Hi Kiwi
thanks for that, i didn’t take it that you were saying i’m a sheep.
I love NZ also , i lived there for two years from 2004-05. So i’m not a kiwi basher at all. Many of my good friend can’t say “fish and chips” properly!
But we all know that markets move in cycles, NZ has had great appreciation and has followed the Aussie market, with a few year lag.
One of my many concerns was that as in Aust when the market started to top out that buyers disappeared then the market headed south. I know countless people who have held on to properties in aust. that have lost 10’s of thousands and 100’s of thousands in some Sydney cases from the peak of the cycle. There is no harm in selling while things are good, because we know that the market will change. If people aren’t in for the long haul then selling might have been a good option. I know some parts of NZ the market has already Stopped and there are an absense of buyers. Those people may be stuck with properties for a long time.
When i first started buying in NZ in June 2003 in some places i bought there were homes that had been on the market for 2 years, great for me as a buyer not so good if your a seller.
The great thing with NZ is there is no Stamp duty so its easy to move in and out of the market.anyway time for me to head out to pasture , Baaa
regards westan
USA deals, cash flow equity and capital growth all in one property.
International Property Consulting Pty/Ltd.
Property Investing New Zealand Ltd
http://www.iproperty.net.auOriginally posted by westan:Hi Kiwi
But we all know that markets move in cycles, NZ has had great appreciation and has followed the Aussie market, with a few year lag.
One of my many concerns was that as in Aust when the market started to top out that buyers disappeared then the market headed south. I know countless people who have held on to properties in aust. that have lost 10’s of thousands and 100’s of thousands in some Sydney cases from the peak of the cycle. There is no harm in selling while things are good, because we know that the market will change. If people aren’t in for the long haul then selling might have been a good option. I know some parts of NZ the market has already Stopped and there are an absense of buyers. Those people may be stuck with properties for a long time.
HI Westan,
Your comments above are weighing toward the exact sheep that buy for greed and speculation …. and to compound the problem they only know of one may to make the yeilds or COCR returns work… and that is renting the house out!…, rather than positive cashflow and capital gains as a bonus and then diversifying the portfolio. (there are many more lucrative returns using other methods if renting does not work with the number crunching process) If investors looked at a cashflow approach + a property in a potential growth area as part of thier criteria then if the market softens and slides down to a negative growth stage…. then thier investments are safe as houses as they are not effected due to cash coming in supporting the foundations of thier port folios. If they have focused on growth with little regard to yeild, fixed interest rates and end result of positive cashflow…. and are hurting in a down cycle… then I am happy to purchase off them to take the burden off them so they can move onto greener pastures
Best wishes,
Kiwi
[baaa]
15%+ Cash on Cash returns goto
http://www.kiwilogic.bizHi kiwi
my experience tells me a very different story
I sold 25 homes in Australia these properties that would have gone up by $0 since i off loaded them. I took that money to a new market and did really well, got the same cashflow but capital growth also. Now i’m taking that NZ money and investing in another market were i expect to do really well again. Way better than if i held on to those same NZ properties.
Your comments above are weighing toward the exact sheep that buy for greed and speculationI find this comment a bit baffling ?? Am i the only one who is trying to make as much money as i can through investing ? Is that Greed ? no, its what i do with that money that makes me gready or not. Surely its not wrong to work my investment dollars as hard and safley as i can. As far as speculation, i buy for cashflow so why not sell a cash pos property that will gross 13% and replace it with one showing 14% in an area that has less risk. In an area with more Capitsal growth potential. I thought that was smart.
On another matter there are better ways to make cash flow from real estate than buy and hold. Unlike years ago, I’m no longer content to make 10% Net from my investment.Regards westan
USA deals, cash flow equity and capital growth all in one property.
International Property Consulting Pty/Ltd.
Property Investing New Zealand Ltd
http://www.iproperty.net.auI am curious
Given the number of people you have put into Buffalo are you moving their to help manage the properties?
Nigel Kibel
http://www.propertyknowhow.com.au
Australian and New Zealand The United States Property Researcher and education
One Day property investment research workshop The United States. Please register your interest
http://www.changingplaces.com.au Buyers advocate.Nigel Kibel | Property Know How
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Email Me | Phone MeWe have just launched a new website join our membership today
Hi guys
Kiwi As far as this thread goes, i doubt that you will be able to achieve 15% net returns, more like 5-8% can you supply an example.
Nigel, is this another one of your attempts to have a go at me ? Im not sure whats your problem, but i’m more than happy to discuss it if you want to discuss Buffalo start a new thread, i’m more than happy to discuss this matter. I have great confidence in our recommended property manager.
regards westan
USA deals, cash flow equity and capital growth all in one property.
International Property Consulting Pty/Ltd.
Property Investing New Zealand Ltd
http://www.iproperty.net.auWill you guys lay off Westan. There seems to be a ‘few’ who keep hammering at his credibility. The man has integrity with a capital I. Find me someone who has been badly done by Westan and I’ll call him a liar!
Originally posted by westan:Hi guys
Kiwi As far as this thread goes, i doubt that you will be able to achieve 15% net returns, more like 5-8% can you supply an example.
Hey Westan,
Or Course!
Just purchased 3 bed Weatherboard (April 2006)
PP=$79,000.00
Rent = $170.00
Rates=$980.00
Ins= $395.00
Property Management = $796.00
CAsh in = $4,900.00 … we only put in $950 ourselves as it is a JV!) + bank funded the remainder (95%)
Nett rental return is $1716.00NETT COCR (cash on cash return) = 35%
Which is a total return on investment of 2.85 years!
Compared to the bank offering 7.5% (Cash on Cash return) you would see the return on your investment in 13.33 years.Now our actuall investment (our hard cash) was $950.00 so the return on our investment is 180% so our return is in 5.5 Months!
That is not even considering capital growth if it happens…
so the bonus is if we were to get 3% capital growth over 5 years then the realsale price would be around $111,003.
The nett profit would be $32,005 … so if you divided that by the average (5 years) then you would end up with $6401 + $1716 (nett rent for 1 year) = $8117.00.
This would mean that average return over a 5 year period would be 60% nett Cash on Cash……
Not bad for an NZ average house in an area thath te bank thinks that 95% lend is not such a risk.
Best of luck to all you investors out there.
[exhappy]For 15%+… Cash on Cash Returns goto:
http://www.kiwilogic.bizThanks Kiwi
i looked at your figures and come up with different result, i think its more realistic.
rent $170 pw so rented for 50 weeks a year (thats being generous)
income $8500
Less expenses
you put in roughly $5 K so you loaned $74K at 7.5% (if lucky) Interest $5,500
rates 980
ins 400
management 800
Total $7,730Profit only $770 per annum or a 15% net return – Still nice
BUT you haven’t allowed anything for repairs, i’ve owned a number of these timber homes in NZ and you will have repair bills. I’d so you need to allow about $500 per year (even if the home is in good condition now), suddenly the real return is down to $270 per year or a 5.5% Net return, Ouch. A bad tenant and it could take years to make up the cashflow. And i hope you don’t have to pay a letting fee as that will eat away a years profit also.
Sorry Kiwi to disappoint you but with this deal you need to get capital gains to make money. And my whole point is i think you will really struggle in the next 3 years to get capital gains in most places in NZ.
Please go over my numbers and tell me if i’m wrong ?
regards westan
USA deals, cash flow equity and capital growth all in one property.
International Property Consulting Pty/Ltd.
Property Investing New Zealand Ltd
http://www.iproperty.net.auHey Westan,
Dunno how you got your figures to strip down the return …. (guess that is why I don’t like putting figures up….. ( I put the April 2006 one on view to show current buying power)I know that I NETT $33.00 per Week in the hot little hand before tax considerations. (as for teh lend 7.25% fixed int only for 5 years)
As for vacancy I do not have any of my properties that have vacancies above 1% ( based over the last 5 years of vacancy records in my portfolio) This is due to the way I take care of my tennants and as I upgrade… the rent increases by $10-$20/week (the tennants don’t mind at all… as they are getting to live in a better house every year)
… or I get them to look after the maintenance and repairs if necessary with wraps or lease options…. (Turning them from 35% to over 100% COCR’s….
Anyway I am not out for a war and peace novel here …. you just asked for an example and I have supplied one of my work in progress deals (they come along everyday – even though the sky is supposedly falling out of NZ).I am sure another 50-100 readers and other … “yeah but what if” people also…. so this will be my last post on this thread as I am not here to actually “prove” I am doing this….. my numbers and historical returns speak for them self (ask the TAXMAN!!! [cap])
After all…. Renting is my “worst case scenario” when weighing up risk and return on my transaction … but hey we are all different in our methods and goals. Best of luck again to all and keep up the good hunting and deal sealing!!
Best of luck all [biggrin]
KiwiFor 15%+… Cash on Cash Returns goto:
http://www.kiwilogic.bizHi Kiwi
Ok this will be my last post on this matter also. I’m not trying to have a go at anyone here just loooking at the facts to back up my position. I even let you use one of your examples to evaluate. I’m trying to have a healthy robust discussion as to wether NZ is the market many belive it is and i say it isn’t any longer.
1% vacancy thats tremendous, you have better managers in NZ that i did. You must have a fantastic run with repairs also, because i think that most people would find $300-500 per year is the Minimum investors should be putting aside for future repairs even if they don’t occure in that year.
I see you only purchased this property in April so you wouldn’t have any Tax year figures for the deal. I think Kiwi we need to be honest to ourselves and be conservative with our own figures, no point doing projections on 52 week occupancy as we all know that isn’t going to happen. My belif is be conservative if i can live with conservative figures then i can certainly live with any improvement on them.
I just needed the figures to prove my point that these deals in NZ for a buy and hold are not Cash Positive, They are at best cash neutral which is fine for some peole . But the facts remain you need capital growth on a deal like the 79K for 170 pw rent.
The figure are the figures i’m not manipulating them to get a worse result. The interest rate on 7.5% was the only difference your paying 7.25% so that gives you an extra 188 per annum, on my figures. But today the best you can get is 7.5% from some obscure lender, most are charging around 7.8% for fixed rates and 9.5% for variable. Fixed interest rates are on the rise in NZ.
OK had my say happy to leave the matter here.
Oh and for those thinking the Aussie Dollar will lose value against the Kiwi, the financial markets expect the Kiwi to continue to lose value against the Aussie over the next 2 year
regards westan
USA deals, cash flow equity and capital growth all in one property.
International Property Consulting Pty/Ltd.
Property Investing New Zealand Ltd
http://www.iproperty.net.auFixed interest rates are on the rise in NZ.Without getting to much into it westan there is alot of information that you are putting out there that is just your opinion which is fine. That’s the point of forums.
You are a long time contributor and people respect your opinion but some of the stuff you are saying is out of date or not true – the fixed rate comment is one example.
There is currently fixed rate discounting all over the TV and radio here in NZ. There are heaps of other examples in the tread but that is just one.
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Hi Don
my apology if i have said something out of date, You imply other comments are not true outof date can you name one ?
Re- the rates i got my information from http://www.goodreturns.co.nz, a well respected and accurate source i would have thought.
according to them banks have lifted there fixed rates none have lowered them. Which banks are discounting the rates and what are interest rates ?
regards westan
USA deals, cash flow equity and capital growth all in one property.
International Property Consulting Pty/Ltd.
Property Investing New Zealand Ltd
http://www.iproperty.net.auHi Guys
I can’t think what else i’ve said may not be accurate, but if its about the currency and its direction then look at http://www.ozforex.com.au
and see what the “futures” are paying for the dollar in the next 2 years, they are saying the Kiwi will drop.regards westan
USA deals, cash flow equity and capital growth all in one property.
International Property Consulting Pty/Ltd.
Property Investing New Zealand Ltd
http://www.iproperty.net.auI am loving the weak NZ dollar at the moment and considering i will be earning foreign dollars for another two years I hope it continues to drop over the next couple of years. imagine the amount of mulah i will have in my pockets when i return to nz! I could buy up all of invercagill. I’m looking forward to it.
Hi Dohicky
yes the dollar’s great for people like yourself (just gotta save some of that money your making). But not so good for Kiwis visiting OZ, we had some friend from Balclutha stay with us over the weekend and while the price of the dollar didn’t stop them shopping (they know how to shop) the trip cost was a bit more than usual.
Lets hope the low dollar can help Kiwi exporters, they need it.
regards westan
USA deals, cash flow equity and capital growth all in one property.
International Property Consulting Pty/Ltd.
Property Investing New Zealand Ltd
http://www.iproperty.net.auI also love New Zealand, however iam also investing in Texas as their are some great opportunities there. It is a little like New Zealand 3 years ago.
Nigel Kibel
http://www.propertyknowhow.com.au
Australian and New Zealand The United States Property Researcher and education
One Day property investment research workshop The United States. Please register your interest
http://www.changingplaces.com.au Buyers advocate.Nigel Kibel | Property Know How
http://propertyknowhow.com.au
Email Me | Phone MeWe have just launched a new website join our membership today
Hi all
Nigel now you have discovered about the opportunities in Texas are you still buying in new zealand ?
regards westan
USA deals, cash flow equity and capital growth all in one property.
International Property Consulting Pty/Ltd.
Property Investing New Zealand Ltd
http://www.iproperty.net.auWestan
If I had a client who was looking long term and felt that America was too far then yes. You can still buy good property. As mentioned their are issues with property taxes and only being able to borrow around 70% needs to be considered.
Personally I am not buying in New Zealand at present and I will be focusing on Texas for the time being. As mentioned before I may be moving there.Nigel Kibel
http://www.propertyknowhow.com.au
Australian and New Zealand The United States Property Researcher and education
One Day property investment research workshop The United States. Please register your interest
http://www.changingplaces.com.au Buyers advocate.Nigel Kibel | Property Know How
http://propertyknowhow.com.au
Email Me | Phone MeWe have just launched a new website join our membership today
Nigel
i’m suprised you are only able to get 70% loans ? We have many banks we are dealing with who are giving us 80% loans in Texas and New York State.
Property taxes are higher than here but this is more than offset against the gross returns of 13-14%, Watch out for Insurance its also a lot higher than Australia ,
Perhaps now you can understand why i’ve sold everything in NZ to invest in Texas ! (actually i still have one NZ property its still on the market)Anyway i’ll get off the Texas topic this one is on NZ.
regards westan
USA deals, cash flow equity and capital growth all in one property.
International Property Consulting Pty/Ltd.
Property Investing New Zealand Ltd
http://www.iproperty.net.auHi Don
i’m still waiting to see what i’ve said that is wrong ? either out of date or wrong ?
When you make comments like that it implies i don’t know what i’m talking about. i stand by what i’ve said. Would you like me to post what the governor of the NZ Reserved Bank says about things or perhaps what the NZ treasurer says about the state of the market and economy. Or perhaps i could quote leading economists.
But you made the comment so where am i wrong.
regards westan
USA deals, cash flow equity and capital growth all in one property.
International Property Consulting Pty/Ltd.
Property Investing New Zealand Ltd
http://www.iproperty.net.au
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