Starting again at 40, where to start?

[motoman]

Long read ahead.

My accessible equity is now zero. So we have to start saving all over again. The Mrs has a small stash but its not enough for a deposit yet.

Onto the positives, Im smart and have been a renovate and sell investor in Australia during the 2000-2007 boom. My expected income is between $70-120k and my Mrs earns $70-80k. So we luckily have a viable income between us. I expect we will save approximately for 3 years to get the $300k cash needed to start again. During this time its my personal opinion we will see a major correction in the market, particularly high end.

Id like to think with our income in 3 years, if there is a correction, we can nab a moderately priced house in a "good" suburb in the Taranaki and Wellington areas. Particularly I am interested in buying in the best suburbs stand alones that are still habitable but nearing need of major renovation. I plan to continue to work while I run these projects. Whilst I did a lot of my own work in Australia, Im more interested in quality tradesmen work for the likes of tiling, gibbing, roofing etc. I have the PM skills to run projects on time and within budget. Im very good at landscape design for staging a houses front appeal, so will likely do this work myself but will still sub contract the pathing etc, which I can do, but not to the quality I want to concentrate on. Im over seeing houses simply being flicked for profit, I have a genuine want to improve housing not simply to make a profit, but to make the owners lives more enjoyable and functional.

I am also interested in transitioning careers in 10 years time. I would like to try architectural drafting/technician, possibly civil. Im also interested in studying interior design. These are vocations that I truely believe I would enjoy, I know all jobs suck for stress at some stage so Im not naive to think these will be the "find the job you love and you will never work a day in your life" vocations.

The long term goal being to utilise these skills to make a modest income in smaller cities as we get older but also to use those skills on my own property developments.

So my question is, outside getting a job and saving, what books are a good guide for the NZ market? I have read many generalist books like SMs 0-130 etc in the past, I have a good grasp on most subjects. I lack some knowledge in how to source houses BMV in NZ. In OZ I simply had a network of agents who knew what I was looking for and knew I had cash.

Lastly is there still money for the small time developer in NZ? I have NO desire to join a property group to pay to learn someone elses methodologies (outside affordable books and videos).

Thanks for sticking through the long read.

[charlotte30]

Dear Motoman

It is never too late to start. Yes, there is money from small time development in NZ. You have to get to know the market, what the market wants and develop your networks. You sound experienced in AUS property and I don't believe that NZ property is much different. Different densities of building plot ratio and/or council requirements. Aus seems to focus on negative gearing which means you hit the financial wall quickly. If you are talking about developing or the high end market this works well if you are at the beginning of the boom. Profit is less as you go through the cycle.

Join the local property Investors Association and you will soon figure out who the major players are and what they do. Also talk to a few agents just to get a feel of what is going on and where. They will point you to who is doing what. They may also tell you what they think you want to hear. Local Council will give you specifics on what you can do in any area.

With regard to books I am not sure there is too around that is NZ focused. Google should give you any that are relevant. I find personal contact with those who are doing what I want to do, gives you far more information.

Clarify your Capital Gains Tax situation. I understand that if you are Australian even though you are investing in NZ CGT applies.

Cheers

[klauster]

Never too late doing something new. In comparison, NZ’s market is not so much different for someone with experience, of course policies and taxation - but you know that.

Books are the snow from yesterday. You need to read the market for tomorrow, what is hot and not. For good housing will always be a market.

As you did, build your network, do what you are mostly comfortable with, don’t monkey the crowd, find your own market. Google knows everything - the trick is getting that knowledge without falling into information overload. Be smart with technology, that brings you ahead. Good luck

[motoman]

Thanks very much for the replies, much appreciate the moral support.

I dont see us getting going for another 2 years, although perhaps end of year next year. But I always feel you are better to be a cash buyer as an extra trump card.

Not an aussie, am a Kiwi who flew home ;-p

Once we get to a financial position of having our own home and cash for a second the Mrs would be happy for me to do this as a job, but it will take at least 5-10 years to be in that position.

I was hoping there might be some good books on the project management side of reno and sell? I had to learn it the hard way and its been a long time so hoping to read something as a refresher. Perhaps 0-130 is all I need.

Is there an investors group for all the main cities?

Kind Regards all and thank you so much for the positivity, its been a hard road back from

[drelly]

Check out Ron Hoy Fong's book if you can get a copy. I heard it was good for reno advice.
Why do you think there will be a price drop?

[Craig Pope Mortgages]

Hi Motoman
Do you really need to wait 3 years till you have $300k deposit? Buying sooner rather than later would be my strategy. Why not get started when you have a 20% deposit saved (you could still potentially be a 'cash' buyer) and then potentially add value to a property by renovating and then creating more equity that way (as well as saving and paying down debt along the way to grow equity in your portfolio). Your earning potential will certainly be what under pins it all and gives you a real advantage to get on the ladder quicker and fund reno's.
All the best!

[klauster]

Hi Motoman, I was in my mid 50s in your position wanting to get the timing right. I purchased 3 investment properties and found it extremely hard to work in a day job and doing what I wanted to do. So I quit my job. Still today I ask myself, why did I wait so long? Good luck

[motoman]

well simply put in my experience its easier to buy a house grossly under market value with cash. also cash enables a less costly and lower risk buy, reno and sell strategy. in and out quickly. im all about low risk exposure. and i dont renovate for long term investment, i do it 95% for the enjoyment in seeing functional improvements to living not monetary gain. ie im not into dividing a 1 bed into 2 for the sake of a profit.

in saying that there are methods for negating risk of a major collapse in the market as seen in the previous USA and Ireland crashes etc.

[artemis]

Motoman, sounds like you might be considered a trader. Something to consider as you can lose a lot of capital gain when selling. The other thing is that work (labour) you do yourself is not usually tax deductible. Depends on the structure used. Suggest read up the IRD booklets Rental Income and Depreciation and get some advie on structures. Not wanting to focus too much on tax but it would be disheartening to pay the government if you don't have to.

May be changes afoot in tax as well. Not just the much talked about Capital Gains Tax but also ringfencing rental income losses.

[motoman]

Yep I get what your saying, they way I look at it is, this tax is a pseudo capital gains Tax. In OZ if you keep it for a certain time and then live in it, you can avoid the tax (I believe), is this possible in NZ?

If Im working I have zero interest in doing any work myself, however if I have time I am capable of landscape design, painting, paving, declutter and choosing appropriate colour schemes for furniture and staging.

Yes definitely a trader. Id rather pay and rightly so, tax on an income. I think thats partially whats got us in a bubble, wanting to keep and inflate the market in investment properties.

Id rather cop a tax up front than in an apocalyptic outcome lose 40% capital loss just to avoid tax. Everyone of us has to believe what we want, Im not saying im right on this topic, just illustrating why I like the minimal risk route.

[artemis]

Yep I get what your saying, they way I look at it is, this tax is a pseudo capital gains Tax. In OZ if you keep it for a certain time and then live in it, you can avoid the tax (I believe), is this possible in NZ?

If Im working I have zero interest in doing any work myself, however if I have time I am capable of landscape design, painting, paving, declutter and choosing appropriate colour schemes for furniture and staging. Yes definitely a trader. Id rather pay and rightly so, tax on an income. I think thats partially whats got us in a bubble, wanting to keep and inflate the market in investment properties.

Id rather cop a tax up front than in an apocalyptic outcome lose 40% capital loss just to avoid tax. Everyone of us has to believe what we want, Im not saying im right on this topic, just illustrating why I like the minimal risk route.

Living in a property then selling - maybe, maybe not. There was a court case earlier this year in which a couple did this several times over some years. This was considered a regular pattern and they were deemed to be traders. Expensive decision for them. Can't recall the details, sorry, but it was discussed on Propertytalk at the time. The IRD site has lots of info, suggest start here:

http://www.ird.govt.nz/property/property-common-mistakes/mistake-dealing-with-investment/

If you are living in a property while doing it up, those expenses are not deductible for tax. Also if you buy, do up and rent out most or perhaps all of the do up is not deductible.

I know there is more to life than tax! Just saying, the way you set up and proceed could easily save - or cost - tens of thousands of dollars. So I suggest learn up and make decisions from a position of knowledge.

[motoman]

yep thats a great tip, in other words find a good property accountant.

this is the oil im looking for, what team to put together, what project plans to use, what methodologies.

im not looking to be the best in the biz, just make a bit of bob based upon good design and quality project management.

[motoman]

I wish they would copy the aussie laws here to make this so much more clear cut for capital gains.

What would be more beneficial for a property renovation hobby, being an internal designer or a draftsman?

I would go back to Uni to study to be an atchitect but my understanding is if you are over 40 you havnt a chance of a career in it.

[PTILoveYou]

If you have no home atm, you can buy a rental with 10% deposit and say to the bank/broker you are buying a 'first' home.

As for books, try track down a 3 day Richmastery Acadamy cd/dvd set. Better than books when it's a video.

[motoman]

thanks for that.

what grants are available to first home buyers? i got a first home buyers grant in oz some 13 years ago so not sure if i could claim one here. and my Mrs is a permanent resident not citizen here. so not sure if she can apply.