Forum Replies Created
- Originally posted by Brent:
Because I have a lot of deals go over my desk at the moment, I’m seeing a bit of the NZ market right now.
I’m shocked at some of the things Australian investors are buying.
Agents know that Aussies are willing to buy sight unseen, and are usually prepared to buy (funnily enough) at Steve’s 11 second solution calculation! (around 10-10.4% yields). These deals are being snapped up within days – often with 2 or 3 offers within a day if the listing agent knows a few investors up north or across the Tasman.
Chatting with an agent I know in Invercargill (way down in Southland), he’s now saying that with so many investors hitting the market, it’s begining to get harder to rent properties.
This is not to say that you shouldn’t be buying in NZ (or that you SHOULD be buying for that matter)
I would recommend that anyone looking to invest (in NZ or otherwise) take on three key points.
1. Always, Always, ALWAYS do your due diligence – get something which backs up every assumption you have made.
Put clauses on the contract which say you won’t settle until these assumptions have been proven.
(PS – don’t just put in a finance clause and have this cover everything. Often this loses you credibility – be honest and transparent right from the start, and more often than not the Agent will do whatever he or she can to help you, and get the deal across the line)2. Consider bringing someone onto your team who knows a little bit about the market, and can understand how the subtleties work. Perhaps a bird-dogger like Tasman Investor or Mini in the North, Westan or Myself in the South.
(Don’t be a tyrekicker and pump these people for information though – if they’re good enough to help you and be on your team, they’re good enough to be paid for their time.)3. Don’t get swept up in the deal. There’s kazillions of them out there – in Oz and abroad. Even though people like ‘Tasman Investor’ talk about changing their investing criteria because too many deals are slipping through his fingers – this doesn’t mean you need to go for the first positive cashflow deal you see.
Positive Cashflow deals are not scarce – and neither are investors whom agents know can be whipped into a frenzy and will possibly make a bad decision.So keep a cool head, and know what you’re getting into.
Brent Hodgson
PropertyInvesting.com
Admin ManagerI’m going on a property buying tour!
Want to receive the e-mail diary of my trip, hear about some of the great Positive Cashflow deals I find, and perhaps discover some great opportunities for yourself? e-mail or PM me!
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dejaWCD
**************Thanks Marco your information is very helpful.
I’m still familiarising myself with all the acronyms and I’m not sure what “IP” and “IMHO” meant in the following statement in your reply:
If you want you cash now, go for the LOC. If you want to take the safe option (IMHO) then go IP and have a little principal in reserve.The question I asked about using equity to purchase further IPs is because I don’t want my first invesments to affect my borrowing capacity for future purchases, but I guess if they’re all cash flow positive and taking care of themselves I won’t have any trouble getting subsequent loans for future purchases?
If I get an i-only loan is it usual with LO deals to make principal payments during the LO period? Or is this a question of pure personal preference for cash flow? I’m thinking that in using i-only loan, because the cashflow margin is higer than P&I loan, I can use that cash flow at my own discretion to reduce the principal or use it for something else whereas P&I you don’t have the flexibility of that?
Also – I’d like to get views on fixing interest or not fixing interest on LO deals, and its implications if the tenant decides to get out before the LO period ends.
[biggrin]
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dejaWCD
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