As an introduction, I'm looking for buy-and-hold - literally for a life time unless something turns out to be fundamentally flawed with the purchase. I want a reliable and generous cash flow for the future. To put things in perspective, I'm a massive fan of Warren Buffet.
I'm 26 years old and living in London for 3 years now. I have no assets of any description in NZ. I earn only a modest salary by London standards but medium to high by NZ standards. I currently have $20,000 to my name and I am fortunate to be able to save $3500-4000 NZD a month for property deposits. I've only recently become a saver. I feel like I'm behind for my age and need to catch up, and build a financial future.
Your advice and wisdom is needed!
I'm looking at buying my first one or two properties when I visit home in December, and will have approximately $60,000 on hand. Assuming a 20% deposit, I'll be looking at one property for 300,000 or two at 150,000 each, and with an appropriate rental yield so that they are cash flow positive even after rates and insurance. I intend to create a 10 property portfolio in 5 years, ideally more than 10 properties if I could recycle some of my deposits - I've read a bit about this process but I don't realistically see why a vendor would sell their property to me at such a steep discount to their true value (thereby allowing me to revalue and recycle the deposit) - but it would be fantastic to experience this from time to time.
In terms of avoiding basic first timer mistakes, is there any advice you could provide or criticisms that come to mind with the following plan?
1. Create a company, trust, or LTC: (which one makes the most sense for me, if any?)
2. Buy the property with this entity with an 80% LVR, assuming 20 year P&I loans. Side question: If the mortgage payment on a 15 year P&I was exactly balanced with rental income minus mortgage, rates and insurance, so that month-end = 0, should I consider a 15 year P&I in such cases instead when the numbers work, to accelerate equity growth?
3. Tax efficiencies:
i. Tax deductible: mortgage interest, repairs, accounting expenses, lawyer and realtor fees
ii. Depreciable: building, chattels, improvements (such as installing a heat pump or whatever).
- I gather that due to these efficiencies, 'making a loss' might be the result of accounting and not a real cash loss, which seems to be a source of comfort.
4. Use the equity built over time to contribute to the deposit of additional properties. In effect the LVR of all properties would constantly hover between 75-80% for at least 10 years during the 'property accumulation phase' after which I will then allow them to naturally pay themselves off of their P&I loans.
Greatly appreciate any and all input.
I plan on moving back home in 5 years.
I'm 26 years old and living in London for 3 years now. I have no assets of any description in NZ. I earn only a modest salary by London standards but medium to high by NZ standards. I currently have $20,000 to my name and I am fortunate to be able to save $3500-4000 NZD a month for property deposits. I've only recently become a saver. I feel like I'm behind for my age and need to catch up, and build a financial future.
Your advice and wisdom is needed!
I'm looking at buying my first one or two properties when I visit home in December, and will have approximately $60,000 on hand. Assuming a 20% deposit, I'll be looking at one property for 300,000 or two at 150,000 each, and with an appropriate rental yield so that they are cash flow positive even after rates and insurance. I intend to create a 10 property portfolio in 5 years, ideally more than 10 properties if I could recycle some of my deposits - I've read a bit about this process but I don't realistically see why a vendor would sell their property to me at such a steep discount to their true value (thereby allowing me to revalue and recycle the deposit) - but it would be fantastic to experience this from time to time.
In terms of avoiding basic first timer mistakes, is there any advice you could provide or criticisms that come to mind with the following plan?
1. Create a company, trust, or LTC: (which one makes the most sense for me, if any?)
2. Buy the property with this entity with an 80% LVR, assuming 20 year P&I loans. Side question: If the mortgage payment on a 15 year P&I was exactly balanced with rental income minus mortgage, rates and insurance, so that month-end = 0, should I consider a 15 year P&I in such cases instead when the numbers work, to accelerate equity growth?
3. Tax efficiencies:
i. Tax deductible: mortgage interest, repairs, accounting expenses, lawyer and realtor fees
ii. Depreciable: building, chattels, improvements (such as installing a heat pump or whatever).
- I gather that due to these efficiencies, 'making a loss' might be the result of accounting and not a real cash loss, which seems to be a source of comfort.
4. Use the equity built over time to contribute to the deposit of additional properties. In effect the LVR of all properties would constantly hover between 75-80% for at least 10 years during the 'property accumulation phase' after which I will then allow them to naturally pay themselves off of their P&I loans.
Greatly appreciate any and all input.
I plan on moving back home in 5 years.
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