Here? there? where?

[frazzledfozzle]

Hi All this is my very first post to the forum but have been a lurker for a while now.
Please be gentle with me.
I Live in Nelson and want to buy my first investment property however properties here are not experiencing any sort of slump that I can see, you can buy a 3 bed home in a scungy area for around 230k with a rental return of aprox $270, In a better area the price goes up to around $300k rental $300-350 with a mortgage of minimum $200k the figures dont look good.

So the question is do I go for the slumlord thing or do I look outside Nelson and if outside Nelson how do I know what is a good province to invest in for the long term? any advice would be awesome because it's driving me nuts not knowing what to do.
Thanks
Frazz

[LKSteve]

Yet

"I Live in Nelson and want to buy my first investment property however properties here are not experiencing any sort of slump that I can see" . . . . . . . . . . . YET. Nelson is not immune. The market there may be robust, for whatever reason I don't know, I’m not educated enough about Nelson to speculate. The Real Estate bubble that occurred over the last several years was a global one & is very, very large indeed. Read about the deflation of this bubble on both coasts of the US, in the UK, in Ireland, Spain & South Africa. The current correction "will not be all over by Christmas".
In my view deflation of the bubble will take quite some time with serious economic consequences for the global economy. If you buy now good luck!

[Glenn]

with a mortgage of minimum $200k the figures dont look good.

So the question is do I go for the slumlord thing or do I look outside Nelson and if outside Nelson how do I know what is a good province to invest in for the long term? any advice would be awesome because it's driving me nuts not knowing what to do.
Thanks
Frazz

You have to understand that it is normal in cities that are worthwhile investing in to be hard to make that first step into investing.
The very fact that the figures do not look good means that a lot of other people think that investing in rental properties in Nelson is a good idea.
You should not take too much of reading superman comics that tell you that you can buy your first property with no money down and be cash positive. When I was a kid I used to read superman comics and they were full of advertisements for expensive courses telling you that you could be big and strong if you purchased their course.
I encourgage young people to get into the hard stuff first off. Do not bite off too big a monster but get your toe into the market and learn as you go.
A common starting point for young people is to buy a house and stuff it full of flat mates. Not the sort of thing for many people.
The next thing to do is start really small like a one bedroom. Sure the returns (rent) is low but the relative size of the mortgage payments compared with your outside income is also. This permits you to pay off the mortgage quickly to the point where the cash income equals the cash outgoings. The returns on bigger more expensive properties might not be very much different than the small stuff the actual size of the mortgage that you need to pay down is much bigger.
With one bedroom properties there are a lot less tenancy problems (there are still some) so it is a good place to start practicing.
If you go for single people as tenants there is less chance of matramonial disputes and the associated wall damage, less blood on the floor, and lower turnover of tenants.

[pgflt]

Stay close to Home

If Nelson is immune from the property slump doesn't that make it a good proposition as a place to buy?
My experience of Nelson tells me that most rental properties availabe are at best only average. Whatever you end up buying you can achieve above average returns by presenting your property in the best possible condition.
I agree with Glen that you should just get on and do it. Make sure you have a clear investment strategy (for what it's worth mine is to buy character property within 1 km walk of the city centre), make sure you present your property in above average condition and hold out for a higher rent. Join the Nelson Property Investors Association and find a mentor.
You are bound to make mistakes at the outset, but these will teach you heaps. You will also learn heaps and save management charges by managing your property yourself which would be impracticable with property elsewhere.
Good luck.
Paul

[Carex]

Hi Frazz and welcome to the forum. I have sent you a private message with my contact details, as I periodically organise a social gathering for Nelson investors and it's always nice to meet new people.

[Hillbilly]

Nelson high prices

Best to wait if the returns are bad.
Went to a forced sale in Feilding. Great house, good street. 6mth valuation at a fair $250k. Only bids to $135k !! (passed in and bailed out by family).