700K-800K budget, what's the best investment strategy.

[df2334]

My wife and I have roughly around 700K-800K budget to make some investment. We've never purchased investment properties before, so we are not sure about the followings:

1.Should we invest in Auckland or in other cities such as Hamilton, Tauranga. With the current market, it seems most of Auckland properties have poor yielding.
2.What type of properties would be the best options? A single freehold house or a couple of units/apartments?

Any advices are welcomed.


Thanks

[Eugene]

I think many investors have a niche, there are types of properties they get to feel comfortable with.
They get to understand location, size, tenants, building style, city etc well.
Cashflow vs growth.
Talk to investors at your local association.
Read widely especially this forum

700-800k is a lot of money. I think you should buy small, start slowly, while you are finding your way,

[Rosco]

I would always suggest that you gain some knowledge and information, before rushing in to invest. Join the local property investor association, such as http://www.waikatopia.org.nz/ , and take your time!

If the $700k-$800k is cash, then I would look more at newer properties, that have Brick and Tile, better tenant, better growth prospects and less repairs.

If you are borrowing the $700k-$800k, then you need to look more at your cashflow. Can you afford to put in $100, or $200 or more into rental properties each week? Is this sustainable and do you have protection/buffer for loss of job, accident, death etc?

Why do you want to invest in property, ie what is your aim or goal? This will affect where you want to buy and what you want to buy. Having a good aim/goal, and then developing a specific strategy to achieve this can really help your investing, and narrow down where and what you want to buy.

The old concept, of 'not putting all your eggs in one basket' is a good one. So try to have a diversified property portfolio, ie not 5 townhouses in Frankton, Hamilton.

I haven't answered your questions, as this is difficult , and without knowing your full circumstances, aims, incomes etc, it would be almost impossible.

Ross

[df2334]

Thanks very much for the detailed replies.

My wife and I both have full time job and we can borrow up to 600K and we have roughly around 200K cash. We heard many good things about joining the local investment community, but we are kind of busy with our work so not sure if we would make any time for it. We are not aiming to be professional investors but rather want to utilize these money more effectively. Obviously, saving those money in the bank is basically losing money, so we thought property investment would be a better alternative. We have already benefited from capital gain in our current properties. One of our property has gained roughly 30% growth in the last 2 years, those properties were purchased for family members and not for investment purpose though, so we have little experience in property investment. Our goal is very simple, borrow as much as we can from the bank + our cash and invest it in a good way so we get fair amount of gain in the next 5 to 10 years.

We've been to a few open homes recently in Auckland, most of them are units, the price is way too high and the yielding is just around 4% to 4.5%.

[CaliAngel]

Thanks very much for the detailed replies.

My wife and I both have full time job and we can borrow up to 600K and we have roughly around 200K cash. We heard many good things about joining the local investment community, but we are kind of busy with our work so not sure if we would make any time for it. We are not aiming to be professional investors but rather want to utilize these money more effectively. Obviously, saving those money in the bank is basically losing money, so we thought property investment would be a better alternative. We have already benefited from capital gain in our current properties. One of our property has gained roughly 30% growth in the last 2 years, those properties were purchased for family members and not for investment purpose though, so we have little experience in property investment. Our goal is very simple, borrow as much as we can from the bank + our cash and invest it in a good way so we get fair amount of gain in the next 5 to 10 years.

We've been to a few open homes recently in Auckland, most of them are units, the price is way too high and the yielding is just around 4% to 4.5%.

You'll be able to borrow more than 600k if you spread yourself over two or more banks. Their first concern is serviceability and the next criteria is exposure.
Auckland is a wash. There are a number of satellite cities that stand to provide a good yield over the next five to ten years.

[flyernzl]

As Rosco has already indicated, your first step should be to sit down (together) with paper and pen and work out exactly what you are trying to acheive.
Then you can work how (and if) investment in property can get you there.

Are you wanting to get a consistent monthly cash flow that will allow you to retire from your day job(s) and live the life you want?
Do you desire to create a capital sum so that you can buy the yacht/bach/tropical island that you dream of?

The wrong way to go about it is just to say "My neighbour made heaps in property deals, we are dead envious and want to do the same".

Are you an investor, a landlord, a trader, a developer?

Plan first, then action.

[Wayne]

We heard many good things about joining the local investment community, but we are kind of busy with our work so not sure if we would make any time for it.

If you don't have the time to learn then maybe you need something a little more passive.
Rentals may seem easy but there is more to it.
I would say you can't afford not to spend the time learning the ins and outs of distributing your hard earned money.

[kiwibean]

I agree with Wayne on this one. If you do not have the time that is involved then it might not be for you. You are looking to invest a lot of money so you should spend the time. Otherwise might as well gamble it away. You don't need to spend hours and hours but do need to spend some time reading books and speaking to people that have done it before otherwise you might learn a very hard lesson if you do not get the strategy right.