leaving country - keep the house??

[nz_geo]

Hi everyone,

Couldn't find anything to answer my question through searching so I'll put it to you guys.

I purchased a property to live in back in May. In less than 8 weeks I will be leaving the country to live and work permanently in Australia.

key info

1. purchased the house for $165k, valued at the time of purchase at $175k
2. house is slightly rough around the edges outside, nothing major. The interior is outdated (1980) but very tidy
3. purchased the house on a special Kiwibank 'In Reach' home loan
4. I want to begin investment in property and have the means (good salary) to carry a negative-geared property
5. Location of property is good - house is worst on good street

I'm wondering what to do with my house?

• put it on the market as is, see how I get on
• invest some capital to improve the propertys value, then put it on the market
• keep it and rent it out - do I sell it to a LAQC or what?

My self and my partner have a high combined income so have discretionary $ available if required.

Any advice would be appreciated. If you need more info let me know

[RentMaster]

Hi nz_geo

The first thing I would suggest is if the house needs a bit of TLC, then give it the TLC. Whether you decide to sell or rent, the little bit extra care will probably pay for itself. Just dont go too overboard and overcapitalise on it.

To sell or to keep is too hard a decision to make. It depends on too many factors that we dont know about. Do you think you might come back one day? If you sold it, what would you do with the extra cash? How much would it rent for (i.e. how much positive or negative cash flow)? How hard would it be to sell? Is there a shortage of rentals in the area? Do you need the cash?

[nz_geo]

Cheers RentMaster,

If I was to rent it my gut feel is that spending to upgrade the property wouldn't be worth it. I'd need to get advice from a local agent on that one. If I was going to sell then I definately think there is room for me to increase the value of the property significantly without over-capitalising. Trouble is, I am running out of time to do anything before I go

I will come back one day, my family and friends are in the region and there will potentially be viable career opportunities for here in the future. There is a shortage of rentals in the area, and I think I could easily sell it at a profit (even without doing it up). I don't really need the cash right now and am more interested in greater longer-term investment gains.

I just found a couple of threads discussing tax considerations when earning in Australia whilst having investments in NZ. Trying to assimilate that at the moment!?

[whitt]

I just found a couple of threads discussing tax considerations when earning in Australia whilst having investments in NZ. Trying to assimilate that at the moment!?

I moved to Oz tempoarily a while back whilst holding a IP in NZ. The tax issue is a big one. When I lived there you could not claim your NZ property against any OZ income. Where as if it was other way around a NZ having a OZ IP then you can claim it on NZ income. The law is one sided you will need to do a search and think carefully on your options.

[roseneath_rat]

If you used the 'In Reach' program its unlikely you have spare cash to put into the 'TLC' of the house (isn't the whole idea of this Kiwibank package low-no deposit, low income?)

If you sell the property, real estate agents fees will quickly cancel out your gains. I'd probably opt to hold.

[MissWorld]

Firstly NZ Geo I was most impressed by yr comments from another post/subject line on my obvious knowledge of the subject..someone who recognises a MIssWorld not just for her beauty but her brains as well <bg>

If you can at worst break even on costs I would definitely hold, though another important consideration should be the Property Management factor, got someone decent too manage rental,maintenance etc??

[Kiwi_Investor]

Hi Miss World !

I moved from Wellington to Aust 3 years ago and have kept my ppty in Lower Hutt.

This has proved to be a worthwile exercise thus far, capital growth has been solid, and the rent plus tax refunds cover the costs.

I claim some costs against my Aust income, you should check with the ATO in Australia and the IRD.

You should also do a test with the IRD to see if you will be a non resident for NZ Tax purposes and you may have to fill in a return to IRD if you rent yr ppty in NZ.

Just do some research on the Tax front at both ends and get a good PM, I use Quinovic in Lower Hutt, they are a little more expensive but they have been very professional.

Another reason we kept our property is that over time should you want to, you can use the equity to fund more NZ purchases, it is good to have a relationship with your NZ bank or financier should you need to fund futher purchases.

Good luck ! I would spend the money and keep the property for the med to longer term.

KI

[nz_geo]

Thanks everyone,

spoke to 2 real estate agents today to get their opinions. They individually agreed that I should be able to sell the property for $185-ish. If that is accurate, I think I will sell up, take the money and run.

If you used the 'In Reach' program its unlikely you have spare cash to put into the 'TLC' of the house (isn't the whole idea of this Kiwibank package low-no deposit, low income?)

If you sell the property, real estate agents fees will quickly cancel out your gains. I'd probably opt to hold.

You're right, I didnt have spare cash at the time....I had been devoting all of my discretionary income to my student loan (which is finally under control...). You raise the point of real estate agent fees, I spoke to a representative from a 'no commission' type firm. They offer a range of packages to market my property. Do you, or anyone else have something to say about these relative new-comers to the real estate industry?

Miss World,

I guess my secret is well and truly out now. I was wondering if you would Property manage for me ....

[MissWorld]

Just make sure you spend the dosh wisely Mr Nz-Geo, I would hate to see you sqaunder it on wild women and song !! hehehe

[RentMaster]

spoke to 2 real estate agents today to get their opinions. They individually agreed that I should be able to sell the property for $185-ish. If that is accurate, I think I will sell up, take the money and run.

Just be careful with that valuation. Real estate agents tend to over-value the property to convince you to sell it so they can get their commission. After a few weeks on the market, and not selling, they convince you to drop the price down to a more realistic value.

[Propoholic]

Hi nz_geo

RentMaster wrote:

Just be careful with that valuation. Real estate agents tend to over-value the property to convince you to sell it so they can get their commission. After a few weeks on the market, and not selling, they convince you to drop the price down to a more realistic value.

Prior to listing, get a list of comparable sales (properties in adjoining streets in the last 2 - 3 months) from the agent and do a drive by on these properties. Also visit open homes of any comparable 'For Sale' properties in your area to get a feel for interior/exterior condition, follow up to get sales price when these sell.

If you do the above you'll have an accurate pricing band in which you know your property will sell.

[Kiwi_Investor]

I would ask 3 different agents to give a written opinion of selling price before going to contract with any agent to sell any property. Ideally this should be backed up by sales evidence of similar properties in your area.

I once had an agent come to give an opinion of selling price on a property I owned. The first question she asked was 'how much did you pay for the house', followed by 'so how much do you want for it'.
I thought you are kidding me !!
Never tell an agent what you paid, thats my opinion, let them find out for themselves.

As another member has pointed out agents can sometimes suggest a higher price in order to secure the listing, for the agents its mostly about gaining your listing and hopefully a sale, it should be a win/win for you and the agent.

Good Luck

KI

[nz_geo]

Just be careful with that valuation. Real estate agents tend to over-value the property to convince you to sell it so they can get their commission. After a few weeks on the market, and not selling, they convince you to drop the price down to a more realistic value.

RentMaster,
I intend to list with a 'No Commission' outfit. I am meeting with her today, and need to verify that she is obligated to sell the property for the agreed price, no matter how long it takes? If that is the case, then I have made a decision to commit to selling my property. I have calculated that I can come down to around $173k and not lose money.

Prior to listing, get a list of comparable sales (properties in adjoining streets in the last 2 - 3 months) from the agent and do a drive by on these properties. Also visit open homes of any comparable 'For Sale' properties in your area to get a feel for interior/exterior condition, follow up to get sales price when these sell.

If you do the above you'll have an accurate pricing band in which you know your property will sell.

I would ask 3 different agents to give a written opinion of selling price before going to contract with any agent to sell any property. Ideally this should be backed up by sales evidence of similar properties in your area.

Well, I have anecdotal evidence which suggests that it is possible that my house could reach the price they have quoted.


Finally, thanks a lot for the advice so far. I will keep posting on this thread to let everyone know how I get on. I leave the country in less than 6 weeks!

[nz_geo]

sold it

Been a long delay but yes I sold my house, for $180k.

So very happy about that.

Now I am considering investing in NZ as an Australian resident. Watch this space

[SuperDad]

Hi nzgeo,

How recently did you sell your house? I see that you paid $165K over a year ago, and have sold for $180K. What were your selling costs (did you finally sell through the no-commission agency)? And what were your holding costs over the time you were trying to sell it? Was the property tenanted over that time?

I'm asking these questions because, on the face of it, it looks like this property has performed very poorly. On a May 2005 purchase price of $165K (and a vlauation of $175K), one would expect a bit more than $180K one year later, given the growth in most areas over than time. I don't think that you have that much to be happy about, other than shedding a poorly-performing property.

I hope your next investment performs better than this one. I'm not trying to be a pr!(K - I'm just calling it as I see it. For your next deal, do what I did - post details on this forum before you go unconditional, or before you put an offer in. I did this, and as a result I made a very low offer, which was rejected. What struck me as a good deal was not so good, as many forumites pointed out to me. I'm much the wiser now, and I'm really glad that I didn't make the mistake I was about to, thanks to the feedback received on this forum.

Best wishes,

Paul.