What should I do....

[Korg]

Guys, I am a newbie here, and this is my 1st post as well. got lots from this forum

My partner and I bought our first house about half year ago, actually it's a two bedroom unit, quite good location. Self using only, no sub-letting at the moment.

We wanna buy an investment property under $200,000. Intinally apartment has been seriously considered, we have been to a few open homes and read some posts on Property Talk, we pretty much give up this idea so far. coz hardly to get capital gain, really small floor area, pretty narrow target market, and heaps of new built apartments as well. it's really hard to get positive cash flow.

Like the listing I saw, 23 square meters Studio, really handy location, Wakefield street, AKL city, bottom price for is around early $110,000, and weekly rent is about $230, returning is about 8% or little bit more than that.

My worry is depreciation, inflations market demand...sort of things, not sure if it gonna be selling for $110,000 in three or four years.

Except apartments, we really do not have any idea what sort of property should invest to get good return to cover the loan and expenses.

Experts, please, please help us.

[Stevegoodey]

Hi Korg,

And welcome, most people in your situation would look for a doer upper or a property that they could add some value to.
This has been the norm for the last few years but more recently this has become harder and harder as everyone else is after the same thing.

My advice would be to look at stand alone homes or home and incomes if possible.
See if you can find a big 2 bedroom property that can be divided into a 3 bedroom without moving any external or load bearing walls or a 3 that would make a nice 4.

Other than that look for a real dog of a property and get it under offer before anyone else, then do your due diligence during the conditional period.
This way your not doing a load of work on a deal you will not get.

Over all I would say congratulations on taking the first step, and welcome to the property game.

Steve

[Korg]

Thanks Steve, really appreciate your advise.

I strongly agree with your opinion that invest a stand alone property rather than apartments. But due to my budget after purchasing my 1st property...not much to invest a two bedrooms stand alone property. We have saw one property in Kingsland, one of the two bedroom unit in a ten units block, upper level, asking $200,000, this listing always pops up to my mind, it's quite cheap, and handy location as well, mins walk to kingsland Village. I am just wondering if this property is the same sort of stand alone property you mentioned?

Also I am not sure how hard to borrow money from bank for my investment property, coz my first house just bought for more than half year. not long actually.

Sorry for my questions, really excited to find this forum...too many question for me, a newbie

Cheers

[revdev]

Hi Korg,

Personally, I think a unit (as opposed to an apartment) is a great place to start.

They are normally fairly cheap, bulletproof (concrete block), easy to renovate and easy to fund. With units you are allocated an equal (but sometimes undivided) share of the section e.g 1/6 of 1500m2 if a unit was in a block of 6.

Another advantage of buying a unit is that it gives you the inside running to buy more of the block as they come up.

BTW, thanks for dropping the big blue font!

All the best!
G

[Korg]

Hi Korg,

Personally, I think a unit (as opposed to an apartment) is a great place to start.

They are normally fairly cheap, bulletproof (concrete block), easy to renovate and easy to fund. With units you are allocated an equal (but sometimes undivided) share of the section e.g 1/6 of 1500m2 if a unit was in a block of 6.

Another advantage of buying a unit is that it gives you the inside running to buy more of the block as they come up.

BTW, thanks for dropping the big blue font!

All the best!
G

Hi revdev,

Thanks for that, haha, you were pretty quick to find out font size changing. you right, "big blue" is too blue to read properly

That's right, the unit I bought is the one you mentioned, sharing land with the others, pretty good, luckily not many units in my block.

My worries at this stage - next property, investment property with my very tight budget...wanna 100% or 95% loan for the IP and rent it out, hopefully rent can cover most of the morgage...

Just leave the font in black

[revdev]

My worries at this stage - next property, investment property with my very tight budget...wanna 100% or 95% loan for the IP and rent it out, hopefully rent can cover most of the morgage...

A good Mortgage Broker should be able to get you into a 95% - 100% loan.

For this option, in my experience, the lenders would look for you to have good cashflow or income behind you (servicability) rather than your LVR.

Believe it or not, I heard recently of a lender approving a deal which took a guy to 99% LVR - yes thats right, 1% equity!...but huge cashflow behind him. Pretty crazy stuff.

All the best
G

[Traff]

Hi Korg

Have you got any likeminded friends that are looking to do the same thing as you, you could go into a property together and halve the costs which would make it more affordable - you would also gain a lot of experience from it and maybe make enough money to go it alone next time. Just a thought!!!! Good luck and i hope everything turns out ok.

Shazza