New to being a Landlord

[Bassai]

We are in Auckland and needing to move to Taumarunui in 8 years when we retire.

We want to purchase a 1920's bungalow thats in beautiful condition and rent it out until we retire. One snag is I hear insurance is an issue with aged bungalows re roofing (steel), electrics and plumbing.

We haven't signed the sale and purchase agreement yet but hope to soon, but has anyone anything to share about buying these bungalows as well as recommending an insurer for them?

Is getting a builders report worth doing?

Your comments and help would be greatly appreciated

Bassai

[Keys]

Oh my. Invest many hours on this site and read, read, read.

Two things immediately show up in your post for me:

We want to purchase a 1920's bungalow thats in beautiful condition

and

Is getting a builders report worth doing?

For someone who is just starting, your beautiful bungalow will not be in the condition it was when you retire in eight years. Also, to even ask the question about the builders report suggests you need to do a lot of research.

Having said that, good on you for asking the questions. Remember, the most beautiful buy will come along often.

[Bassai]

Yes I admit I am completely green with this. Our goal is not to get profits from onselling, but to have someone assist with the mortgage between now and the time we retire. Thats it, its simple.

Not having ever owned a home before we are forced to purchase outside of Auckland so we can at least afford a home. Its taken a whole working career to save enough for a deposit (due to high rents and living expenses). Now we have one chance to buy a property that will be freehold by the time we retire.

My wife loves the older style bungalows and not knowing anything about properties I wondered if there was any inherent risks with these over and above other later built properties. Of course you cant take the real estate agents input nor advise cause all they want to do is sell the property and like most sales people they will say anything to get you to sign.

We understand there will be wear and tear on the property in 8 years and with our superannuation funds and Kiwisaver we will have more than enough to update and modify the property at that point. Very obviously looking at the yearly rental income and multiplying that by 8 it becomes a big chunk of change for us.

I understand the financing, I understand the negative gearing and taxation advantages but not much about properties. Sheesh I am not even mechanically minded enough to work on cars!!

Any help and advise would be greatly appreciate and I thank you in advance for commenting.

Have a nice one

Bassai

[Wayne]

get a builders report.
There could be any number of unseen pitfalls in an older property.

[speights boy]

Also make it conditional upon insurance; which it will be anyway as it will be conditional on finance.

But, give yourself plenty of time to get insurance confirmation.

[Bluekiwi]

Okay a couple of concepts I would like to throw in:

1. Rates - I looked down there once, I seem to remember nutty rates bills like 3k or 4k for silly little houses.

2. Prices arent going anywhere in T - depopulation, why buy an asset that will go down in value or at best stay nuetral in price, and likely cost you maintenance bills and tenant problems.

3. Why not buy a house in Auckland - take the normal 800k capital gain for holding it for 8 years in auckland, and buy 10 houses in T when you retire and you get 10 rental incomes.


Caveat: Watch the slow down in auckland prices sometime around 2017 / 2018

[Bassai]

Okay a couple of concepts I would like to throw in:

1. Rates - I looked down there once, I seem to remember nutty rates bills like 3k or 4k for silly little houses.

2. Prices arent going anywhere in T - depopulation, why buy an asset that will go down in value or at best stay nuetral in price, and likely cost you maintenance bills and tenant problems.

3. Why not buy a house in Auckland - take the normal 800k capital gain for holding it for 8 years in auckland, and buy 10 houses in T when you retire and you get 10 rental incomes.


Caveat: Watch the slow down in auckland prices sometime around 2017 / 2018

1. The rates are $2400 per year for the property we are looking at
2. This isn't about capital growth .. its about buying a home to retire in down there and have a tenant foot most the bill
3. I hate Auckland. We want to move to where there is a quiet small town (Taumarunui is very pretty) apart from that we don't have a big enough deposit to buy in Auckland and at our age we can only get a 10 year mortgage which we will pay in 8 to be freehold when we retire. We just don't qualify financially for a home in Auckland. Income yes but deposit and length of mortgage doesn't work

[Bluekiwi]

1. The rates are $2400 per year for the property we are looking at
2. This isn't about capital growth .. its about buying a home to retire in down there and have a tenant foot most the bill
3. I hate Auckland. We want to move to where there is a quiet small town (Taumarunui is very pretty) apart from that we don't have a big enough deposit to buy in Auckland and at our age we can only get a 10 year mortgage which we will pay in 8 to be freehold when we retire. We just don't qualify financially for a home in Auckland. Income yes but deposit and length of mortgage doesn't work

Okay cool.

I would definitely get a builder in to view an older house like this.

Re insurance I would use an Insurance Broker like ILG to ensure you get the right insurance for the job, plus they are free and represent you if you have a problem with the insurere.

The old kayak letting place down there they are wanting to sell, not sure its on the market or not.
You might pick that up for a good price, the owners look pretty keen to quit it.

[Bassai]

Okay cool.

I would definitely get a builder in to view an older house like this.

Re insurance I would use an Insurance Broker like ILG to ensure you get the right insurance for the job, plus they are free and represent you if you have a problem with the insurere.

The old kayak letting place down there they are wanting to sell, not sure its on the market or not.
You might pick that up for a good price, the owners look pretty keen to quit it.

Yes there are bargains to be had down there but not good for capital growth at all. For us its a perfect time and we are looking at a 180 squares, on 1600 squares land for $120,000. 4 Bed plus sleep out, one garage and 2 baths all in reasonable condition that a coat of paint and new carpets would be ideal. In Auckland for that you would be looking at $600k plus. Its ridiculous.

I would be worried as an investor. Its a town where reselling is very hard but for an old geeza like me that wants value for money, a pretty little quiet town to retire in, its perfect. We looked at Patea, Hawera, Kawerau, all around Taranaki but nothing beats Taumarunui for a beautiful town with 2 rivers running through it, nettled in hills and valleys with great property prices. Its 30 mins from Taupo and the mountains, only 2 hours to Rotorua and Hamilton.

We were shocked when we went down there first, compared to Auckland, people actually are friendly and talk to you if you pass a stranger it the street. I thought I was in the Twilight Zone haha

[BigDreamer]

Taumarunui is a nice quiet town but very cold. An old bungalow wouldn't retain heat as much so make sure you invest in good insulation and/or heatpump.

[Bassai]

Taumarunui is a nice quiet town but very cold. An old bungalow wouldn't retain heat as much so make sure you invest in good insulation and/or heatpump.

Thanks for that and weather my wife will adore. These house we are looking at has insulation top and bottom and has two wood burners. I love fires so that suits me perfectly

[Maccachic]

Thanks for that and weather my wife will adore. These house we are looking at has insulation top and bottom and has two wood burners. I love fires so that suits me perfectly

Sound wonderful! But remember tenants generally don't look after your home like you will so budget on some beautifying before you move it. I'm guessing it will be nice to have light at the end of the tunnel (lovely house after slugging away in Aucks )

[Bassai]

Sound wonderful! But remember tenants generally don't look after your home like you will so budget on some beautifying before you move it. I'm guessing it will be nice to have light at the end of the tunnel (lovely house after slugging away in Aucks )

Thanks and yes I understand about wear and tear. Been renting for 40 years and have had my share of a-hole landlords and taken some to tenancy tribunal on several occasions. Good lesson for what not to do as a landlord.

We have set up some extra funds to go into our Kiwisavers especially for home improvements and that will be a nice little nest egg on top of our projected balances. Kiwisaver has grown really well for us (Fisher Funds). Jointly have $80k now plus our Superannuation and then government pension.

So we will be comfortable in retirement and have money to do the house up to customise what we want. I have big plans for an awesome garden and the ability to travel every year whilst our health allows. All going well we will be in our own little utopia

[BigDreamer]

In regards to insurance, you can give them a call now and they could quote you how much it would cost and if they have any issues with a 1920s house.

[Viking]

Um, have you checked to see if there are any tenants??

Stayed there for 10 days last Xmas, enjoyed the place with lots of places to go but the population is leaving because there is little work.
That leaves mostly bene's for tenants.