Strategy discussion

[MVL]

G'day all
I have a couple of questions to put out to everyone. i know everyone has different views, i am all ears and open to all opinions so don't hold back.

Im in my mid 20's and at this stage i have two current investment properties one returning $300 and the other $440 p/w both properties look after themselves i don't have to pay anything out of my pocket mortgage, insurance, rates etc
My plan is to have the income from my properties help look after my retirement in the future.
The strategy i have at this present time is too buy rentals close to university areas where the rent is good places are in high demand. i don't see a university moving too far away or closing down anytime soon and it seems everyone i know wants to go and study. Im not to worried about the parties as long as they pay the rent I'm happy and damage thats why you have a bond and insurance. Im also not too worried about capital gains so much they would be nice though, as long as in 20years they are close to freehold i am happy.

Now I'm currently looking for my 3rd i work overseas and have saved a good sum to get into my 3rd.

Would it suit me to start looking properly at a 3rd property or knock some good branches of the mortgage i have at this time?
p/s for tax purposes i am a non tax resident at this stage.

In my mind i have thought over my strategy and believe its a good way to plan ahead for myself but I'm only at the bottom of the ladder in property investment terms and i know there are some very experienced investors on here i would love to here about your thoughts on my mindset or put me on a different path?

i return to NZ in october for 2weeks coffee/lunch or a few beers are on offer if anyone has time to give me any advice

[Bluekiwi]

All I can say is crikey well done, very impressive for one so young.
I was pissing all my money up against the wall at that age.

Just watch house prices in late 2016 to 2019 as they will take a bit of a breather / fall around then.
If your not worried about tainting as you are holding these long term.
You could buy and sell a couple now to reduce debt.

Or you could buy a good renter now.
And do a bit of trading latter when interest rates rise.

Consider locking in a good 3 year rate now ?
But watch interest rates 2016 to 2018 when they could be 8.5%

[morrison74]

whats a good rate for 3 years fixed?

[Auckland Newby]

Blue Kiwi I'd be interested to know why you think 2016 - 2019 are the years to look out for?

[MrAwesome]

I am in the same situation, I just got my 3rd property (which was initially meant to be a rental) which I will now live in as I am moving back to AKL. I have one property which is rented out to students and haven't had any issues thus far. I am at the same time looking at a 4th property for a investment after I get the tax structure sorted as I am moving back to AKL and will be a tax resident.

I believe interest rates will rise so I have locked in a 3 year rate (5.95%). I went for the approach of paying off part of the loan when the interest rates are high as opposed to now when they are reasonably low.

That is just me, I am in my mid 20s also, so I will keep an eye on this thread.

[Bluekiwi]

Blue Kiwi I'd be interested to know why you think 2016 - 2019 are the years to look out for?

Okay explorer crashed on me so here is short version.

I have posted on this before, its basic supply and demand 101.
In that period, there is going to come a time when demand is low and supply is high.
Westpac / BNZ / ANZ / ASB / Rodneys Ravings - these economists reports I read every week.
While they are often wrong, I look at market conditions at the coal face and chart a course mid way between what these guys says.

Demand Low:
High interest rates.
Ausie economy strong, less nett immigraion.

Supply High:
Housing special zoning construction hits its straps
Building construction usually behind by 6 months is slower for multiple reasons, will be ramped up.
Earthquake rebuild slows down and more builders get into action up in Auckland.
Unitary Plan comes into affect in 2016 - there are significant implications there for increased supply if you take a good look at it (not many do)

Supply will catch up to demand sometime around 2017 / 2018.

The big points though are high interest rates and increased supply of housing.

This would of course be turned on its head by another kind of Twin Towers event.
Or significant technological advance in terrorist capability.
NZ is most likely the safest place in the world.

[Auckland Newby]

thanks for the detail bluekiwi some good stuff here.

[elguapo]

While they are often wrong, I look at market conditions at the coal face and chart a course mid way between what these guys says.

If they are often wrong, would Game theory not state that you should do the opposite of what they suggest rather than try a consensus path?