Leaving Auckland in 6 months - can't decide what to do about property

[nzsq]

Hi everyone

We have just sold our house in Mangere Bridge for a nice profit and are now deciding on what to do in relation to our next property.

Our plan is to leave Auckland in around 6 months as we have a baby on the way and want to be closer to family who are in Taranaki.

I guess our 3 options are:

1. Buy a property, live in it, do up and sell in April.
2. Buy a property, live in it, do up a little and rent it out from April.
3. Rent a property for the next 6 months and let our $$ sit in the bank until we buy in Taranaki.

Any thoughts from you savvy property investors on the best option?

It's hard to know if #1 will work as I'm not sure if Auckland properties will keep rising so quickly and 6 months is quite a quick turnaround. We will only do #2 if we have a positive rental yield. But I'm loathe to just leave money sitting in the bank for 6 months and pay someone else's mortgage...

Would love to know your thoughts!
Thanks
Susan

[Rosco]

Hi Susan,

Nice profit = this means in my mind taxable profit, so should be tax paid. Just be careful with your wording, as this is a public forum, and I presume that you mean you sold your personal house for more than it cost you.

Option 1) would be Taxable, watch tainting and also could be GST implications(depends on your situation)

Don't be scared of renting. Most rentals, especially in Auckland are negative. So in effect your rent is only paying a part of the mortgage, and the owner is having to pay the rest of the mortgage, plus the rates and insurance, repairs etc.

Overall, do you ever want to move back to Auckland? If there is even a small chance you might, then I would suggest keeping your foot in the Auckland market! Otherwise you might never be able to get back in.

From my perspective, you are kind of comparing Auckland and Taranaki. Which is going to give you the best overall return over the next 10 years? I would guess Auckland, so would be looking hard at option 2.

For option 2, you could easily structure so that you could pull your equity out in April, and have a rental in Auckland with a higher mortgage and your cash available for a Taranaki purchase.

Also don't be scared of renting in Taranaki for a while, as you can probably get a reasonable house for cheap rent. I would personally prefer to rent in Taranaki and have a good rental in Auckland.

Ross

[mortgage broker]

If option 3 sounds nice to you, you might want to consider buying in Taranaki now. My feeling is that provincial towns seem to pick up in prices once the economy gets really cranking and thats only just starting.

[Lovethiscountry]

If option 3 sounds nice to you, you might want to consider buying in Taranaki now. My feeling is that provincial towns seem to pick up in prices once the economy gets really cranking and thats only just starting.

Why is the economy going to get cranking?

[Rosco]

I agree, I would be careful buying in the provincial towns

More immigration, = more house demand and more inflation, so probably higher interest rates.

Rising interest rates and rising petrol costs (think I just saw petrol was going up again soon?), and recent LVR changes will hurt the provincial towns!

I'd prefer the bigger cities.

Ross

[Wayne]

If option 3 sounds nice to you, you might want to consider buying in Taranaki now. My feeling is that provincial towns seem to pick up in prices once the economy gets really cranking and thats only just starting.

They do pick up when the economy gets cranking - unfortunately we are waiting for that to really happen.

[JABlog]

More immigration, = more house demand and more inflation, so probably higher interest rates.

Rising interest rates and rising petrol costs (think I just saw petrol was going up again soon?), and recent LVR changes will hurt the provincial towns!

I'd prefer the bigger cities.

Ross

I heard IR will be on hold until mid to late 2015. Also gas prices are coming down.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11344964

definitely agree on the immigration though 45K plus

Auckland is definitely expensive with low yields. . I have heard people who sold and looking to buy in the same market can't even get back in!

[Meehole]

My observation on North Shore prices are:
Prices are stagnant and the only ones with the $$$ to pay big money are the Asians.
If you have a cross leased property the Asian buyers are shying away from them, they like their land freehold unencumbered.
Rental prices have stalled and are coming back.
More properties for sale and more rentals to rent.
Heaps of people are selling up and moving out of Auckland, with cash in hand many have taken advantage of the market and are buying mortgage free elsewhere.
Why would they want to come back to Auckland? Taranaki is lovely.

[Leftette]

Lovely and freeze your bollocks off cold, not to mention 'provincial' *shudder*

[Wayne]

Lovely and freeze your bollocks off cold, not to mention 'provincial' *shudder*

woose
That's not cold - I remember when ...

[Meehole]

Couldn't be any worse than the constant rain over the past 3 days, what's to love about that? Colder climate brings about an opportunity to try different activities anyway. New Plymouth was a humming town in the 50's, Wanganui was known as sin city.

[nzsq]

Thanks everyone for your comments. Rosco, you're correct, I didn't phrase my initial question well. What I meant was that we did indeed sell for more than we bought for - but that was after months of hard work decorating, fixing bad jobs, and landscaping on a place that was previous inhabited by male smoking flatmates who owned both a dog and a goat (seriously) so the place was in a bit of a state. We actually lived there for close to 2 years, so def not a do up and flick on.

We've gone with our heart on this one, and decided to leave the Auckland property market and buy down in Taranaki. Meehole, you're right, Taranaki is lovely

[Meehole]

Thanks everyone for your comments. Rosco, you're correct, I didn't phrase my initial question well. What I meant was that we did indeed sell for more than we bought for - but that was after months of hard work decorating, fixing bad jobs, and landscaping on a place that was previous inhabited by male smoking flatmates who owned both a dog and a goat (seriously) so the place was in a bit of a state. We actually lived there for close to 2 years, so def not a do up and flick on.

We've gone with our heart on this one, and decided to leave the Auckland property market and buy down in Taranaki. Meehole, you're right, Taranaki is lovely

Good on you. Weigh up lifestyle against a huge mortgage for the privilege of living in Auckland, no contest! Best of luck, enjoy!