How come you post negative stuff on shares etc when property investors like this guy get yields of 4%...
1.3m property renting for 1100 a week... my rule when I started in the early 2000s was to roughly double the peice in rent. You'd want about 2600 a week rent on that.
There are so many Auckland investors in similar positions but most are not as extreme as this situation. This is a perfect example of how overcooked the market is and why a correction is inevitable.
While I do not recommend buying apartments, and my first investment was a shoe-box apartment on Queen Street Auckland in 2005 (pictured).
I was very lucky to sell this apartment 12 months later for the same price to my tenant, while the apartment market was dropping prior to the GFC. Have I held it longer when GFC hit, I would have lost a lot of money!
Here are few things to watch out for when buying an apartment:
1) make sure the apartment is at least 50m2 to get bank lending
2) avoid apartment blocks that has any structural issues such as leaks.
3) read at least 2 years of body corp minutes with a magnifying glass and go through with a fine tooth comb
4) avoid apartment blocks that are predominately investor owned. Investors will more likely fire sell in sign of trouble during recessions, and drive prices down. More owner occupier the better!
5) avoid apartment blocks where there are too many substandard tenants. Good luck attracting desirable tenants...
6) personally I would check ownership of all apartment units in the block. Avoid any blocks that have HNZ ownership.
7) make sure the body corp has allowed for a robust long term maintenance plan
8 ) make sure you calculate your rental return by net yield and not gross yield. Body corp fee can significantly reduce your net yield!
9) make sure the view the apartment unit is getting is not going to be blocked by the next new build right in front of it, which will reduce the price significantly in the future
10) talk to a few owners and tenants living in the apartment block to get a feel of the points above
11) talk to the building manager and find out as much about the apartment block and who is living there as much as possible
12) stay well clear away from leasehold apartments. Lack of capital gain and horrendous ground rent will set you back years to come!
13) make sure body corp rules and building insurance policy specifically allows AirBnb short term accommodation. You do not want your short term tenants to trigger fire alarms or burn the building down, and you are not covered by insurance!
Gary Lin The apartment building you bought in is low-end hence your issues. However if you’d kept it you’d definitely have made money on it. Your advice is subjective as it all depends on your investment goals. Eg. I know people who’ve done very well with leasehold, and I hold a few apartments under 50sm that have performed well. People shouldn’t be put off buying apartments as the market is growing due to lack of land. They’re also low maintenance, cheaper to buy and generally have higher yields than houses, and they can have the same percentage of cap gains as houses if you buy well.
Apartment land leases?
Get your self equipped otherwise stay away from apartment 😂
Great advice....thanks Gary
Catherine Southwick good tips for you 👍
Gary Lin A greedy prat who received parental money to begin his path of buying New Zealanders potential homes for his own mercenary self. You're a part of the housing problem you soulless asshole 😡
Buildings with the fancy amenities like swimming pools, spas & tennis courts are nice, but these facilities aren’t free. Body corporate fees are often significantly higher in these buildings.One bedroom apartments generally attract young professionals, two bedroom apartments generally attract flat mates. Young professionals usually mean less drama & better ROI%.Small apartments = students, larger apartments = lower percentage ROI. You need to find a balance, as students are less likely to be long term tenants (more than 1 year), and then you have the costs of finding new tenants + a vacant apartment while searching.
Useful tips 👏
I would say that 2years of body corporate records is not enough... Dig back as far as you can go.
This is awesome! Thank you!
Do u see an over supply of apartments in the near future?
Out of interest what is that same apartment worth today?
Well said Gary Lin
Stating the obvious: better buy one with a car park if you can! HahaBuying apartments is a different game, a lot more research required but maybe well worth it, yield could be much higher than the average unit/house ...
look for a do up, apartment do ups can be cost effective and look at furnished rentals can work good
Look for air bnb reviews for the building / neighborhood.
Very good advice Gary Lin.
Grant Sanderson thoughts ❓❓
Buy an apartment built and developed by Conrad properties.Reputable devloper so far.
To me when im inspecting a place I think if they skimp of this shall stuff what else have they been cheap or lack or maintenance with. After I submit my offer and in the attorney review period I send a list of repairs and maintenance needed and have the price revised. I find that emotionally the seller doesn’t want to have to start the process again and 9/10 times I get a good discount because of things like s crappy letter box and on from there. Great tip!
You must be so bored today lol
So when my property manager/agent gives me a figure I simple say you can add another $10-10000 dollars to that mate cos I’m heading to bunnings to get a stainless Letter box 😂😂
Charging $520 a year for a new letterbox is one of the reasons we need stronger tax laws and regulation against predatory landlords and investors.
Latest Labour slogan: We’ve what it TAX to TAX what you’ve got.
The proposed CGT is aimed at property investors and most of the other noise will be diluted or removed (only for now if this lot are returned to power) it is driven by ideology that resents the private sector having a bigger foothold in providing accommodation than the State, They want to change that and this is step 1. I once worked in a role supplying materials to HNZ and the abuse of tax payer dollars was unbelievable, the State will never be able to do it - take a look at the Kiwi Build mess - which this govt knowingly lied about to get in power. Vote them out or watch them screw it up for future generations - cashed up wiser heads will swoop at that time - “the markets are simply are transferral ground of wealth from the impatient to the patient”
Now increased rates? Smh.
They should just fix the chargable rent price if they want to go down the regulation bonanza ha
Rents go up and interest rates drop, that’s a pretty good pay rise in my eyes 👍🏻
I am just going to rent a room at my friends place and use it as my office.
Can you please explain claim home office and pay CGT in which way related?
It’s such a small proportional cost it should not make a difference.
That is a no brainier.The typical self employed that claims home office expense would claim 10% or less of their total home expenses so the benefit of doing so would be gone if CGT kicked in as a result.
Haha rhetorical question?
I’d imagine that most would use it as an office to claim expenses and then a year or two prior to selling change to not claiming expenses.As I’m sure that there would be so many loop holes to utilize to negate large sections of the tax if it were ever implemented.As having an exception to not include the family home, cars, boats, jewelry or artwork, it likely opens up a raft of ways to minimize tax for savvy investors/accountants.
Labour talks about encouraging more businesses and want to help small businesses.
Many kiwis including myself start their businesses from their own home, so called home office, and or our garages.
Up to potentially 48% tax rate especially for service based, low upkeep type consulting businesses.
Now government wants to tax more to small business owners as well...
Quote: “The rules get more complicated for people who work from a home office.
They would be able to claim an exemption on any gain in the value of that home, like other home owners. But they would then no longer be allowed to deduct any costs related to their property, such as rates or mortgage payments, from their taxable income.
Alternatively they could choose to keep those deductions, but pay tax on any capital gain on the proportion of the home that they used for business, when they sold it.
Catherine Xu Nightingale read this article, last two paragraphs relating to home office expense.
They should make thresholds for company tax instead of set 28% imo. It ruins small business & there is no incentive to hire staff or anything along those lines.
For the next election Labour surely will be out
This is total bs get labour out
Vote her out is the only way. Labor will target the young and low income earners to get there votes. Hopefully all the sensible parents out there will explain to them how it will effect them as well. She is really bad for NZ. Vote labour out!!!!
Wtf are they thinking? Seriously. I see a big brain drain to Australia until the labour government is out because who would want to put up with this crap??
Taxinda the smiling assassin strikes again. Has anyone noticed how she never fronts any major announcements. Wtf is she up to anyway? Her PR people are doing a top notch job of isolating her from negative policy. Guess she then gets to be the nice PM who comes in to save those who are in need of a break.
Vote them out.
Holy shit dude is that for real. Limit deductions or pay capital gains? This is the least business friendly thing I’ve possibly ever seen, in any country.
Love Labour - the best thing to happen to NZ and Jacinda is an amazing leader, here's hoping National stays down in the polls so Labour can continue giving a shit about the people and our country, rather than the wealthy getting greedier. Go Labour!
I agree Gary Lin. It seems to be a lot harder for us. I started my small business when I found myself a single parent. Instead of being on the benefit, I started my own cleaning business and worked damn hard to support my kids and work my business. I seriously wonder if I should continue. By the time I have put aside my taxes, I am always surprised how little is left. I know that if i invest my savings, that too will be taxed..just because we have the ingenuity to be independent and work hard we seem to be penalised for it everywhere.
You are only screwed if you vote these ill equipped ideologues back in. The game here is to get everyone talking like this tax grab is inevitable, then the coalition of losers will offer a watered down version to make themselves appear moderate and if enough dummies fall for it and they are returned to power, inch by inch the tax creep will begin - just like gst. Don’t be sucked in, this does nothing for housing affordability, vote them out, the wheels are falling off and they haven’t the ability to see us through, have you listened to The PM speak - no substance, waiting on a working group to give feedback on every issue - she’s winging it.
Don’t be so dramatic, there are ways around this, sit back and watch.
Sell 300m2 to someone else in the family lol
But this will slow the property price increases. 😂😂😂 yeah right.
yes sure would have. what great leadership and business training plus great pay.
Yes - good training systems
Yes - good training systems
my first job was at KFC i learned about how systems can extract productivity out of someone with little knowledge
In hindsight yes, but as a 15yr old I probably wasn't thinking about that kind of stuff.
No. But they do have a good training model. A perfect business if you were to judge it's merits purely on systems and processes.
Think bigger. One of the only businesses on the planet that if you pass their franchise vetting the banks are 99.99% going to throw money at you and they are known for offering franchises to employees before investors. Owning a business that can be run by 15 year olds and you only need to visit once a year to make sure the building hasn’t burned down, doesn’t get much better than that
I started at McDonalds when I was 15 and worked through the rest of my high school years, that job paid for me to get to university and I learned a lot of great things in the process!
Good money if you make it 👌 Is it 40 hours a week? 😎
There are many contributing factor to high house prices, especially in Auckland and major cities in New Zealand.
The biggest is lack of financial education in schools. This means people are often lacking the budgeting, and long term financial planning skills that older generations had.
What this leads to is a paycheck-by-paycheck or even credit card culture, where people often spend everything they earn, and have nothing left at the end of the month in terms of savings.
Without significant savings, people are more and more reliant on getting a big mortgage to get onto the housing ladder. Where it used to be 40-50% deposit required half a century ago, now you can borrow as much as 95% (with high income of course) for a home.
Once generations of people now are reliant on a big home loan to buy a house, then it only takes the banking industry to change their rules to dramatically affect what we can or cannot afford.
Imagine back before the GFC, a $500k mortgage at 9% interest costs $45k a year in interest borrowing cost. That doesn't include principal.
Today a $1mil mortgage at 4% interest cost $40k a year in interest borrowing cost exclude principal repayments.
I just don't think that anyone would lend money into the nz housing market at 2% interest rates.
There will always be a risk premium.
If any of the big 4 get a [another!] credit downgrade, just watch those funding costs increase across the tasman.
There are many better places for international money to park.
Saving what’s left over (which is usually nothing) rather than paying one self first. I believe we are purposely dumbed down.
Someone asked what to look out for buying a home in 2019.
Here's my very quick response: Make sure your wife likes it. No plaster No railway No motorway No arterial road No high voltage pylons No flood zone No gang area No commercial industrial properties next door No leasehold No Housing New Zealand clustered in the immediate streets No steep slopes or cliff tops No apartment No body corp/unit title No meth lab
Buy in high ownership area Street appeal Quiet street Door knock neighbours and ask them questions Look at what your potential neighbours are throwing out at rubbish collection especially the recycling bin, ie overflowing alcohol bottles is bad sign
How to drive down the cost of new builds: 1) reduce red tape especially the resource consenting process 2) remove monopoly by Fletcher Building and it's chain of building material suppliers 3) encourage alternative prefabricated building methods 4) encourage more young people get into trades, rather than universities, and better career planning in high schools
Are you talking about my favourite movies,my friend 😂
Mission impossible 1,2,3 and 4
Ok... we are a seismic country... so construction products and engineering will differ greatly.. west coast and east coast in the USA case and point.
Yes timber is the same and plaster board... but rebar, mesh and steel all differ and have to comply to NZ Standards not others... that's one of the issues... Testing in NZ is extremely expensive compared to overseas as well... the whole construction support network is under resourced as well... so nothing will change unless the compliance issues are sorted first.
Encourage financial literacy and investment in personal development. The mindset of NZ entitlement and tall poppy syndrome is laughable in New Zealand. We have a postage stamp population on a massive land mass. We don’t have a land problem.
Love HSBC, they've been the best bank we've worked with. So attentive and best service, our banker took us out to Euro for post settlement celebrations too. We've got all our loans at 3.75% across the board
Obviously? Unless you have other ideas on how to stimulate the market?
The big question is Why?
competitions are good
HSBC wouldnt give me a home loan however unless I was borrowing $600k + 😐
Thanks to foreign buyers ban, CGT rumours, ring fencing of tax losses, and tight bank lending (did you know bank lending criteria today is 100%+ tougher compared to 2016 and prior?), Auckland house prices have dropped in the past two years.
This means more bargains are now on the market, and more room to negotiate well with less competition.
If you are entering the market in the next two to three years, make sure you buy well undervalue, good cash flow, and don't hope and pray for capital gains like people were in the past 5-6 years!
If you don't have the right strategy and knowledge, send me a message and see how I can help you succeed in this market. ... See MoreSee Less
I’ve experienced 3x property corrections so far since i bought my first rental at 18, these were up to 50% reductions in values and always gave great buying opportunities for those that could cover/hold. Although I wouldn’t buy a unit in this building for a 50% discount.
Alex came to me and wanted to invest in Hamilton 2 months ago.
From knowing almost nothing about property, Alex went from strength to strength.
Within about 1 month after completing my Property Blueprint course, Alex found a deal that is 6% return. Best of all the dual income property has already got services separate, plus the council development contribution was already paid by the seller!
Alex only need to spend $4000 to complete the subdivision!
After subdivision is complete, each of the two separate properties will be worth $430k to $450k each, giving Alex a combine value and equity gain of over $200,000!
If you want to be like Alex, have confidence, knowledge and skills in your property investment journey, I provide a range of group coaching, online course, and one on one coaching.
I agree with the sketchy loans. Even my mortgage brokers now are relaxed about income. I think you are on point with what will happen next, when commissions are taken away, most sales jobs/brokers will hit the fence, the impact is huge. Unemployment ect.
The Australian housing market is getting worse and worse. Australian government will feel the pressure to: 1) lower interest rates by cutting OCR 2) relax interest only loan periods to give negative cashflow borrowers more breathing space 3) ease lending to revive the market 4) accelerate immigration to boost demand for housing 5) entice foreign buyers back somehow to boost demand for housing, especially new apartment market that have been worst hit
Will be interesting to see the reaction in New Zealand market, which has been relatively not as badly affected by the credit crunch by the banks.
Are you concerns that the government is infringing the rights of private property owners?
"But his officials have warned it will have a detrimental impact - made worse by the fact private companies or people could make money off the land grab." - isn't this worrying?
In China this is common practice, local city councils working with major developers that buy back apartment blocks at a time, sometimes hundreds at once, demolish, and build higher and denser apartments to meet growing population demands.
How would you feel if this kind of compulsory acquisition occurs in NZ cities?
Also for the neighbours who have not had their land "compulsory acquired", what are their rights if the new development infringes on their privacy, peace and enjoyment etc?
i don't mine as long as the compensation is sweet enough
Time for change!!
I think it's business as usual in an already stolen land.
This is the sort of policy that could really blow up in Labour's face. As it's one thing to have the Kiwibuild policy flop, but it's another to forcefully take something from people, and then potentially still have your policy flop.
From what I learned is that we dont truly own anything cause the government can take it if they wanted it. But if the people made a huge uproar the government will get scared. But when the people are taught to hate private property owners then they wont stop anything.Government taking property is theft
Lets see what the report says.
Personally I dont think Labour will adopt CGT, they've got too much other shit to mop up.
Interesting that there hasnt been more noise from the business world. They should really target multinationals such as apple/google first rather than the middle class business/property owners.
Is CGT applied on new buys or retrospective? For those selling a reclad leaky building it is distasteful to be additionally hit with CGT on a lower capital gain after being hit with significant debt (tax) of $100k's incurred to fix.Can the capital loss incurred to fix a recladd be off set from the capital gain and CGT applied ro the balance? seems fair.
I’m not to worried as a buy and hold kinda guy
people well sell their rentals and buy a mansion as principal place of residence.
I thought they only allow one house as ‘family home’? Doesn’t matter if it’s in family trust or not?
Buying property is not just about the logic and numbers.
Emotion appeal is very important also as it can affect the value growth and also attracting the right types of tenants.
Street appeal is very important when comes to doing your market research.
Make sure when you are searching for the right property, put in the time and effort to check out the neighbours, have a chat to them, check out the street at different times of the week. ... See MoreSee Less
New Zealand's tax rates 'absolutely' need to change – expert 1 NEWS SHARE SHARE Facebook Twitter Google Plus Email Facebook Twitter Google Plus Email Topics New Zealand Economy Politics Employment N...
To be fair as a PAYE earner I put in blood sweat and tears and spend significant time away from family. Why is it ok to take 33% of my earnings but not a business owner who has had earnings or dividends for 30 years and is now making a killing by selling an asset?
Here in the USAwe have had capital gains for a long time,
short- and long-term. Short-term capital gains are taxed at your ordinary income tax rate. Long-term capital gains are taxed at only three rates: 0%, 15%, and 20%. To get long term capital gains tax you hold the asset for a year or longer. So you pay regular tax, income tax let's say, then capital gains on top of that. Which is why we usually hold for a year or more but also with property there are zero capital gains tax if you reinvest back into property.
How likely is it to pass ?
Revolution, how about those parasites take a pay cut.
Hopefully we don't have to wait too many years before a government takes this seriously.There is a lot of low hanging fruit a government could easily utilise to make massive progress - certainly a lot more progress than the current version of Kiwibuild is capable of.
I too made a lot of mistakes when I bought my first home in 2009. By the time we sold it, we sold for $150,000 less than if we purchased a similar property without the mistakes.
Here were the mistakes I made: 1) only looked at 2 open homes 2) didn't get a building inspection 3) didn't get an expert opinion from a more experienced friend or builder 4) bought on a busy arterial road and didn't not check peak traffic 5) bought a house with layers of retaining walls on all sides of the house, and retaining wall was starting to tilt..
Hence why I created a Property Investment Blueprint course to help home buyers and current and future investors to navigate through the mine field, and not make mistakes along the way!
A blow for real estate outfits that proclaim Negative gearing as big
reason to buy an investment property. That was when I first found out about Negative gearing many moons ago.
And the government wonders why there's a housing crisis.. most people can barely afford to live, how the hell are they going to save a deposit. Less rentals, rents rise signifigantly and it's actually worse, but more tax in their pocket so that's all that matters 😂
Do you think it's still worth being a landlord? Do you think it's worth anyone new to the game buying an investment property now?
Gary Lin, do you think it’s a matter of time before losses can’t be offset even within the portfolio?
good stuff Gary. I was wondering what interest rate you were using ? also with your investments do you always take the 30 year term with the buy and holds properties?
Thank you for sharing Gary
Gary Lin how easy is it to rollover the interest only period? Is there a maximum amount of time that a mortgage can be IO?
When market is acting funny like this .
Forecasted recession reflected already from US share /loan market .
Recently UK too.So be very careful taking any “ suggested short cuts “ in finance .In case interest rate move up suddenly .
It’s dangerous .As for 2nd opinion from different resources for any “ new option “ in finance .I would suggest in case traps behind .