Originally posted by evie
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How to maximise current financial position - pls advise
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Originally posted by Gary Lin View PostIt's not very hard, an easy way is buy 4 rentals, wait 10-20 years when they double, sell down 2, and have 2 freehold properties giving you say $900-1000/week gross income.
Right now you want to have 1 or 2 properties, get yourself in the door, and position yourself when the next slump comes, that's when you start buying more when the market conditions are more favourable like 2000-2003 & 2008-2011!
I would like to achieve the goal before i am 48.....
Is there a possibility?
BTW: I love houses. I am in Interior Design.... so naturally I love property.
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Originally posted by Gary Lin View PostGet hold of Ron and get a 1 hour free consultation, he doesn't push you to join his coaching programme, in fact a lot of the time he talks too much of the facts, strategies, and market cycles etc that he drives potential students out the door confused!
Do you think I have a chance to try to ring him again....?
I don't have anyone to share and learn from re these topics... I have always only read books!
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Originally posted by evie View PostOK, so I shall have to wait for a "slump" (sounds tragic)
I would like to achieve the goal before i am 48.....
Is there a possibility?
BTW: I love houses. I am in Interior Design.... so naturally I love property.
I bought 9 rentals in 2 and half years starting 2010, so 8 years in comparison is pretty long time to make things happen!
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Originally posted by evie View PostI did ring all week and left my number and name on his answer phone but no luck.
Do you think I have a chance to try to ring him again....?
I don't have anyone to share and learn from re these topics... I have always only read books!
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Originally posted by Gary Lin View PostWell no one knows what will happen in 8 years, but right now I say your chances of success would be higher if you buy now rather than wait for the next 'slump'.
I bought 9 rentals in 2 and half years starting 2010, so 8 years in comparison is pretty long time to make things happen!
WOW - that's brilliant! How did you do it? Buying 9 rentals in 2.5years...?
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Hi Evie,
Have you looked at total money products? They can allow you to offset your savings against your mortgage, and just pay interest on the balance. BNZ has total money, but some other banks have similar. This will give the same effect as using your cash to pay down your personal house loan, but you might prefer this option.
With property investment, the best advice is to take your time and to invest long term. So don't rush in and buy the first rental you see, instead establish a plan that works for you. For example if you have low cashflow, then you should buy better cashflow properties. If you have high income, then you can take more risks and gamble a bit more on capital gain.
At the end of the day, its not how many properties you buy over the next 10 years, instead it is establishing a property porfolio that helps you meet your goals.
An initial meeting with me could help you set a plan and understand how it all works. And I don't sell insurance!
RossBook a free chat here
Ross Barnett - Property Accountant
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Thank you Ross! Yes you are absolutely right - I have a goal (which could be modest to some on this forum) and am trying to find out the plan... Seems like you are in Hamilton? I was in Hamilton last couple of weeks, but will not be going down that way anytime soon....
I have not explored total money product
A question as I am not quite sure: How does one know if one has "low"cashflow? (sorry for the dumb question!)
Do you mean low cashflow = low income? Or does low cashflow mean someone who spends almost all they earn each time? (which is it?)
And high income, if one doesn't know how to manage ones income - it wouldn't matter if they have high income? Their cashflow would be low..? (is this what low cashflow means?)
What are the banks after? They are only interested in serviceability (I am guessing!)
(Part of my goal is to be financially ready so I am able to take care of my parents too.)
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Hi Evie,
For me, low cashflow means low spare cash. So could be a high earner who spends it all, or a low earner who struggles day to day.
If you have no spare cash, then you can't afford to buy a really negative rental that will cost you a lot per year to top up.
RossBook a free chat here
Ross Barnett - Property Accountant
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Originally posted by Rosco View PostHi Evie,
For me, low cashflow means low spare cash. So could be a high earner who spends it all, or a low earner who struggles day to day.
If you have no spare cash, then you can't afford to buy a really negative rental that will cost you a lot per year to top up.
Ross
And sorry for another dumb question: But why would some people buy a really negative rental? (really? people actually buy negative rentals?! It sounds like an illogical thing to do)
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Originally posted by evie View PostOk right! Well, I don't have low cashflow...
And sorry for another dumb question: But why would some people buy a really negative rental? (really? people actually buy negative rentals?! It sounds illogical)
Some investors, who have some money, will buy these low rental return properties, but at a lower mortgage, so they don't need to top up, ie buy a $600k property renting for $500/wk, but only has a $400k or less mortgage.
It is illogical, but in most cases it works... not the best way to invest your money, but not bad compared to the sharemarket or bonds. Long term most of these investors still make a lot of capital gains.
We call them Mum & Dad investors.Last edited by PTILoveYou; 29-01-2015, 02:29 PM.
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OH I see!
ïn hope there is capital gains.... Isnt that like gambling? (What happens if there is no capital gain, or very little?)
Gary - lets say there is property for sale $680k, CV $500k; Rental $1200 per week
Mortgage: 100%
Is this a negative property?
Property CV $800k, Sale $680k, Rental $600
Mortgage: 100%
Is this a negative property?
"It is illogical, but in most cases it works... not the best way to invest your money, but not bad compared to the sharemarket or bonds. Long term most of these investors still make a lot of capital gains."
What is the better way of investing?
Yes I think that would be my question.....
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Originally posted by evie View PostOH I see!
ïn hope there is capital gains.... Isnt that like gambling? (What happens if there is no capital gain, or very little?)
Gary - lets say there is property for sale $680k, CV $500k; Rental $1200 per week
Mortgage: 100%
Is this a negative property?
Property CV $800k, Sale $680k, Rental $600
Mortgage: 100%
Is this a negative property?
"It is illogical, but in most cases it works... not the best way to invest your money, but not bad compared to the sharemarket or bonds. Long term most of these investors still make a lot of capital gains."
What is the better way of investing?
Yes I think that would be my question.....
First of all, the difference between gambling and investing is whether or not you know what you are doing, and can you consistently make money. If yes, then people will call you a great investor, if you loose money on a consistent basis, people will call you a gambler and a fool.
If you choose not to 'gamble' in the Auckland market, well what if Auckland prices keep going up? You will miss out...
For your example:
$1200 x 52 / $680k = 9.2% gross yield/return
Given current interest rate is around 5.5%, that is a healthy 3.7% margin. Usually rates & insurance etc is about 1-1.5% so, this is a high rental return property.
$600 x 52 / 800k = 3.9% gross yield
This is your normal Auckland property in above average areas. Yes this is a negative yielding property
As for better way of investing? Hard to say, given my limited knowledge, there is no easy way to invest in Auckland. Perhaps invest in cashflow neutral properties in good suburbs in South Auckland. Investing in Central/North/East is all negative cashflow now, but these areas are all good capital gain areas.
If you have average to low income, and not a lot of cash deposit or equity, invest in cashflow neutral or slightly positive properties in South Auckland.
If you have above average or good income like $80-100k, and decent equity, then I think North/Central/East would be a good option.
I still see plenty of house price increases in Auckland in 2015 & 2016, especially the lowering of our interest rate. Plenty of Chinese are now looking to move money to NZ to invest while the exchange rate is low.
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