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  • Originally posted by speights boy View Post
    Why the reluctance to answer a very simple question ?

    In actual dollar terms, how much (approx) does someone need to earn in order to borrow 800k.
    I'll start you off...lets assume 7.5% interest rate.

    Come on Ron....it ain't rocket surgery.
    According to the Westpac website the repayments on a $800,000 30 year mortgage are $5,594 per month.

    Assuming 30% of income used to service the mortgage, an income of $18646 per month, or $223,760 per year - quite a lot for a traditional family with mum at home looking after the kids, but quite acheivable for a professional, double income, family.

    Originally posted by RHF
    The properties devalue by 2012 by doubling in price to $800k, the rents double and stays up, interest rates double but comes back, but my mortgage of only $380k stays the same.
    While you are looking at the property press from 10 years ago, look at the for rent ads as well - what have rents done in the last 10 years?

    Back when he appeared in 2004, Ron's mantra was 'buy well, renovate, rent, repeat' supported by the cash flow from the Tofu shops. Now, in 2012, the mantra seems to be 'buy well, renovate, rent, repeat' supported by the cash flow from mentoring - keeping to the same basic formula and not branching out in to jungle juice, sections in fiji, developments or any other number of distracations (Distraction Lane, anyone!) is, I think, the secret of his longevity in the property world.
    DFTBA

    Comment


    • Oh dear Ron, what a disappointment.

      At least I now know you do agree with me.

      Don't worry....I won't tell anyone.
      Last edited by speights boy; 27-01-2012, 10:01 PM.

      Comment


      • Originally posted by cube View Post
        Assuming 30% of income used to service the mortgage, an income of $18646 per month, or $223,760 per year - quite a lot for a traditional family with mum at home looking after the kids, but quite acheivable for a professional, double income, family.
        Thanks cube.

        That is to buy what is now a 500k house in West Akl, or upper North Shore

        Easy peasy.
        Last edited by speights boy; 27-01-2012, 08:02 PM. Reason: Thanks cube

        Comment


        • You could be a bit unfair there.
          You're talking about a $800k mortgage on a $1 million house in a first home buyer scenario - wouldn't you expect this buyer to have some equity in their existing home?

          Comment


          • If a first home buyer has to pay $500K now, they'll have to pay a million in 10 years.

            Sounds impossible? Then house prices can't just keep doubling every 10 years.

            Comment


            • But a first home buyer doesn't have to pay $500k now.
              They can easily buy a cheaper home.
              And yes, house prices will continue to double.

              Comment


              • Buying a home has a lot to do with attitudes, goal, and taking action...

                A migrant comes to NZ and see the land of honey, welfare, free schooling, government housing, cheap medical, etc and ends up as an expense on the Tax payer.

                A kiwi live here and has always rented, enjoys the good life, and for generation is still a renter..

                Then there are people who have the means and can buy a house, but want to buy there dream house beyond their reach.

                Another migrant comes to NZ and sees the land of opportunity, works hard, picks kiwi fruit, cleans houses, wash dishes, delivers papers, does long hours, and in 5 years buyers a house in Mangere to Manurewa.

                Then there. are people who just don't want a mortgage and save all their money to buy a house outright.

                Much like many property investors starting out, they just don't know enough or where to even start. Some are told by their certain banks even today that they will need 20% tp 40% deposit, when all is needed is 5% to 10% deposit if they didn't look at leaseholds or apartments.

                Ron Hoy Fong
                RonovationZ
                Last edited by RonHoyFong; 28-01-2012, 06:22 AM.

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                • I don't disagree with much you have just said Ron.

                  However for families that need to live in the West Akl, Albany, Upper north Shore, Glenfield areas and planning a basic property, then the income numbers just become too large; when compared to median incomes.

                  You are probably aware of the old parable.

                  Those that are not may wish to google.....Wheat and chessboard problem.

                  Comment


                  • To borrow $800k @ 7.5% over 30 years P&I will cost about $1291 per week. Assuming banks allow a loan up to 40% of household income that will mean a weekly income of about $3230. But if they only allow 40% of after-tax income (assuming a tax rate of 25%) will mean a gross weekly income of about $4,300 (about $223,600pa) is required.
                    Gimme $20k. You will receive some well packaged generic advice that will put you on the road to riches beyond your wildest dreams ...yeah right!

                    Comment


                    • Originally posted by RonHoyFong View Post
                      The best way to explain this is to read Kieran Trass's book "Grow Rich with the Property Cycle"

                      Ron Hoy Fong
                      RonovationZ
                      But you still haven't defined what a boom is, so nobody knows whether you will be right or not.

                      You just say that it will 'boom'. What on earth does that mean? It's so vague it could mean house prices merely keeping up with inflation.
                      Last edited by Lissica; 28-01-2012, 01:43 PM.

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                      • Originally posted by Bob Kane View Post
                        House prices stay about 2% ahead of inflation.
                        Which is what I would expect.
                        And that's about the rate of real economic growth isnt' it?

                        Comment


                        • Originally posted by Lissica View Post
                          But you still haven't defined what a boom is, so nobody knows whether you will be right or not.

                          You just say that it will 'boom'. What on earth does that mean? It's so vague it could mean house prices merely keeping up with inflation.
                          Like I said, read Kieran's book. Then you can have a better understanding to make better judgement or criticism of others

                          Ron Hoy Fong
                          RonovationZ
                          Last edited by RonHoyFong; 28-01-2012, 07:35 PM.

                          Comment


                          • Originally posted by speights boy
                            Ron

                            I don't believe Lissica deserved that from you.
                            Whoops you're right so have amended.

                            On reading back I meant to target someone else's criticism.

                            Anyway, don't worry I won't tell who!

                            Ron Hoy Fong
                            RonovationZ

                            Comment


                            • Yeah, thought so.

                              Criticism?
                              Sure, I guess.

                              Won't answer simple income required question.
                              Won't expand on your definition of a boom.

                              Perhaps neither fit your narrative you depend on elsewhere.

                              I suppose it's one of the hazards in your line of work.

                              Shame really.

                              Comment


                              • Originally posted by speights boy View Post
                                Yeah, thought so.

                                Criticism?
                                Sure, I guess.

                                Won't answer simple income required question.
                                Won't expand on your definition of a boom.

                                Perhaps neither fit your narrative you depend on elsewhere.

                                I suppose it's one of the hazards in your line of work.

                                Shame really.
                                I am really not here to explain the affordability of losers in society that want to laze away their lives, or how they can afford a million dollar home in the future. That's a problem for the welfare dept, housing NZ, and Govt, not my problem

                                I had friends who use to criticize me for working hard, doing O/T and investing my saving as they smoked, drinked, partied, gambled, and did their O/E. Surprisingly when they came back from their O/E they would ask if I had any cheap accommodation for them. Naturally I always said no because I was not here to subsidize them and also I wanted to be in a position to increase rents to market value without regrets.

                                Not surprising I would rather associate myself with like minded people who want out of the rat race.

                                I am here to give my advice to you and others on how to be the 1% of NZ population who have 5 or more properties, so stop asking me silly theoritic questions that have nothing to do with Property Investing.

                                Look at the historical facts which is the best answer to your question, future guesses is your choice and good luck to you.

                                As to the boom, read Keirins book, I consider him as the best expert in this field and his book is over 100 pages with stats and diagrams. I am not prepared to explain his reading in just a couple of paragraphs which would otherwise answer your questions.

                                Ron Hoy Fong
                                RonovationZ

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