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  1. #11
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    Hi Guys

    RonHoyFong wrote
    In saying this my buying rule are to ensure anything I buy is a minimum average of 10.5% gross return before tax.
    Ah ha. Shades of the 11 sec rule.

    Regards
    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

  2. #12
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    Feb 2005
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    Quote Originally Posted by Glenn
    That all makes for interesting reading Ron.

    One or two thoughts.
    whilst Auckland is bigger than the rest of NZ and has always had a life of its own it is not the only place that us baby boomers are able to live and make a living.

    Aucklanders have always suffered from myopia. It might be big by NZ standards but is a baby compared with other big cities around the world.

    Ron has some flaws in his argument.
    It all sounds great and looks good to buy lots of cash positive properties. As you get older most investors are less able to handle what that implies..........


    As well as the street skills one needs you also need to be part social worker in order to reach empathy with your tenants and motivate them to put the rubbish out, and pay the landlord rather than the pokie man.
    Hi Glenn from Nelson (Mainland NZ)

    My suggestion of buying lots of cash positive properties was aimed at all investors and not just the Baby Boomers retiring.

    You are correct and your views from outside of Auckland is very much part and parcel for the NZ as a whole. I guess I was being a bit simple to speak of what energy I might have left in me when I turn 65 years in year 2013 to look after properties. However I had consider perhaps consolidation of property numbers, reducing LVRs, turning to commercial, or more than likely placing it into the hands of Property Managers so that it will allow me to secretly sit side by side with tenants at the pokies. Maybe my kids will look after the properties when it’s all transferred into a Trust?

    Sorry - when I was talking about Auckland I meant it in a regional sense, and also as an example nationally for those readers out of town. It’s just that I am a 3rd generation Aucklander and hence refer to it because of familiarity to this area. I haven’t really looked at outcomes of other cities in depth in any way other than what I am picking up through property trends in public editorials. This is where I call on thoughts of other forumites for input

    I acknowledge my can do attitude won't last forever but hopefully I can achieve most of my goals by 2010. (Didn’t seem so long ago we were all celebrating New Years Eve 2000 millennium.)

    Even if us retiree are cashing in our properties, I still see an even number of migrants needing a bed wanting to buy and therefore don't see a drop or crash in property values.

    Conclusion - Is there "to be or not to be" a "Boom of all Booms?" (by William Shakespeare + Ron)

    Thanks Glen, your input is valued

    Cheers Ron
    Last edited by donna; 27-07-2017 at 01:08 PM.

  3. #13
    Join Date
    Jan 2005
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    The trouble with trying to second guess what might happen in the future is that there are so many variables that could change everything. It relies on the status quo continuing.

    For example, China and Taiwan look to be squaring off at each other more strongly than they have for a while. Suppose that evolved into WW3. Or suppose the government was to lift the age of retirement to 75 one piece of legislation could change the playing field considerably.

    There are just too many variables. Ron you may have hit it spot-on, but equally, you could be so far off the mark that it will be laughable. Only time will tell.

    Personally, I'm having more than enough fun trying to come to terms with what is, without trying to fathom what will be.

    Julian.
    Gimme $20k. You will receive some well packaged generic advice that will put you on the road to riches beyond your wildest dreams ...yeah right!

  4. #14
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    Feb 2005
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    Auckland
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    Quote Originally Posted by RentMaster
    One other thought.

    If New Zealand is reaching retirement age because of the baby boomers, then the same is going to happen in a lot of other countries around the world as well. So if people are retiring all over the world, and they too are trying to attract immigrants, then where are all the immigrants going to come from? We surely only want to accept in people with skills who can add to the economy, and not to the welfare system.
    Hi RentMaster

    (Your software for Landlords and Property Managers is brilliant)

    Your other thoughts regarding the same problem happening with baby boomers in other countries I covered in the beginning under "Consideration + Outlook" paragraph 5

    5. Where will the migrants actually come from? Naturally a balanced globalization of migrants is ideal, however I don’t actually see this happening, because UK and Europe likewise will have their own Baby Boomer problem. Australia has always appeared to be a lot more attractive than NZ so its unlikely boatloads of Australian will come to NZ. China by then may not be an answer because of their one child policy since 1980 and so themselves will start to have there own employment shortage problems around 2020. Japan is having their problems already. Probably through the losses they encountered in the WWII and insufficient regeneration?
    6. Migrant may either come from third world countries such as South America, Africa, or the Middle East. The alternative choice I would see is South East Asia, India and /or the Pacific region where it is over populated, has influences of Westernisation and at least many of the migrants will bring with them the work ethic and the financial means to set themselves up in NZ. I can’t see the point for NZ allowing surplus migrants from a region that will end up being a further burden on this country's finances in the earlier years. However this all comes down to an immigration policy of the day.

    Yes I absolutely agre with your thoughts, but will there be a BOOM OF ALL BOOMS around 2010 to 2012. If so, what is the ACTION to follow?

    Cheers Ron - and thanks for your valued input
    Last edited by donna; 27-07-2017 at 01:08 PM.

  5. #15
    Join Date
    Feb 2005
    Location
    Auckland
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    Quote Originally Posted by cube
    Quote Originally Posted by RonHoyFong
    In saying this my buying rule are to ensure anything I buy is a minimum average of 10.5% gross return before tax.
    Is that on purchase, or after you have renovated?

    cube
    Hi Cube! Hi Muppet

    I look at it on the after I have renovated cost.

    e.g. I look at the potential gross annual rent I expect to achieve after renovations divided into the purchase price plus renovation cost to achieve the % return.

    However if my current rental % should increase over the existing properties I will be a little flexible on my rules when that happens. On the other hand if the current floating interest rates drops below 8% again likewise I will also relax my 10.5%.

    For most non-Rent Reliant Borrowers the following simple formula should apply
    Current Floating Interest Rate (CFI) + 1.5% = Minimum Gross Rental Return % (MGRR%)

    As a Rent Reliant Borrower I use CFI + 2.5% = MGRR%

    My suggestion to all newbies is to stick to nothing less than 10% untill we see a relaxation of interest rates.

    In saying this I think there is another more accurate rule where Gross Rents x 70% is used?

    Cheers Ron
    Last edited by donna; 27-07-2017 at 01:08 PM.

  6. #16
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    Auckland
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    Quote Originally Posted by Julian
    The trouble with trying to second guess what might happen in the future is that there are so many variables that could change everything. It relies on the status quo continuing.

    For example, China and Taiwan look to be squaring off at each other more strongly than they have for a while. Suppose that evolved into WW3. Or suppose the government was to lift the age of retirement to 75 one piece of legislation could change the playing field considerably.

    There are just too many variables. Ron you may have hit it spot-on, but equally, you could be so far off the mark that it will be laughable. Only time will tell.

    Personally, I'm having more than enough fun trying to come to terms with what is, without trying to fathom what will be.

    Julian.
    Hi Julian

    (Hope by now that Phil Jones at Richmastery has replaced that stolen set of DVDs on my One Day Workshop with a complimentary set, if it hasn't arrived yet it's because of me getting your details to Phil late)

    You are correct that there are so many variable to contend with so hence the purpose of this discussion to better prepare us for the next property cycle.

    At the moment should we just keep buying Flat-Tat like I've been doing or slowdown and be conservative?

    Conclusion - Will the next property Boom be the Boom of all Booms

    As the saying goes: Vision without ACTION is a dream, Action without VISION is a nightmare.

    Cheers Ron
    Last edited by donna; 27-07-2017 at 01:08 PM.

  7. #17
    Join Date
    Jun 2005
    Location
    Nelson NZ
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    Ron

    Looks like we both have a retirement party the same year. Are you coming to mine or are you inviting me to yours.
    Good to see your family have been in Auckland for a while.
    I can beat that I am a fourth generationer with the first Aucklander being born there in the year of 1855. Actually born outside of Auckland on Great Barrier Island but lived all her life in various parts of Auckland.

    Having been into commercial pretty well from the begining of my investing life, I can assure you that whilst there are decided advantages it also has its days and problems. In fact in hind sight I should have bought more residential rather than commercial four years ago.
    Do not think there are no good commercial deals around in todays overheated market. For instance I bought last year with a syndicate into a large commercial that brings in 10% net after management. The internal rate of return (after tax is taken into account for the partnership that owns the property) will be in fact over 10%.
    We had to look outside of our own little city to do this though and there are some things in the future that would put some people off.

    So my point is do not look forward to the day when it will all change into a wonderful life of bliss and no worries by planning to slip out of one market into another.

    Rather do both at the same time.

    Regards

    Glenn

  8. #18
    Join Date
    Feb 2005
    Location
    Auckland
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    Hi Glenn

    "You and your Partner are cordially Invited to the 65th Big Bash of Ronald Hoy Fong (QSM, JP) on 7th July 2013." - RSVP by 1st July 2013

    The views from a Baby Boomer prospective I believe is so important, because investing now to cash in on the next property boom cycle leaves us only one chance to enjoy the benefits of the wealth if born pre 1950. Excess money is really not going to be too much use after the age of 75 years for traveling other than the purchase of a BMW wheelchairs.

    Sadly to say I know of so many Baby Boomers who have invested strategically wrong into -CF properties.

    So getting the investment strategy right is so important

    Its interesting to think that anything you buy today (starting at the age of 20year) that every $100k of property purchased will potentially worth over $3m in 40 years time.

    Cheers Ron


    Question: Will the next Property Boom be the Boom of all Booms?
    Last edited by donna; 27-07-2017 at 01:08 PM.

  9. #19
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    Glenn
    There are still a few good commercial deals around, though they are certainly thinner on the ground.

    In a reversal of the usual scenario I'm finding currently the better yields (and better deals) are to be found in the bigger cities. The smaller cities and larger towns seem to be getting a little bit silly with the prices they are asking.

    Perhaps property is like shares - in that when one finds lots of people paying silly money it is better to be selling than buying.

    Ron,
    There is a parcel waiting for me at the PO but I haven't had time to retieve it as yet. Fingers are crossed.

    An interesting posting that has got people thinking.

    Julian.
    Gimme $20k. You will receive some well packaged generic advice that will put you on the road to riches beyond your wildest dreams ...yeah right!

  10. #20
    Join Date
    Jun 2005
    Location
    Nelson NZ
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    Quote Originally Posted by Julian
    Glenn
    There are still a few good commercial deals around, though they are certainly thinner on the ground.

    In a reversal of the usual scenario I'm finding currently the better yields (and better deals) are to be found in the bigger cities. The smaller cities and larger towns seem to be getting a little bit silly with the prices they are asking.

    Julian.
    Absolutely correct about the small city commercial prices. We bought in Christchurch (if that is counted as being a bigger city). Our prices here are killing the goose a bit. Some of the real estate agents are quoting rents that are unobtainable. I attended one auction here that was quoting industrial space at $120/m compared with typical rates of $70 to $90.

    Its interesting to think that anything you buy today (starting at the age of 20year) that every $100k of property purchased will potentially worth over $3m in 40 years time.

    Cheers Ron
    If there is one thing that I regret about this property stuff is not doing it 20 years (sorry make that 30) ago.
    My $22000 home that I bought at that time in is now worth a bit more.
    I do recall looking at a little investment flat back then that would not have killed us. The clever accountant (AKA for wife) said we could not afford it and so passed on it. Goodness we could have done with the cash flow that little flat would produced over the years.
    I then looked into investing in real estate back in the heady share days of mid / late 80's after making a small fortune on the share market. Nothing made economic sense those days with the interest rates so high and rents so low. So we prudently left the money on the market (took enough out for a year off work and OE) and lost most of it. Hows that for being prudent.
    So yes there are some nasty years if not decades in property that are not too good but if you can hang on there with prudent LVR it will look after you.
    Glenn


 

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