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    Hi everyone,

    I would love to hear your opinions on this Portfolio and your thoughts on it in regards to risk, set up and future plans.

    At this stage we have all properties with the one bank but are considering a split banking strategy through a broker.
    Would love to hear the pros and cons of having all properties with the one bank if anyone has had past experience with this.
    I have a fair idea of many of them but its always good to hear others stories and experiences good and bad.

    All properties are based in good central locations on the North Shore in Auckland.

    Property 1 - Valued at 1.8m (Mortgage free) Family Home
    Property 2 - Home and Income 3 bedroom and 2 bedroom houses on one title valued at $1,050,000 (Mortgage $895k) returning $930 per week
    Property 3 - 2 bedroom valued at $850k (Mortgage $650k) returning $550 per week

    All properties to top up per week for rent, insurances, maintenance and council rates on a 4.69 interest rate is around $300 per week on interest only loans. This is based on a 5 year rate we have been offered. If we go with a one year rate we have been offered it leaves us cash flow neutral.
    Our plan is to pay down the properties over the next 5 years while rates are low and we have excess cash per week and per year.

    Would love to hear your thoughts on this and if you consider this to be a safe position and plan.
    Obviously we will also need to take into account untenanted property periods and maintenance etc
    We are also looking to purchase another one in few years time which we believe will be near the bottom of the next dip.

    Thanks for your time.

  • #2
    Originally posted by Allinthegame View Post
    Property 1 - Valued at 1.8m (Mortgage free) Family Home
    1.8m in badly used capital makes me cry.

    Comment


    • #3
      Would be interested to hear what you would do differently then?
      We have purchased these other properties to pay down and have set up for retirement.

      Comment


      • #4
        Originally posted by elguapo View Post
        1.8m in badly used capital makes me cry.
        Not me, our PPOR is worth nearly that much and is mortgage free.

        Means if I f**k up royally we still have the house. Yes it slows down the money making but how much do you need?

        I think the above portfolio sounds OK. I myself wouldn't be looking to purchase another one until those mortgages were small though.

        Having said that, it all depends on salary levels etc.
        Squadly dinky do!

        Comment


        • #5
          Interested to see others' replies as we are in a similar situation.

          Comment


          • #6
            I guess it depends on what you're trying to achieve. If you have enough spare cash to pay down that debt in 5 years, then I don't think it matters too much what you do as long as your income is stable.

            Some people would say to sell them and buy 10 houses in Tokoroa but that might not be the sort of investment you enjoy, even if the cash flow might be better. I've come to put much less value on absolute dollars and much more value on stability and security of the investment over the years.
            Last edited by drelly; 09-08-2016, 04:19 PM.
            You can find me at: Energise Web Design

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            • #7
              Originally posted by Davo36 View Post
              Not me, our PPOR is worth nearly that much and is mortgage free.
              Means if I f**k up royally we still have the house. Yes it slows down the money making but how much do you need?
              I think the above portfolio sounds OK. I myself wouldn't be looking to purchase another one until those mortgages were small though.
              Having said that, it all depends on salary levels etc.
              How much house do you need vs how much income you need etc. Without understanding more about someones goals and situation, it's very hard to comment on their current position is.

              Assuming this person has a high income and many earning years left with little risk of that changing, it's fine.
              If they are near retirement, unstable/low income, not so much.

              Comment


              • #8
                Originally posted by Allinthegame View Post
                We are also looking to purchase another one in few years time which we believe will be near the bottom of the next dip.
                Just a question, if you believe there will be a 'dip', why are you not selling? I can't see how you will be positioned for buying in this 'dip' without very significant borrowing, unless you can pay off capital at a truly staggering rate. What makes you think this dip won't impact your income, rents and ability to borrow?

                Comment


                • #9
                  All valid points. We have been reluctant to sell as the properties we have are really good ones and located well next to shops and transport.
                  We plan to hold long term. It may well be that we don't purchase any others and just hold on to these for the future.

                  Comment


                  • #10
                    I think you should look to add cashflow because you are CF negative at historically low interest rates. That probably means you need to go out of Auckland or look at apartments. What happens if the RBNZ blanket bans interest only loans going longer than 5 years or something like that?

                    Your ROE is going to be quite low at today's values.

                    I would sell one and buy a multi income in Wellington or ChCh that makes the portfolio cf neutral. Or buy a couple if you don't mind borrowing against your PPOR.
                    Free online Property Investment Course from iFindProperty, a residential investment property agency.

                    Comment


                    • #11
                      We are seeing a lot of good properties in Wellington post LVR announcement.
                      Free online Property Investment Course from iFindProperty, a residential investment property agency.

                      Comment


                      • #12
                        If you're going backwards in such a low interest rate environment the conservative view would be to get some higher yielding investments. Of course the likelihood of ongoing low rates mitigates that risk but you really want your assets to be paying themselves off when rates are at 4%. You could go outside of Auckland and find cash flow relatively easily. Your biggest risk is .that if you don't do enough debt reduction and interest rates go up again you are in a less than brilliant position.

                        Comment


                        • #13
                          4.69% sounds high. I've not had much luck with 5yr rates.
                          Tend to stick to 2yrs now - my crystal ball is like most economists - wrong.
                          With interest rates so low making extra principal repayments has never been so easy.
                          I/O loans I've found to be a mistake - even with good capital gains.

                          Your valuations are very dependent on the crazy market.
                          More like:
                          $550pw rent @5% cap rate = $572K (Ouch!)
                          $930pw rent @5% cap rate = $968K
                          It wasn't that long ago it was 7% cap rate or even 12%.

                          Well done on getting PPOR mortgage free.
                          She who must be obeyed won't let me mortgage ours ;-(
                          The three most harmful addictions are heroin, carbohydrates and a monthly salary - Fred Wilson.

                          Comment


                          • #14
                            Are all of them cross collateral? Is the mortgage in your own home discharged?

                            If you have 2 properties with the same lender and are refinancing one away while the new lender is likely to honour an approval, the existing funder may cause issues as above by requiring more funds to be repaid to keep the LVR at 60%.
                            And if you are selling then the bank can pay you less taking LVR to 60%

                            Comment


                            • #15
                              Originally posted by Bluecoat View Post
                              Are all of them cross collateral? Is the mortgage in your own home discharged?

                              If you have 2 properties with the same lender and are refinancing one away while the new lender is likely to honour an approval, the existing funder may cause issues as above by requiring more funds to be repaid to keep the LVR at 60%.
                              And if you are selling then the bank can pay you less taking LVR to 60%

                              Hi, we are looking to refinance 2 with different banks and keep the family home with our original lender but remortgage it to sort the LVR's on the other properties.

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