Finally on the Board - First Investment Property Purchased

[Yea'Na'Eh]

Check out this website: www.homerescue.org.nz
Will give you some in sight into what the Maori Incorporations are up to.

[Bluekiwi]

k1w1,

Good point about the basement flat. There are loads of unpermitted ones out there and I guess it's all good until something goes wrong. I've looked into it for a couple of properties but the costs of bringing the ground course up to spec are prohibitive.

Yes I agree it is a very tricky area.

And I have had conflicting advice on Insurance, but there is defintely some opportunity to be able to get FULL Insurance for this type of Scenario.

Plus this is only a wall that would need fire rating, not floors, as it is the horizontal extension that would become the flat.

The other way is to just rent it to one tenant advertised in a careful manner that explains the full benfiits and opportunities - Features !!

And they can do what they like with it, including possibly having Uncle Bob and his wife occupying one end of the hosue.

[drelly]

k1w1,

Good point about the basement flat. There are loads of unpermitted ones out there and I guess it's all good until something goes wrong. I've looked into it for a couple of properties but the costs of bringing the ground course up to spec are prohibitive.

[Bluekiwi]

Far enough.
The RV doesn't sound outlandish based on the yield but I don't know that area anyway.
What was the CV?

350k is the CV

[tpr2]

Far enough.
The RV doesn't sound outlandish based on the yield but I don't know that area anyway.
What was the CV?

[Bluekiwi]

Nice work Bluekiwi

Did you get an RV or are you just estimating?

Until I can find a way to use this new equity there is no point in spending money on a RV.

I am estimating but I am certain of the RV range.

[tpr2]

Nice work Bluekiwi

Did you get an RV or are you just estimating?

[Bluekiwi]

Yeah 14k covers everything, from interest cost through rates and insurance to lawyer bills, private investigator and court fee's and added security.

Excludes all my time and effort - quite significant - sorting this out.
But I am not afraid of hard work.

No damage to the house and no work required on it at all, everything is well maintained.

14k also covers normal holding costs 5/6 to 27/6 getting it rented.

[Xav]

Well done BK. I take it you would buy at mortgagee auction again?

Just so I'm clear, was there any damage to the place or was the $14K just for your costs for evicting him? I presume that figure includes lost rental?

Haha.. afterward this guy had been ejected, and Insurrance sorted, I felt better, even if there is 20k of hassle I have still done well.

Turned out to be a more pertinent thought than you knew at the time I expect!

[k1w1]

What you say there, BK, raises a point that I can't get my head around.

Without legally making it a multi-dwelling home & income, aren't you effectively voiding your insurance? If one party burns the place to the ground and the insurance company find out (which I am sure they would) then they can deny the claim.

This would keep me awake at night.

While on the subject, how come RE agents can describe a place with a separate flat as a "2nd income" when technically speaking it is an illegal situation? Is it illegal when you live in the main house and rent the "flat"? Probably depends on the council and local bylaws, I guess.

[Bluekiwi]

Okay all done and dusted.

Court order and police assisted eviction of some pretend tenants - I might add the police did go a little overboard with the 4 police cars, 6 police, paddywagon, swat team with 4 ex army goons, 3 bailiff's, and 1 sergeant.

You might have seen it on Maori TV Friday 5/6.

27/3 to 5/6 to get access, property now rented.
Total extra cost about 12k to 14k.
PP 236k, plus 14k say including all my costs till tenants move in = 250k.

RV would be 375k to 425k.
So nice minimum gain of 125k.

Rent 400pw so 8.3% yield.
But under rented to quickly get tenant.
House had 1 more room than we thought, so 6 months time put it up to 440pw would make it 9.2% yield.

Opportunity also exists to put a Kitchenete in the Rumpus and close off one part of the house that includes huge master bedroom with ensuite.
Plus own driveway and access, plus garage.

Rental would then be 200pw flat, 350pw 3 bedroom house = 11.4% future yield.

[cynic]

Jabba the Hut

I wanted to put in a pre-auction bid to the bank of 250k, but they didnt want to look at as there wasnt enough time to contact other potential purchasers.

From my research I knew that it was a good deal at 250k as it is a quality property and in a good area.

The occupier had not allowed anybody access to the property but further DD proved my inkling to be correct, that the property had been owned for 9 years by my old boss in the 90's and I had in fact been in the property twice
Plus I knew that the extension he had done, had been done well.

Further calculations revealed I could go to 280k but then further due diligence revealed Caveats and Tresspass notices on the windows.

This caused me unease even though they were revealed as rubbbish claims, so I factored in 20k poss costs and restricted my max. poss. bid to 250k.

But before the auction I actually decided I wouldnt bid, as a man with a very young family, I didnt need potential troubles like this.

Then the Auction:

The weirdest auction I have been to.
A small room, with 12 people crammed in.
Just as the auctioner was about to start the bidding.

Some nutter interupts the proceedings handing out phamphlets and tresspass notices and starts in on this huge speech.

Finally the auctioner tells him to sit down.
He then offers me a phamplet which I reject, so he throws it at me.

I rejected it because I had just decided there was no way I wanted to buy this property now !!!

All through the auction, every 1 minute, he starts yelling out, in a very small confined room.
About tresspass notices, unlawful bidding, the corrupt NZ Govt, how we are comiting a crime, that by bidding we open ourselves up to criminal action, fines and prosecution.

The auctioner then loudly and agressively yells out at him that this is his auction and for him to be quiet, but that does not stop him.

At this stage I think, there is no way I ever want to buy this house and all the hassles that will likely go with it.
And so must everyone else as the bidding stops at 220K, way too low.

So I think oh well I might as well get in some bidding practice, so I go in at 230k along with a tirade of abuse.
The other phone bidder goes 235k.

Here I think lets play a bit and just go 236k.

Well blow me down, there is silence, what couuld this mean ?
I think oh well, maybe It will be passed in and I can negotiate a few terms with the bank.

Then all of sudden the auctioner start yelling out loudly and pointing at me, screaming above this other guy.

ITS ON THE MARKET, ITS SELLING NOW, THIS MAN HERE, THIS MAN HERE !!!!!

And I think, oh shit is this really happening, someone else bid please

Haha.. afterward this guy had been ejected, and Insurrance sorted, I felt better, even if there is 20k of hassle I have still done well.

8.8% on a quality property not some shoe box.

The whole office of the agents were genuinely astounded I had bought it at that price.
They said that he had put 2 bidders in the room off, and the phone bidder who went to 235k had also heard the commotion had also stopped bidding.

That would be one of Jabba the Hut's properties. You might pick up hassles afterwards with the fat little toad. He robbed me blind, amd convinced he was the mastermind behind my burglary when I tried to stand up against him

[mortgage broker]

If you wait it might get cheaper buddy.

[Bluekiwi]

You guys have made me thirsty, I am going for a beer

[k1w1]

Actually I was amused at the excellent retort to your belittling of the buyer.