invest for cashflows or capital gains

[hommedespoir]

WHEN not if the USA hyperinflation sets in, Leasehold becomes WOW... The New Freehold

There is no real estate bubble in NZ, so you'll be waiting a very long time for it to "pop"!

Invest for cashflow; capital gains doesn't pay the bills.

If you buy a property and create cashflow then you have almost certainly created capital gains also. The two are certainly not mutually exclusive.

Somebody had to buck the trend, someone had to say something scintillatingly lacking in popular appeal.
Good points, spurner. I agree.

Curious Question: What do Peter Schiff, Gerald Celente, and Mark Faber have in common?

Contrarian Answer: They all predict an American economy on the verge of hyperinflation.
(re-run of Weimar Germany of 1923, specially interesting when you perceive the blatant parallels
between Barack and Adolf...)

google: usa hyperinflation (sorry, I researched the 3 top links but apparently I must wait to turn 100
before I'm to be trusted posting anything as non-titillating as Gerald Celente in a youtube URL)

When-not-if New Zealand inevitably follows US and becomes a New Zimbabwe,
the real estate investors who'll reap rewards far more massive than any capital gains,
are the super-smart-contrarians who ignore the popular (and fallacious) aversion to leasehold,
and buy all the mortgagee-sale long-term leases they can grab.

For a typical 21-year run, (y)our ground-rental costs remain at the exact-same level,
you pay the rent with a few then-worthless notes that don't even make good bog paper....
while your long-suffering RTA tenants are paternally well-looked-after by
your caring real-estate professional's religiously-regular 6-monthly review,
and your bankster offers a new cash-collection service for the long-suffering tenants
while (y)our rates will be contributing massively to offshore profitabilty of a multinational
like Recycleurs Les Plus Grands (Auckland, NZ) Bruxelles SA. (Counter that as a challenge, Len)

I'd welcome a PM from any desperate freehold-only capital-gain hunter with the odd long lease
their bankster is threatening giveaway by auction.

Will I be the only bidder?
MikeR

[jo-man]

I spoke to my broker.
Answer was no, with $25k for deposit because income would not suffice the repayment. LVR is under 80%.
I was looking to borrow $225k for $250k property ($25k Dep).
Broker's word was banmk are still quite tight with money.

I appreciate fantastic feedback from all you guys... some thing to punder and find a way to buy property. I belive that this is a right time to invest in cashflow property.

[speights boy]

Is that how it works?

Exactly ENP; that's precisely how it works.

http://hopetoprosper.com/the-greater-fool-theory/

[ENP]

Does that mean you buy the 2nd, 3rd, etc property with 100% finance if you always recycle the deposit?

eg.

buy 200k house (including your renovations in the price) with 20% deposit of 40k
6 months later it's worth 240k

Pull out the extra 40k equity and buy the next place with 100% finance? Is that how it works?

[NovInvestor]

I agree, 6 months is the norm these days

[essence]

A word of care - some (!) Banks are making investors wait SIX MONTHS before allowing the deposit/equity money to be recycled out.

If you're relying on that money for your next lined up property, it pays to be careful or you might end up in the guano.

The only way you may be able to recycle the money out, is to re-finance with a totally different bank.

[NovInvestor]

I have $25k.
Wage:$60k
I am looking for upto $250 unit in Sandringham, Kingsland area.
I dont want to show to the bank my PPOR.
Can I go through a M broker to get a loan and not declare or collatoral another property.

Then, how do you recycle deposit in say 3 months? to buy another property??

Any suggetions would be appreciated.

Buy 20-30% below After-Reno valuation, then after 3-6 months, give your valuation report with photos of before and after reno to your bank for a top up.

Then use the top up money to buy your next property.

[AMR]

I have $25k.
Wage:$60k
I am looking for upto $250 unit in Sandringham, Kingsland area.
I dont want to show to the bank my PPOR.
Can I go through a M broker to get a loan and not declare or collatoral another property.

Then, how do you recycle deposit in say 3 months? to buy another property??

Any suggetions would be appreciated.

It is very easy for the bank to type your name into iAdvise or Property Guru and find out all properties that you own or your trust owns, so don't go down that path. It used to work.

[Orkibi]

Can I go through a M broker to get a loan and not declare or collateral another property.

NO you cant, and if they find out they will treet it as Fraud.

[jo-man]

I have $25k.
Wage:$60k
I am looking for upto $250 unit in Sandringham, Kingsland area.
I dont want to show to the bank my PPOR.
Can I go through a M broker to get a loan and not declare or collatoral another property.

Then, how do you recycle deposit in say 3 months? to buy another property??

Any suggetions would be appreciated.

[CJ]

In general I would say minimum 10% Gross, as with apartments you have Body corporate fees and sometime other costs like ground lease payments which will reduce the NET Yield.

Personally for apartments I think you need to look at the net yeild, not the gross. Typically the purchase amounts are smaller but there can be considerable costs for some such as rates, ground lease and bodycorp which are out of proportion compared to houses and even some other apartments.

I have seen apartments with a gross yeild of over 13% (sounds great doesn't it) but the net yeild was less than 8%. This was not leasehold and due to the type of apartment, would probably need professional management (it was small so turnover would be very high) increasing costs further. Add in maintenence (it was furnished as well so probably higher maintenance), means the deal didn't look so good.

Personally I think net yeilds (taking it account fixed costs (ie. rates, insurance but exclude interest and maintenance)) is always best as that way you can compare to interest rates.

[Kerry Christian]

Oh - by the way - did I not mention earlier Cash flow works.

[Orkibi]

Ok so what is a good % of return from apartments?

In general I would say minimum 10% Gross, as with apartments you have Body corporate fees and sometime other costs like ground lease payments which will reduce the NET Yield.

[MonkeyMagic]

If you are looking for cashflow positive deals check out Property Billboard

[joe90]

Hey everyone.

Ok so what is a good % of return from apartments?