NEW ZEALAND property investments

peter – do a search there are hundreds of threads discussing same….westan and minimogul seem to be the gurus

We are expat kiwis being out of the country now for over 10 years. So a few observations following a recent trip for you to consider in regards to leasehold land in New Zealand.

1. Much of the leasehold land belongs to maori tribal or iwi groups. As a result major changes such as sub dividing etc would need further consultation with the maori which may take a while.
2. Most leaseholds are renewable indefinitely.
3. Rates and taxes have an additional cost for the leases. You could expect the additional lease costs to be 30 to 40% higher than free hold land.
Having said this, this is an area where you can get some wonderful bargins which give positive cash flow.

House prices on lease hold land in many places are 20-30% lower – less mortgage but rents remain the same – so good cash flow.
There is a drive at the moment to settle outstanding land issues in New Zealand. This means that in the near future a capital outlay in may be required to make some properties freehold. For a 2-3% capital outlay property value will rise to freehold values. In the town that I am basing these comments on many of the local businesses have bought as many freehold properties as they can manage in order to reap the benefits of the capital growth. But whatever you do in regards to leasehold land – do your homework first. Coastal properties have gone up in price over the last few years with many areas seeing rapid price rises.

Secondly the issue of finance is it is not a problem as an Australian buying into New Zealand. Most of the major Banks can accomodate. Conditions do apply. As most of the New Zealand Banks are owned by Australian groups I imagine the raising of finances will be simplified [purhaps].

There are some excellent deals going in New Zealand. The discussions in the papers were that New Zealand follows behind the Australian market by 6 to 12 months. This information can be used for your advantage. Auckland can be problematic to the uniformed. Some of the Real Estate guys have suggested expecting a 2% rise in interest rates with a 10% decrease in rental as arough guide as to where the market may be heading.

I hope this is of help.

Kegwylo.

KG Billinghurst
6308095871183

I agree with Westan,
Take a 20% deposit from Aust and finance the other 80% in NZ. Haven’t yet found a bank that will lend over 80% without needing your grandmother, children and pets as security (in other words I haven’t yet found a way to do it!!)
Some banks will require a valuation, some don’t depending on whether you purchase through a REINZ registered Real Estate Agent.
Definitely get a building inspection, and a round of photos so you can get a feel for the place helps a lot as well.
A written rental appraisal, title search and rates information are also valuable and I consider necessary information to make an informed decision.
Establishing a relationship with your rental manager is also important. They are you eyes and ears in absentia.

Cheers
CD

CastleDreamer
“+CF properties in NZ available now”

Muppet
not me
if I could buy 130 PI I would spread them out
glenn

“I should be content to look at a mountain for what it is and not as a comment on my life” D. Ignatow

Hi Guys

Didn’t know that there were 130 houses in Tokoroa.

If driving along the main road or State Highway One and close your eyes and count slowly to ten you will have driven right past the town and seen nothing.

Mind you, you have to be the passenger.

Regards

I think Tokoroa is about 14000 people….

Oh yeah and re:leasehold land, there was a great place I was looking at a year or so ago, 35K, GV was 55k, freshly painted inside and out, 4 bedroom, right next to town and the polytech, in a south island town, would rent for 280 a week,
(41 percent return, anyone????) however the catch was it was on leasehold land.)

After paying the lease of 8000 per year it was an 18 percent return. Still OK, but the reason i didn’t take it was because if vacant……it would be bad. And as it had traditionally been let as a student rental, i was worried about 6 weeks vacancy every year.

I discussed it with my lawyer who had a look at the lease for me. it was in year 7 of a 15 year lease, which meant it wouldn’t go up for another 7 years (meanwhile if rents did go up a bit your returns would have got crazily astronomically good) but then again I was finding 18 percent returns on freehold land back then easily, so why would I buy leasehold? Also like someone said, buildings depreciate, land appreciates, but if you don’t own the land………
you don’t get capital gains. Still the writeoff would have been OK though, as you could depreciate the entire purchase price at 4 percent….

Dolf De Roos says leasehold can be great simply because a lot of people are scared of it and so therefore you get more deal for your money. but if you are vacant it’s about 5 times more of a liaibility (the different between paying rates and paying rates and the land lease!!)

my two cents

cheers-
Mini

WallFlower,

Earthquakes are common, but huge ones are not (although still far more common than in Australia).

Floods are relatively common in some areas too. The lower North Island had big floods earlier this year and now the BOP’s having them.

GP

Hi Guys

Hullo from this great land of earthquakes and floods.[biggrin]

The Eastern Bay of Plenty is experiencing a major flood at the moment. Estimated losses will be in the 10s of millions. Main problem is that the dairy farmers are starting into calving at the moment.

A couple of 1000 people had to be evacuated but most are now back home.

If more info is required about earthquakes please look at http://www.geonet.org.nz/ which is updated by the minute.

Lots of earhquakes were felt over the last few days but the biggest was only about 5.3 on the Richter Scale.

Poor ole tasmaninvestor would have been in the thick of things at Ohope.

Regards

Don’t forget to factor in SCUBA gear and daily airfills. I wonder if they’re tax deductable!

“Life is not a journey to the grave with the intention of arriving safely in a handsome and well preserved body, but better to skid in sideways, thoroughly used, totally worn out and loudly proclaiming . …… Hell, what a trip !!”

Hi Guys

There is another 10-20ml of rain due again tonight.

Regards