time or not to invest

[poonie]

Relatively new to property investment.Considering favourable interest rates hopefully being passed on....and the thought that there may be inflation following this time of deflation...is now a good time to buy if the property is reasonable?Would apreciate others thoughts on this.Also is it possible o get a positively geared property that will have capital gains above the national average,in the Auckland area?

[Rosco]

Yes - now is always the time to invest

Hi Poonie,

I think now is always the time to invest. I see investors all the time saying, I'm just going to wait a year for the market to crash, or for interest rates to drop or until they save some more money. In just about all cases when I talk to them 2-3 years later they have done nothing, and are saying "I wish I had purchased that investment property 3 years ago, it would now be worth ...."

If you invest in the right property it doesn't matter when you buy it. So I would be establishing a strategy, what you are really after and when. Watching the property market drop slightly over the last year has made me realise that cash is king, so I would now make sure a properties income less expenses plus tax refunds is positive. If you have a positive property, then you are NOT having to top up, therefore you can keep it for ever. The only investors or owners hurting at the moment is those that HAVE TO SELL.

Also at the moment
1) Low interest rate - should be below 6%
2) Less competion so that you have better bargaining power and can get delayed settlements, vendor financing, options, cash discounts etc
3) No building in NZ - So sooner or later we are going to run out of houses and rentals. This will push up rental demand and prices, plus house prices.

So buy the right property NOW.

Ross

[mlkmnz]

Positive cashflow has become a lot more possible now with lowering interest rates and declining values.

Capital gains on the other hand may be stagnant for a while.

My personal advice is if you've got the cash and can buy something positively geared in an area of high rental demand, why not. I wouldn't be stretching myself in this environment though.

[Contrail]

We are in interesting times.

What is going to happen in the future? Interest rates will hit around 4-5% meaning property is far more affordable.

The question is will inflation bite back? Will the difficulty in obtaining credit negate the cheap interest?
Will job loses mean more houses on sale so we still have a growing over supply problem?

One fundamental may be ripe but there are many more that could spell doom.

Interest rates are still coming down, there is still an oversupply of houses on the market.

There is still a better time to buy or more time to see the disaster coming, depending on your view.

[freezinhot]

Has anyone brought anything at the moment? With cashflow properties apprearing more frequent, has anyone been buying at good discounts and even better yields.

FH

[ecoeco]

I find it an interesting question about when is a good time to buy. I've always taken the view that, as long as the property matches my criteria, I'll buy it - regardless of the economic situation. I have a buy'n'hold model so if I'm going to be happy with the property for 20 years then 12 months here or there doesn't make much difference. By buying fairly consistently since 2000 I've effectively 'dollar cost averaged' the market.

That said my buying rules (not negatively geared, a property that will still appeal to tenants in 2020, etc etc) mean that I didn't do a lot of buying in 2005 - 2007.

Also is it possible o get a positively geared property that will have capital gains above the national average,in the Auckland area?

Yes and no - the extreme market conditions at the moment (low interest rates and falling values) might make it possible. Most properties in Auckland will appreciate quicker than the national average the trick is working out what areas will appreciate higher than the Auckland average.

My rule of thumb has been to look for the infrastructure related projects. When Massey announced their commitment to the North Shore Albany was great buying and had huge captial gains. When it became clear the old Silva Park sheds would come down Mt Wellington was good buying and had huge capital gains, etc.