Propeller property investment

[Rosco]

Hi Dongiblin, you see it written quite often that you make your money when you buy a property. So if you buy off (or via) a property investment company they would be making a cut so in my opinion you pay a premium for someone else to do the work. This is fine if you are busy and don't have time to find a section and build yourself. You may do it cheaper if you had sourced the section and managed the build yourself?
I would recommend getting your own valuer to look at it though.

Normal sections in Hamilton are around $225k and to fit the two houses the sections might be bigger, so more expensive.

To build a 4 bedroom and 2 bedroom for $595k, ie around $375k sounds difficult. In my opinion you would struggle to match this price if you tried to do it yourself. Normal 4 bedroom house would cost around $300k, so $375k isn't too much more. In Hamilton i find that you can buy a new house for less than you could build it, plus the specs are probably better!

Rototuna is generally good, but watch lots of salespeople describe areas wrongly.

The rent does sound a little high. Maybe $450 for 4 bedroom, so leaves $320 for 2 bedroom. Actually, brand new 2 bedroom in good area is probably around $300 or slighly more.

I have had no dealings with Propellor.

Ross

[Auckland Newby]

Hi everyone,
I've got to say that I have found the Properllor Property Team very good to deal with. Sure you can probably hunt around and save some money building yourself and cutting them out of the deal etc but for investors who are new to property investing and work fulltime in corportate jobs and don't have time to learn everything there is to know about the industry they are a pretty good way to go. Deals aside I didn't find them pushy and always returned phone calls within 15 minutes. This is my experiece and until I know exactly what I'm doing I'll probably continue to use them.

Cheers

[BlueSky]

Hi everyone,
I've got to say that I have found the Properllor Property Team very good to deal with. Sure you can probably hunt around and save some money building yourself and cutting them out of the deal etc but for investors who are new to property investing and work fulltime in corportate jobs and don't have time to learn everything there is to know about the industry they are a pretty good way to go. Deals aside I didn't find them pushy and always returned phone calls within 15 minutes. This is my experiece and until I know exactly what I'm doing I'll probably continue to use them.

Cheers

Fair enough, In auckland you would be struggling to find land so buying turn key packages may be one of the options, but Hamilton may be a diffrent cattle of fish. I laways looked at it this way ,if its cheaper to buy than build buy as a a package unless you are building to live in it with better specs.

How times have changed -- wind back the clock back 10 yrs , 700m2 sections in Hamilton were just selling for $65K and new holmes built for $230K with land!

[Markj9035]

Hi All,

I've just had a first meeting with this lot and now I'm researching their background. Does anyone have any up to date information on them? Not too sure I am completely confident in having to use their solicitors, brokers and accountants. I asked about using our own and they weren't particularly in to that.

Any up to date info would be great,

Mark

[Keys]

I asked about using our own and they weren't particularly in to that.

Run, Run NOW, Run as fast as you can. Run until your legs can not carry you any more. Run while you still have your savings and or equity intact.

RUN FOREST - RUN.

[Rosco]

Hi Mark,

There is two sides to there comment, but it would scare me a bit too.

Side 1 - they want someone advising who presumably knows their product, the advantages and disadvantages, and hopefully someone who is a chartered accountant who specialises in property investment, so knows the tips and tricks. Some accountants and lawyers are very against property investment and talk their clients out of investing without really understanding what the sale firm (propellor) or the client is trying to achieve.

Side 2 - they want someone who supports them and doesn't convince the client to not go ahead. A seperate accountant such as myself might point out the full costs, risk of interest rate rising if negatively geared.

Overall I hate firms who really promote the tax advantages and saving tax, and this was obvious from a glance on their website. There is chattels depreciation, which is a none cash cost, but if you are making a large loss and getting a large tax refund, then the property is negatively geared and you are putting in money. So simple equation put in $10k cash to get $3,300 tax back! If you give me $10k, I'll happily pay you $3,300 back - no one has ever accepted this offer, but they still love their tax refunds.

So if getting large loss and large tax refund, then really gambling on capital gains. So just need to think through carefully.

Especially if interest rates keep going up.

I would get the full informaiton if you are keen on Propellor, go through the process, but before signing or committing, run it past me. I'll even have a glance through it for free and a quick chat for free (10 minutes properly overall) just PM me. Might be fine and perfect for you?

Ross

[speights boy]

NZPIF slams Labour's ring-fencing plan - Landlords.co.nz

[Rosco]

Interesting numbers!

"The NZPIF said a similar policy had been tried, failed and reversed in Australia. During the two-year period it was tried in Australia, national rents rose by over 25%."

I imagine Labour will struggle to get in this election, but something to watch out for long term!

Ross

[donthatetheplayer]

Hi All,

I've just had a first meeting with this lot and now I'm researching their background. Does anyone have any up to date information on them? Not too sure I am completely confident in having to use their solicitors, brokers and accountants. I asked about using our own and they weren't particularly in to that.

Any up to date info would be great,

Mark

Hi Mark. I dealt with Nikki Connors a few years back when she was Catalyst (which were associated with Ray White) and I was super green. On her strong advice I ended up putting a contract on a property that I couldn't afford and was not a suitable investment for me at all. Thankfully I went with my gut and cancelled the contract but after that experience I am 100% sceptical of these businesses. They are just REA's dressed up in a flasher package to sucker in the uninformed. They have zero concern for your financial success (despite the sales spin) and every concern for making the sale. Maybe this business is different but you know what they say about leopards..

I wouldn't think twice about paying your own advisors for professional advice. Using their advisors is just plain dumb! In fact they must be treading a very fine line advising you not to seek independent advice.

Edit: BTW when I wanted to cancel the contract they got me in a room and two of them tried to talk me around. I would eat them alive now but looking back I can see for a newby it was an intimidating situation to be in.

[speights boy]

Interesting numbers!
"The NZPIF said a similar policy had been tried, failed and reversed in Australia. During the two-year period it was tried in Australia, national rents rose by over 25%."
I imagine Labour will struggle to get in this election, but something to watch out for long term!

Ross,
It may reduce the amount of effort that some investors use in trying to shift other non tax deductible debt onto their IPs.

[elguapo]

Interesting numbers!

"The NZPIF said a similar policy had been tried, failed and reversed in Australia. During the two-year period it was tried in Australia, national rents rose by over 25%."

I imagine Labour will struggle to get in this election, but something to watch out for long term!

Ross

Not actually true. Rents when up a lot in Sydney, but not in most other places. That makes it highly questionable that the cause was the ring fencing. There are massive vested interests in Australia for negative gearing, tens of billions worth a year, they are going to have a hard time battling that.

[speights boy]

There are massive vested interests in Australia for negative gearing, tens of billions worth a year, they are going to have a hard time battling that.

Absolutely correct.
Their SMSF set up makes it a very different situation.

[marklowes]

Negative gearing never made sense to me.

I would not be effected at all by ring fencing; I still try to maximise expenses against rental income to minimise tax paid on profit; make sure I get my inspections in myself and travel costs for each of them (living far away helps with this).

If you're neg geared, you are making a loss no matter what (and hoping for cap gains, which is not investing it is speculation, http://en.wikipedia.org/wiki/The_Intelligent_Investor).

Claiming the loss against income gets you a third of your loss back, but you still wear 66% of that loss. Anyone who is overall negatively geared across their whole portfolio should be more worried about their mix of properties and own investment strategy than what labour are thinking about with this ring fencing proposal.

[Rosco]

Negative gearing never made sense to me.

I would not be effected at all by ring fencing; I still try to maximise expenses against rental income to minimise tax paid on profit; make sure I get my inspections in myself and travel costs for each of them (living far away helps with this).

If you're neg geared, you are making a loss no matter what (and hoping for cap gains, which is not investing it is speculation, http://en.wikipedia.org/wiki/The_Intelligent_Investor).

Claiming the loss against income gets you a third of your loss back, but you still wear 66% of that loss. Anyone who is overall negatively geared across their whole portfolio should be more worried about their mix of properties and own investment strategy than what labour are thinking about with this ring fencing proposal.

I think it depends.

If you were earning $500k, and could pay down the loans turning it to positive, is it so bad?

So really depends on the investors circumstances.

Also, over history it does work very well.

Say you purchased the Average NZ property in 1992 for $100,000.
Now 2012 worth maybe $350,000

If buy with no money in, and even if costing $5,000 per year after tax. Cost $100k to give $250k capital gain. So over last 20 years would have been a great investment!

Going forward its a guessing game and I agree with gambling comment.

Also was the recent farmer article, worth $350k of the top of my head in 1997, now worth $15 million as on town boundary and subdividable. In Flat Bush I think. So this would have been a great negative gearing, as most farms don't really make a profit either.

Ross

[marklowes]

Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.
Warren Buffett

"I like to go for cinches. I like to shoot fish in a barrel. But I like to do it after the water has run out."

-Buffet

When you are buying neutrally geared property (at worse) from the word go, the risk factor drops dramatically, and all the 'speculative gains' are just icing on the top