First Timers, What have we done???

[Rosco]

Hi GeePee,

Just bear in mind that everyone is different. Some want 1 investment properties, some want 100.

It's important to establish what you want, and then make sure this property is helping you achieve your long term goals.

If it's not right, then its thinking through an exit plan, but bear in mind this doesn't mean you have to sell today, and it might be a 5 year plan for you.

From your extra comments above, you sound much more secure as you have some cash reserves which is good.

Good luck

Ross

[Glizzle]

If there were no bad speculations there could be no good investments; if there were no wild ventures there would be no brilliantly successful enterprises.
~F.w.Hirst

[Bluekiwi]

Get a property manager. I am not a PM so have no vested interest when making that recommendation. If not already factored in, it'll make your losses even worse, but it'll help you sleep at night.

Despite being a far left loopy loop exstremist, and the only Cunliff supporter left in NZ

Leftette is right.

Contrary to common belief, it is actually cheaper if you have a "Good Property Manager".

Besides taking away all the pain, they make it cheap for you by getting best tenants at best market rent - that is worth mega bucks, the 7% commission is peanuts compared.

I defy anyone to give me a better property manager than "Pedersens Property Managers".

But Leftette lives on the shore so she cant be too bad.

[AMR]

As a first investment, it sounds like it has absolutely destroyed your servicing.

As a development site, it doesn't sound too bad. Rather than just looking at cosmetic renovations, have you considered the development angle of the site? Adding a minor dwelling, subdivision, or a medium density development could add value and cashflow, and possibly allow you to get the site closer to cashflow neutral / positive.

[GeePee]

As a first investment, it sounds like it has absolutely destroyed your servicing.

As a development site, it doesn't sound too bad. Rather than just looking at cosmetic renovations, have you considered the development angle of the site? Adding a minor dwelling, subdivision, or a medium density development could add value and cashflow, and possibly allow you to get the site closer to cashflow neutral / positive.

Yes, we will definitely look to create a dual income by building on the rear of this section at some stage. It seems to be the only way to get a property in a "good" Auckland suburb close to neutral or even positive.

[speights boy]

We managed to secure the property $60k under its value.

By what measure did you make this assessment, and how did you achieve this ?

[Wayne]

I let these 'purchased under value' statements wash over me these days.
On the odd occasion it is possible to truely purchase under value by being in the right place at the right time with the right deal but mostly you just set the value at that moment.

[flyernzl]

Hence the falsehood 'The Auckland Property Market is overvalued'.

[GeePee]

For finance purposes we had to get the house valued by the banks own certified valuer. We won the auction at the set reserve price and that was $60K under what it was valued for. $60K equity straight away.

We were very lucky as the seller was keen to sell as his parents that had gone in to a rest home. He could have easily invested some cash to do up and sell on and he would have done well out of the property. But he didnt have the time or the money.

Geepee

[speights boy]

Hence the falsehood 'The Auckland Property Market is overvalued'.

What about income to price ratio range would you judge to be desirable ?

[flyernzl]

I have no idea.

Surely the definition of value in a free market - including housing and the NZ dollar - is what a willing seller will sell at and a willing buyer will buy at.

Ratios have nothing to do with it.

[speights boy]

Ratios have nothing to do with it.

First home buyers and their banks will disagree with you.

[GeePee]

I have no idea.

Surely the definition of value in a free market - including housing and the NZ dollar - is what a willing seller will sell at and a willing buyer will buy at.

Ratios have nothing to do with it.

Exactly. People are asking for overs and people are paying overs. The income to price ratio is not always the defining factor in the Auckland market. It is all about long term capital gains.

The only way to get a property in Auckland close to neutral or positive is to have multiple incomes on the one section. Which is what we looked at when purchasing a section, is it sub dividable?, can we add a minor or major dwelling? Unless of course you buys way out in the suburbs in a crime ridden area

[Wayne]

Surely the definition of value in a free market - including housing and the NZ dollar - is what a willing seller will sell at and a willing buyer will buy at.

You would be talking about 'market value'.
Not the same as good value or fair value which are more subjective and would need some comparison.
When they talk about 'over valued' they are talking with respect to incomes, or rents, or historic trends.
Market value is what the market will pay - all the rest is wishy washy and open to interpretation.

[speights boy]

The income to price ratio is not always the defining factor in the Auckland market. It is all about long term capital gains.

Which is why on that other thread I reckon what the president of AIPA has written is horsefeathers.
Investors (landlords) are a very strong part of this Akl buyers market would be my guess.