Moving to Australia - Options to invest in NZ?

[jonny5]

Hi PT,

I'm moving to Australia in the near future (1-2 months) to make the most of higher incomes and gaining work experience in my field (finished studies 2 years ago). I am looking to return in 2-3 years with hopefully a healthy savings sum for property investment (although would prefer to inject some of these savings into an NZ based investment while working in Aus). My conundrum that I face at the moment is that I currently have $15k saved and am very keen on investing it (as opposed to having it sit dormant in a bank account) while I have my stint in Aus. Whilst at high-school and university I read up a fair bit on PI although lack any real experience, hence why I'm asking on here for advice.

The question I would like to ask PT is, what would you do if you were in the same position? I feel that it is a great time to invest in property in NZ and would hate to come back in 3 years time to find property prices have shot up in value. I also have 8k available from kiwisaver (if i were to live in the property for the first 6 months). Is a property syndicate a suitable option? should I resort to a term deposit and invest once I return to NZ? Should I start looking and invest now before I leave, handing the management over to a property management firm?

Any feedback will be great. I've searched the forums and books and can't seem to find anything similar to this issue.

Thanks,
Jonny

[TheLiberalLeft]

Unless you're thinking of "investing" in some piece of crap in some tinpot town south of the bridge, I'd say you don't yet have enough of a deposit. You have plenty of time. It sounds as though you're young. Go and have fun in Oz. Blow some dough on hookers and drugs (legal, of course, for the churchladies' sake). You have to squander some money though. Save what's left over.

I don't think the market's going to do a hell of a lot in the next 2-3 years.

[Marc]

The high life of Aussie - yep remember it well ha ...like the Trader in the UK who blow over 200K (UK pounds) on Champagne.

Don't know if 5 percent deposit is allowed now - is it? Your savings would give you about a 5 percent deposit so if I was you I'd double it and secure a good job then go hunting for a good deal back here in NZ.

Marc

[buxlo122]

Chuck it in listed property trusts (LPTs) such as KIP, ANO, PFI, DNZ etc. It will be better than putting it in the bank and LPTs are pretty stable in price and dividends.

Otherwise if you want a bit more risk you could invest in some other shares.

[jonny5]

Thanks for the responses. Yes, I understand that 15k is a low deposit. The properties I have been looking at are in the 200-250k range. Thinking back to the 11/2011 Prop Investor mag in the 'Best Banks Revealed' article I recall many banks accepting 5% deposits.
Looking at another PT thread had a few people indicating that it will be fairly hard to get a mortgage while in aus, for a nz prop. Although a few mortgage brokers said they might be able to sort something.

Am looking into LPTs now, thanks buxlo!

[buxlo122]

My pick for LPTs at the moment is ANO it is showing good prospects with increasing office rents and occupancy post GFC.

[TheLiberalLeft]

How old are you? If you're under 25 you'll come to regret not following my advice to the letter. Good luck.

[VirtualT]

Be aware, once you become a tax resident of oz you will need to:

- Declare any income from NZ including rental income
- Pay CGT on sale of any property you buy in NZ while resident of Oz, either when you sell it or when you stop being a tax resident.

[jonny5]

Interesting that CGT is owed even if only leaving the country. I've been looking into LPTs, which are looking like a good option.. will be a lot less hassle than worrying about an IP and will keep me interested in the nz property market whilst away. Currently reading up further on LTPs on here and sharechat

[LondonKiwi]

I'd put the money in a term deposit. Don't bother with shares you're likely to have less money than you currently have when you return in that medium.

I did something similar to you about 15 years ago. Moved to London rather than Aus although the pound is not as strong now so Aus is a great option (and has a better climate).

Save money over here and send it back on a good exchange rate. As long as you are not intending on staying in Aus you will still be able to buy property from Aus. I have. The only issue is for long term NZ residents in Aus who are now viewed as overseas investors purchasing in NZ...you will need a larger deposit then (20-30%). NZ friends of mine living in Sydney for 15 years are in that position now.

Good luck!!

[TheLiberalLeft]

"Not as strong now" is the understatement of the year. Long gone are the days of $3.40 to the pound, LK.

[tehoro]

yeh working in Aust my self Kiwi Bank let you loan up to 80% the big four banks are all 70%.

[ENP]

If your time frame is only 1-3 years then just invest in a term deposit.

You won't be able to purchase a decent rental with that deposit. It will be a hassle to manage from Australia being your first rental, even if you get someone to manage it. You will have to transfer your Australian money across to NZ, which incurs roughly $30-40 in fees each time, etc. Even if your 15k earns 20% p/a compared to 5% in a TD, it's only a difference of 2-3k at the end of the day. It may drop 50% in value, who knows.

Why invest in LPT's? Looking over their annual reports basically all of them have not increased their total rental revenue over the past 3-4 years. If I were you, I'd put it in a term deposit and sort out your options when you get back.

If you are dead set keen on property investment, 2 bedroom units could be an option. Or if shares are the go, look into some companies on the ASX.

[Maccachic]

There are no charges to transfer money using XE.com they make their money buying and selling. I found them very good when I was in Europe (Germany, Ireland and UK) exchange rates seemed pretty good too.

[speights boy]

Why invest in LPT's? Looking over their annual reports basically all of them have not increased their total rental revenue over the past 3-4 years.

Taking AMP Office (ANO) and Goodman Property Trust (GMT) as examples over the last 12 months.

ANO : 20% share price increase,
GMT : 14% increase,

Both with steady PIE dividends; which is the reason most people hold these.

The Institutions at the big end of town have LPTs in their funds; so Mr Market has been favourable towards these recently.