The right start to investing.

[Odin]

Many investors starting out will have limited funds and will be looking for a solid start on a property maybe 150k to 200k. So what's the advice on that ?
Some say go for new buildings as there is less maintenance and better chance of good tenants. But there is little in the way of new builds in that range other than apartments. So would an apartment be the way ?
Some say buy in the city but there again is the issue of price range. Its not easy to buy in that price range in the city. Would a unit be the way to go ?

Would it be recommendable to buy close to home so the property can be "self managed" thereby adding some deductible expenses ? And then maybe over time building a portfolio and achieving the home office and telephone line and so on ? Or would it be better to buy a good property in gore or some other place far away ?

I don't feel there is any places local to me that would suit as an investment property. The prices are a bit to high and the rent is a bit to low. Therefore i am looking in an area kind of north of Huntly and south of Papatoetoe as i can manage a property there my self. I feel thats the best option. I would most likely get a rental agent to help with screening tenants and selecting the fist lot and then manage from there my self. The problem becomes finding such a property.

[CanucKiwi]

Hey Odin,

I do know people who are successful at self-managing properties... very hands-on types with lots of time. On the other hand, I personally think that a good property manager is worth their weight in sanity.

For me at least, there's no question... put every property under management and move on with life.

[Rosco]

Hi Odin,

There is no right or wrong answer to your questions, only time will tell.

I personally think that property is the best investment, and by getting into any reasonable property you will still do well.

1) Apartments - I don't like apartments as you have no control over your neighbours (above, below and beside you). If you get a great tenant, but the other 200 in the building are the worlds worst tenants, then your great tenant will move out.

Also in Auckland at the moment I think there is too many apartments available. This creates a big risk that they go down in value, but on the other hand creates huge opportunities as there are lots of desparate sellers. So if you researched the apartment market well, and became an expert on this area, you could take advantage of others misfortune.

2) I would always prefer main centres as they have large numbers of potential tenants and not relient on one employer. In small centres watch for the timber mill, or other similar employers closing down.

3) I always use a property manager. My Hamilton property manager (Flat Fee - superdad on property talk) recently got an extra $20-$40 per week more than I would have, which is more than they cost. I believe in using professionals, rather than doing a half pie job myself, because they are a specialist in this area they should know more than you and do a better job.

4) I prefer new properties, that are more expensive for the reasons you state. If I could only buy a $150k to $200k property then I would (i'd go anywhere but research the smaller town thoroughly before purchasing), but first I'd look at borrowing from parents, employer, anyone else I could think off, or look to buy with someone else. I'd prefer to own half a great property then a whole of a bad one.

5) I think between Hamilton and Auckland is great, and this area must grow long term. But watch the new waikato express way, as this may affect some of the small towns like Huntly etc. The Waikato times front page today showed where the express way is going.

Best of luck with finding a property!

Ross

[Odin]

Thanks Rosco.

That's good advice. I have looked around for any partner or any family to lend me money but have not been successful. I am not to keen on a partner as it scares me a bit to put my fortunes partly in the hands of someone else. I do have a slight advantage to other inverters in the sense that I in a way pay quite a lot more tax in the form of child support. Therefore any tax deductions for me is worth as much as 62%. So even if i get hold of a decent property in not the best area and end up with a bad tenant that takes time to get rid of i should be just fine as all of that is tax deductable. (I have done the numbers and could on most resonable investments just under 200k go 15-25weeks without rent and have a maitanance bill and break even)

Anyway, what i was keen to ask was what you presieve the effect of the expressway will be on e.g. huntly ? Houses on the road trough huntly may go up ? will the town die slowly ?

I'm sure superdad is great but i would be careful with flat fee managers as they do not gain by having a higher rent on your property. But saying that i don't really trust to many in the way of property management to be proactive in upping the rent if the tenant is staying.

I would predict that a reasonable apartment in auckland will gain in value over time and the rent should be good but the question is how long will it take and which apartment complexes will turn slum as some undoubtebly will. I would stay well clear of zest as it may and more like a cestpit. But paople will quickly catch on to the easy apartment renting lifestyle and demand will grow with growing migration.

I am keen to have a property within arms reach (say 50-75Km) so Huntly does look interesting. I'm not sure i would be too keen on a 200k property in manurewa or mangere. I was thinking about a property on the frindge of a small town with a bit of land to put a removal house on in a year or two.