For those of you thinking you might like to have a go investing in New Zealand, fixed interest rates are down to 6.5%-7.5% and still expected to go down about another 1% over the next few months. (OCR is expected to drop another 1% at end of Jan) From my experience, working Ozzies don't seem to struggle getting money here in NZ (I have a broker who has financed dozens of Australians).
I'm in the Hawkes Bay and rents seem to have stabilized, some are even going up and there aren't many vacancies. I had a 2-bed flat vacant just before Christmas and it only took one advert and a week to fill and I'm getting top (above market) rent.
Yield wise, I'm regularly finding Buy & Hold properties with 8.5% yields, and in the more tenant-based areas I'm getting over 10% again, YAY! Creating leases options is easily returning 12% plus profit at the end.
Other upsides to NZ
— No Stamp Duty
— No Capital Gains Tax
— Strong rental demand
— Positive Cashflow of 8.5% -12% in the Hawkes Bay (Napier and Hastings)
— 4% deprecation, regardless of property age from day of purchaseHappy investing in 2009!!
VickyFixed rates are down again and finance is available in mid to high 5's at the moment. There has been a lot of discussion about an irregular raising of fixed term rates recently which has prompted a release from the NZ reserve bank questioning the banks motives on raising fixed rate ie they are out of step with the actual cost of funds and the bank are acting to the detriment of the NZ economy. The heard thinking has followed the banks and they are taking the higher long term rates hook and sinker but if you are willing to chance your hand there will be even cheaper rates out there in a matter of weeks! Or will there?
The phrase now is "don't wait for the book" about investing in cashflow because by then it is too late!
Get on a plane guys and head to NZ. Have a holiday and scout out your next purchase.
Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
Hi guys,
As you may have already seen in the news, rents across NZ have taken a hit due to an oversupply of properties currently for let. This has mainly been caused by the many home owners that have been unable to sell their homes, and have had to move away regardless and have been forced to offer their properies for rent.
It has been common place for some medium to higher end properties to have dropped back by as much as $50 per week, thats $2,600 per year! And worse still If you are an investor that owned four such properties, that would be a reduction of annual rental income of over $10,000 per year, on properties that were already fairly negitive for cash flow to start with.
There are certain things we can do as investors to limit or completely avoid being effected by situations like this.
I have written a blog where I discuss how I have structured my portfolio to protect me from these rental decreases that many other property owners and investors are currently experiencing, and how you can too.
Click HERE to read the BlogG'day guys,
I'm looking at investing in NZ, I have a few questions,can I claim neg gearing and depreciation as I live in Oz? If and when I do sell will the cap gains affect me as I live here? I'm currently looking in the Hawkes Bay area,what are the interest rates at the moment and what are the general yields? What are the vacancy rates?
Regards,Fitzer.
PS. My wife is a kiwi,can that work in our advantage?
Hi Fitzer,
I'm pretty sure you can claim neg gearing and depreciation, but highly recommend you speak with your Oz accountant, who should know how to work the system to your advantage. Ideally, it would be good if your accountant understands both the Oz and NZ accounting info in order to take best advantage of everything available for you. I've worked with a lot of Oz investors in the past and they seem very happy with owning over here in NZ, and are especially happy with their buying power at the moment.
I would highly recommend you get pre-financed if you can before going on your NZ spending spree, as the NZ banks have definitely tightened their lending criteria in the past year or so and will require you to have a cleaner credit history than you may have got away with 3-4 years ago. If you need a local mortgage broker, I'm happy to recommend.
As for interest rates, check out at http://www.interest.co.nz/mortgages.asp for a list of current mortgage rates. I am a local Hawke's Bay property finder and have been finding yields from 7.5% and above recently. Single family homes in lower socio neighbourhoods (i.e. easy to tenant) are in the 8%-9% range and blocks of flats, depending on age and quality 9% – 10.5%.
Current rent rates are available here … http://www.dbh.govt.nz/market-rent . Personally, I am getting above these figures, i.e. Flaxmere 3-bed upper quartile is listed at $260 a week, I am getting $280 a week and the tenant is WINZ direct (WINZ deposits the rent directly into my bank account, so there's never a problem with missed rent) — I love Winz-direct tenants
Again, personally, I am not finding any problem with vacancies, contrary to the article that Clint has identified. Clint is definitely right about structuring your portfolio to protect yourself from rental decreases — it's iimportant to fall in love with the bottom line, not the pretty house that you'll never live in!!Something that is worth thinking about is leasing to horticultural workers over the season here. The Hawke's Bay has an influx of about 14,000 horticultural workers (mostly pickers) over the season which runs from about mid-Nov. thru end-May. There are a couple of options, one is to furnish the property and rent by the bed (about $90/bed per week) or rent unfurnished for market rent on a fixed term tenany to one of the companies managing the picker programs. Workers (mostly men) come in from the Pacific Islands and Asia and there are a few rules to play by (such as max 8 people to 1 toilet) but all in all it's proving a good way to increase yields!!! After the season, landlords are putting regular tenants in over winter on fixed term tenancies ending at the beginning of the next picking season.
I hope this is helpful to you.
Vicky
Hi Vicky,
Hope you are well.
Just to clarify, In my post about small towns and vacancy issues I wasnt refering to the Hawkes Bay being too small to invest in, but moreso Tokoroa and the like
Cheers,
Clint
Thanks for the info Vicky, much appreciated!
Regards,
Fitzer.
Hi guys,
We have just sent out a newsletter to our property investor database discussing this topic of why it is now more important than ever to get educated before investing/investing further.
If you are not yet on our email list, you can view the email newsletter in your browser here > http://eepurl.com/cRmn
Hi Clint, I'm sorry I expected more. That newsletter says exactly nothing. I'm disappointed.
KY
kum yin lau wrote:Hi Clint, I'm sorry I expected more. That newsletter says exactly nothing. I'm disappointed.KY
Sorry you feel that way, but certainly appreciate your feedback KY, always like to get it, be it positive or negative. I liked that article i found, and thought it highlighted many good points that many new investors fail to think about or realise, so thought i would pass it on for those that may not normally come across it.
Many people really do under estimate the benefits of gaining a sound investment education, and going about things properly, that is until it is too late.
In future I will add more of my own opinion and thoughts.
Hi Guys,
We have just sent out a Property Alert email to our database, advising of our latest Property deal. Which is cash flow positive pre tax by over $4,000 p.a. and in a excellent growth area. Available via assignment.
Again, personally, I am not finding any problem with vacancies, contrary to the article that Clint has identified. Clint is definitely right about structuring your portfolio to protect yourself from rental decreases — it's iimportant to fall in love with the bottom line, not the pretty house that you'll never live in!!
You must be logged in to reply to this topic. If you don't have an account, you can register here.
