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Looking to invest $500/600k in Hamilton. Any suggestions on good areas?

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  • Looking to invest $500/600k in Hamilton. Any suggestions on good areas?

    Hello to all experienced investors,

    We are considering to look at investing in Hamilton for a 3 bedroom, ideally 2- bathroom brick and tile house on freehold title in good parts of Hamilton with good tenants. Our budget is $500-600,000 and we don't mind having to top up to say a weekly of around $100 to cover for rates and property management fees etc on top of the mortgage repayment. it will be a 100% loan using equity from our existing family in Auckland that we currently live in. We are more keen on better parts of Hamilton with good capital growth potential as we may sell after say 2 years so that we can release all the cash to help with paying down the mortgage on our current family home ( by the end of this year our mortgage on our family home will be around $280,000 and our house is worth about $1M in this current market).

    Any suggestions on which areas we should look at in Hamilton OR can we still find something in Auckland at this moment with good capital growth in the next 2 years with a price up to $750,000 at this market( we can go up to this figure if we wish to at this point).

    Thanking you all for reading my thread

  • #2
    No expert on Hamilton so not much help sorry, more of a heads up to get good advice re structuring, as you will be liable for income tax on any profits made- I assume that you want to hold for two years to avoid the bright line test, but alas that's not the way it works. Sounds like you want to take a punt on the cash cow (according to media) that is property investment for a couple of years so, if so good luck. But remember there are no guaranteed capital gains and who can say for certain what will happen to prices in the next two years.

    Regards

    Craig

    Comment


    • #3
      Originally posted by Maple17 View Post
      Hello to all experienced investors,

      We are considering to look at investing in Hamilton for a 3 bedroom, ideally 2- bathroom brick and tile house on freehold title in good parts of Hamilton with good tenants. Our budget is $500-600,000 and we don't mind having to top up to say a weekly of around $100 to cover for rates and property management fees etc on top of the mortgage repayment. it will be a 100% loan using equity from our existing family in Auckland that we currently live in. We are more keen on better parts of Hamilton with good capital growth potential as we may sell after say 2 years so that we can release all the cash to help with paying down the mortgage on our current family home ( by the end of this year our mortgage on our family home will be around $280,000 and our house is worth about $1M in this current market).

      Any suggestions on which areas we should look at in Hamilton OR can we still find something in Auckland at this moment with good capital growth in the next 2 years with a price up to $750,000 at this market( we can go up to this figure if we wish to at this point).

      Thanking you all for reading my thread
      South Auckland or Mangere Bridge/Mangere East.

      There are plenty of apportunies in these and I think they will hold value better than Hamilton should there be a downturn before you sell.

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      • #4
        If your investment horizon is 2 years property is not the best fit... Sounds like you're confusing property investment with a trip to sky city.

        Comment


        • #5
          Saint Andrews and Hamilton East you could get great properties with sound structure at this price. In particular, Saint Andrews as it is a very well established suburb and extremely easy to tenant.
          www.PropertyMinder.co.nz
          # Property Management
          # Ad Hoc Tenancy Services / Rental Inspections / Terminations and Notices

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          • #6
            Maple17 - I wonder if your strategy could be more thought through. If you pay your mortgage down - if that is the goal, then taking a 2 year option for a good capital gain could be risky. Also what if your plan works and you pay your debt down to $0. What then? At some point you will need to reinvest - you may do it after a few years of being mortgage free - by that time you could be paying a lot more for a property.

            If your time line is short, property investment maybe a risky bet as you can sometimes be caught out in a down market - if this is the case you will want to have good cash flow from the property so not to risk selling in a down market and being left with a higher mortgage than what you started with.
            Hamish Patel | ph: 09 625 4693 | mob: 021 625 693
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            • #7
              Thank you all for your comments and suggestions. From all the feedback I have so far, I am now thinking if we are better to stay in Auckland or down to Hamilton instead (or maybe Tuakau or somewhere closer to Auckland) for an investment property ?

              Comment


              • #8
                A 2 year window is pure speculation, which isn;t necessarily a bad thing but you are assuming property is a sure thing short term. The fact is it isn't, all investments have risk. So if you want to buy a rental and minimise the risk of losing money if you have to sell quickly Auckland is going to be hard to beat however Hamilton is early on in the boom cycle so is also a good choice. I would buy in Auckland. An area coming off a lower base like Papakura or even Tuakau, Waiuku, Pokeno. All those areas are going nuts so get in now you will get some growth hopefully.
                But for safety you should take at least a ten year view not a two year one.

                Comment


                • #9
                  Unless if you find a good deal in Auckland, I would still recommend investing in Hamilton at this time.
                  www.PropertyMinder.co.nz
                  # Property Management
                  # Ad Hoc Tenancy Services / Rental Inspections / Terminations and Notices

                  Comment


                  • #10
                    Hi Maple17,

                    Have you looked at the gross yield and overall cashflow on a rental in Auckland or Hamilton?

                    Are you really looking for an investment or a speculation? You just need to be clear yourself and what your potential risks and rewards are!

                    If you are only aiming for 2 years, be very careful that the market could turn and you could be caught with a property you no longer want in a market where things are not selling. Ie in the last cycle the market in Hamilton was very flat from early 2008 to early 2015, so yes could be a 7 year wait!!!

                    Ross
                    Book a free chat here
                    Ross Barnett - Property Accountant

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                    • #11
                      Thanks for all your feedback again.

                      Financially we can hold the investment house to be longer than 2 years if it is better that way. I guess we would consider selling in that shorter time frame if we say want to reduce the mortgage in our family home or use the proceeds/gains from the sale to start up a small business in about 2-3 years time if things work out that way.

                      Comment


                      • #12
                        You are not an investor, you are a speculator.

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                        • #13
                          How long would it take you to pay off your house anyway and hold the investment property too if it was on 100% lending?
                          Free online Property Investment Course from iFindProperty, a residential investment property agency.

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                          • #14
                            Hi Nick,

                            I think it will take us about 8-10 years to pay off the full $280,000 mortgage on our family home base on my husband's earning capacity from his fairly stable full time job and also if I go back to some part time position next year earning about $300-400 net per week. In this way, we can also hold on to the investment property in long term say up to a purchase price ideally to early $600s (max. about $750,000) in this current market. ( we have 3 primary school age children so guess we made our decisions from a more conservative prospective medium to looking long term). Thanks

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                            • #15
                              Based on all that buy in Auckland and aim to keep it. Use the equity to start the business.

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