Building Property Portfolio and Continuing to Rent Yourself

[auckland investor]

Living in Auckland it doesn't make much sense for me to by my own home. Several reasons:

- It is very expensive compared to out of Auckland
- I would have to get flatmates in to help pay the mortgage
- It would have to buy in a less desirable suburb, further away from work, sports, friends, etc
- It provides little flexibility if I want to move suburbs if my circumstances change

However, if I continued to rent somewhere in Auckland where I would prefer to be, it allows me to use my savings to buy rentals cheaper elsewhere, such as Hamilton, Palmerston North, etc.

It would give me all the benefits of being in the property market with all the flexibility of renting.

Seems win win to me? What do you all think?

[spaceman]

Seems win win to me...for you and your landlord

I reckon you could make it win win for you only, with a bit of planning......that is live in one of your own IP's......immeadiately a lot of people will tell you that it can't be done...... but it can be..... True you need to be careful to avoid tax avoidance, but it can be done.

For example if a trust buys a property is there any legal restriction on who it may or may not rent the property to?????

Cheers
Spaceman

[shanecarruthers]

Change your mindset ....

at the end of 5 years renting you have ... hmmm nothing .... end of 5 years owning a property you have some equity in a property and a stake in the property market, rents would have gone up over that period and so would house prices.

So to my mind I have yet to be convinced that renting vs property ownership is a good idea, infact it is bordering on insanity ....

But hey thats just my opinion

[spaceman]

^ I think the general argument in favour of IP & rent, is that you pay less to rent and you invest the surplus cash and thus after 5 years you don't have nothing.

Cheers
Spaceman

[Harvey]

I like the option of buying your own house. Then purchase an IP with 100% finance secured over your own home.

[essence]

Why not buy an IP NOT where you live and keep renting in Auckland?? ie Hamilton, Taupo, Rotorua. Do research BEFORE you buy!!!

This gets you -

a) into the property market
b) claim expenses/losses/profits against your IP, if correctly structured this flows through to your tax form (possibly a refund of tax)
c) allows you to keep working/living in Auckland
d) if you want to buy more houses when the market picks up, at least you're got a basis to start from

Remember -

a) You can't claim expenses on your own home (Spaceman's situation being a different issue)
b) you can't claim expenses when you rent from someone else
c) a combination of house ownership/renting will give you (better? different?) options

Just ideas for you to think about.

[buxlo122]

Why not buy an IP NOT where you live and keep renting in Auckland?? ie Hamilton, Taupo, Rotorua. Do research

a) You can't claim expenses on your own home (Spaceman's situation being a different issue)
b) you can't claim expenses when you rent from someone else
c) a combination of house ownership/renting will give you (better? different?) options

Just ideas for you to think about.

However you don't need to return tax on expenses saved by living in your own home. I.e you don't have a rent expense anymore.

[Natural Lifter]

Living in Auckland it doesn't make much sense for me to by my own home. Several reasons:

- It is very expensive compared to out of Auckland
- I would have to get flatmates in to help pay the mortgage
- It would have to buy in a less desirable suburb, further away from work, sports, friends, etc
- It provides little flexibility if I want to move suburbs if my circumstances change

However, if I continued to rent somewhere in Auckland where I would prefer to be, it allows me to use my savings to buy rentals cheaper elsewhere, such as Hamilton, Palmerston North, etc.

It would give me all the benefits of being in the property market with all the flexibility of renting.

Seems win win to me? What do you all think?

Hi, could you tell us, which do you prefer ? Live in desirable place and paying flatting cost to landlord for comfortable lifestyle. Or sacrifce comfortable lifestyle to invest in property for 5-10 years to buy a home in a desirable place ?

What's your specific goals and plans in property investment ? Can you invest time and effort, pay mortgage and additional cost for 5-10 years without being able to cash in.

Or you want to fix old houses and flip it after renovation to make capital gain ?

Do you own a property at the moment ?

When are you buying a property, what's your criteria, location, and price range ?

Do you want to manage the property yourself or get someone such as property manager to do the work ?

We are all here to help each other in property investment. Don't take it wrong way - I am not attacking your idea.

[shanecarruthers]

^ I think the general argument in favour of IP & rent, is that you pay less to rent and you invest the surplus cash and thus after 5 years you don't have nothing.

Cheers
Spaceman

Invest in what ? ... shares, gold ??

[spaceman]

^ I think the generally proposed plan is that the excess cash gets invested back into property, but it isn't compulsory. Any form of investment would do even just cash going into a savings account.

The merits of different investments can be argued back and forth, but as long as the surplus saved renting vs buying is invested you shouldn't end up with nothing.

Of course it does also rely on people being disciplined enough to keep at the saving/investing.....IMHO one of the big arguments in favour of home ownership is the "compulsory savings" aspect for the weak willed

Cheers
Spaceman

[auckland investor]

Change your mindset ....

at the end of 5 years renting you have ... hmmm nothing .... end of 5 years owning a property you have some equity in a property and a stake in the property market, rents would have gone up over that period and so would house prices.

So to my mind I have yet to be convinced that renting vs property ownership is a good idea, infact it is bordering on insanity ....

But hey thats just my opinion

I don't think you quite understood my topic. I would be in the property market, building equity and my properties I own values and rents would go up like you said. Because I'd own multiple rental properties.

[auckland investor]

Why not buy an IP NOT where you live and keep renting in Auckland?? ie Hamilton, Taupo, Rotorua. Do research BEFORE you buy!!!

That's exactly what my post said.

[auckland investor]

Hi, could you tell us, which do you prefer ? Live in desirable place and paying flatting cost to landlord for comfortable lifestyle. Or sacrifce comfortable lifestyle to invest in property for 5-10 years to buy a home in a desirable place ?

Why not do both? The difference between me renting a room in a less desirable suburb vs one I'd love to live in is about $20-30 per week.

What's your specific goals and plans in property investment ? Can you invest time and effort, pay mortgage and additional cost for 5-10 years without being able to cash in.

Yes definitely. Long term is the plan.

Or you want to fix old houses and flip it after renovation to make capital gain ?

Definitely not.

Do you own a property at the moment ?

No.

When are you buying a property, what's your criteria, location, and price range ?

By end of December next year. For rentals, I would choose 2-3 bedrooms close to town in Palmerston North or Hamilton between 150-250K

Do you want to manage the property yourself or get someone such as property manager to do the work ?

Get someone to manage it. It would be very difficult to manage it myself if I lived in Auckland and owned something in Palmerston North for example.

We are all here to help each other in property investment. Don't take it wrong way - I am not attacking your idea.

Thanks.

[auckland investor]

Invest in what ? ... shares, gold ??

Back into my rental properties. Duh?

[auckland investor]

Is Spaceman the only one who actually read my post? Everyone else's questions can be answered from my original topic post.