is much more about appreciation than cash flow, that is primarily how I have made any money with houses.
What is the best way then of actually holding onto properties long enough for them to appreciate without goibg broke in the meantime from mortgafw payments? I would have loved to have held onto the Auckland properties I owned, but I simply couldn’t afford to.
Do you need a lot of money to start with, or are you finding properties that while not cash flow positive are at least cash flow neutral?
Well the answer for everybody will be different. I got caught big time in the GFC and was forced to sell so I know what it's like when things go bad. The short simple answer is you need to have enough cash reserves to fund a shortfall. Which sounds great but doesn't help people who don't any money. So the better answer is to find a way to do what i do now. I went to the USA and found a way to buy cashflow positive houses and also to flip houses. I then used those funds to buy or hold on to New Zealand assets. You may be able to get a home based business, or even a second job. Find a way to start accumulating some cash to tide you over. The USA saved my life financially, it's just so easy over there to make money. But I traded many houses in NZ and had a portfolio of 52 doors, (mostly in Auckland), before the GFC so it can be done anywhere!
We used to teach years ago the cashflow pyramid. Buy 4 to 5 houses that were cash +, which you can still find in some smaller towns or go overseas. Then you stick a capital gain property on top of them to form a pyramid and use the cashflow to pay the shortfall on the good one. That theory is entirely sound but I think you can make more weekly cashflow more quickly using a business of some kind. It can be flipping houses, selling something on trademe, anything that brings you cash to pay the shortfall.
The good news is with the left wing stupidity going on in NZ we will see rents rise faster than ever before so your negative drain will reduce quickly. (Rents always rise faster under Labour because they do not understand supply and demand. Scary but true).
@Dean Letfus that is an awesome technique, I’d love to be able to do that.
I see what you mean about finding alternative means for getting cash flow, finding anything with half way decent cash flow seems pretty difficult.
There is a large property next door to my house in Auckland that has been sitting on the market for some time that I would absolutely love to buy and incorporate into my own section to create a very large parcel of land. Problem is, even if I managed to get it at a massive discount (800,000 on a 1.25 cv), it would still be more than I’d be comfortable servicing myself.
Or would require a lot of very well cash flowing properties to create the pyramid.
@Ryan Spearman, so in a case like yours, assuming there is good upside in doing the amalgamation and development, you could consider doing a JV on the additional property. Then someone else carries the negative gearing until you do the development.
There is always a way to get good deals done.
PM me if you're interested in giving some more details I may be able to find you a partner or even look at it myself.
@Dean Letfus Thanks for the interest and the info Dean, I appreciate it.
The major hurdle (other than actually paying for it) I am facing is that I wouldn’t really want to develop it for at least another 20 years, as it is literally my back yard and I have no intention of shifting the family.
Really, it would just be a way of securing some great equity for later and stopping someone from throwing up a whole pile of townhouses in my back yard.
I had considered buying then amalgamating it with my own, then subdividing and selling the existing house with a much smaller section as a way of financing it all. But that feels a little above my level of experience, and still, I’d be some way off breaking even
New investor from Christchurch. I have recently inherited a 50% share in an as-is-where-is property in Christchurch that we are looking to repair (my father in law is a structural engineer), sell and invest elsewhere in Canterbury.
New investor from Christchurch. I have recently inherited a 50% share in an as-is-where-is property in Christchurch that we are looking to repair (my father in law is a structural engineer), sell and invest elsewhere in Canterbury.
It's a 1910 weatherboard bungalow. It's come a bit off its piles and needs a jack and pack, 108mm slope across the whole property, 8mm less and the insurer would have patched it up at the time.
We have some reasonable estimates (I will be getting some solid quotes in the next few months) and we are confident that we have enough contacts to get it done.
After that it gets a bit murkier, The property hasn't seen much of an update in the last 20-30 years so theres a lot that we COULD do, if we had a more solid idea of how the demand is for properties on TC3 land (i'm pretty new to this, I wasn't expecting to buy a house for a decade so I have been on a bit of a crash course the last few months). If anyone has advice on getting insurance for TC3 land that would be greatly appreciated.
kia ora all. very excited to have found this group.. have a couple of questions i hope yal can help me with. do you need a title company in auckland to close deals or just use your lawyer? second questions is the anyone yous would recommend.? thank yous in advance
kia ora all. very excited to have found this group.. have a couple of questions i hope yal can help me with. do you need a title company in auckland to close deals or just use your lawyer? second questions is the anyone yous would recommend.? thank yous in advance
We just use our lawyer - Wells & Co. We haven't done any big deals but they've helped us spot a few tricky conditions on properties we had under contract.
another question if you dont mind.. lawyers, title company and agent if any all get paid at closing less deposit. can the same apply to contractors or inspectors?
hi mark. im new to bigger pockets so still getting used to this system. im based in Gisborne New Zealand and have a good understanding on the market from here along the East Coast to the top of the north island as far as Auckland. I have A very Good understanding of the Land and Tourist Attracting, I think we could work with each other on a few deals i have lined up.