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  1. #1

    Default newbie ques: 1st IP... Apartment or house?

    hi all,

    As a newbie I really have hard times making up my decision to buy a house or apartment for my first IP...

    My situation is:
    cheap apartment: I can afford possibly 10-20% deposit in the very near future;

    average house: I can only afford 5-10% deposit the most in the near future, and 20% will take me several years to save this amount of money.

    either house or apartment, Im not living there and it will go for rent.

    I will probably keep $3000-5000 for buffer to pay off any urgent fees.

    I will try to keep my mortgage payment as fast as possible.

    I have a feeling that apartment does not have capital gain as much as house, but seeing myself cannot afford to buy average house in the near future (say 2-3 years for 20% deposit) unless Im paying much expensive mortgage...just like you work for the bank for your rest of your life.

    So I really need some advise even before I approach any property management agent

    Please advise.

  2. #2
    Join Date
    Jun 2004
    Location
    Auckland
    Posts
    2,103

    Default

    Hi sega88, welcome to the forum.

    If you are located in Auckland and considering buying CBD apartments, be very careful. There has been a number of posts on this topic, so be sure to read them to get a better understanding of the market. A large number of apartments, many of them are cheap boxes, are coming onto the market this year.

    I suggest you go and look at many houses and apartments to get a general feeling.

  3. #3
    Join Date
    Sep 2004
    Location
    North Canterbury
    Posts
    154

    Default

    Hey Sega88,

    Just a heads-up - have you checked with banks/broker to see how much the banks will lend using an apartment as security? It used to be a lot less than what they would lend against a house, but things may have changed.

    Good luck,
    Lynda.

  4. #4
    Join Date
    Dec 2004
    Location
    Christchurch
    Posts
    126

    Default

    You definitely have to be careful which apartment you buy. I have just bought one, but made sure that it had a higher resales value by being 85msq 2 bdrm, 2 car park, e.t.c.

    Those shoe boxes for sale in Auck CDB are very small.
    Banks are conservative when lending on apartments under 40-50 msq.
    And thnk about the future......who would be in the market to buy it off you in 10 years time ?

    I think apartments are no riskier than houses, you just need to do your homework, and make sure there are no detracting features, and that it will be still a valuable asset longterm.

    You may also be able to buy a house with a small deposit as many lenders will now lend up to 100% if you qualify, so you might like to look at that option as well. Maybe get some advice from a mortgage broker on who offers 95-100% finance, and what the criteria is

  5. #5
    Join Date
    Mar 2004
    Location
    Thames, NZ
    Posts
    477

    Default

    Where are you buying Sega?
    How do you eat an Elephant?
    One Bite at a Time!! (Source: Spaceman)

  6. #6
    Join Date
    Dec 2004
    Location
    Sydney, Australia
    Posts
    413

    Default

    My advice would be against buying an apartment in the short term. As others have indicated here there is a large supply of inner city apartments in the main centres, with development continuing to add to the supply. With lower immigration levels for the key tenant market for these apartments it all points to one thing, a skewed supply vs. demands balance in favour of supply. This potentially could have a negative affect for both purchase price and rental for the your investment meaning capital loss and making it harder to afford your mortgage repayments. In the long term it means that you could pick up some bargains for these types of investments but I don't think that is the case as of yet.

    My advice would be to speak to a good mortgage broker and see exactly what your financial position is and what you can borrow to, you may be surprised to see houses may be more affordable for your circumstances than you think.

    Cheers

    LK

  7. #7
    Join Date
    Jun 2004
    Location
    Auckland
    Posts
    2,103

    Default

    There are about 10,000 apartments in Auckalnd CBD. About 3900 units are coming this year and 1600 in 2006. About 70% of apartment sales are to investors, so you see the market is very volatile.

  8. #8

    Default

    Thanks for the reply. yes Im in Auckland so initially I was planning to invest in Auckland, I do realised that apartment property maybe a risk with low equity gain from a specialist point of view....any forums here more focus on apartments? how many people here invest on apartment like wildwest?

    havent check with banks/brokers yet....should I check with them even Im not ready? (say how much can borrow for apartment vs house) Im stiill at the research stage and this is the most frustrated part I guess...too confuse...there are so many people saying they are consultant, property management company etc...are they really trustable?? I rather like to let them take care of my investment if they are any good....too good to be true huh.

    I do think I have a stable job so it should not be too hard borrowing 90-95% with a premium cost (even 100% huh~?) but its a huge amount of money...one single wrong move and Im gonna suffer badly...especially for newbie.

    Also seeing the market now is really at its peak wave the moment, why investor still step in at this stage? should I save some more money first and invest later? I always ask myself these questions....what should I do next then?

  9. #9
    Join Date
    Sep 2003
    Location
    High up above and deep down under
    Posts
    10,915

    Default

    Hi sega

    You are betwit and between a rock and a hard place.

    I suggest that you spend some dollars and go and have a talk with Andrew King or with Kieran Trass. It will be money well spent.

    But make sure you have some goals first.

    Contact details for:
    Andrew:
    http://www.propertyinvestor.info/
    Kieran:
    http://www.hybridgroup.co.nz/

    Both post on Propertytalk.

    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

  10. #10
    Join Date
    Dec 2004
    Location
    Sydney, Australia
    Posts
    413

    Default

    Personally if I was a new investor I would save a higher deposit and look to see what happens in the market over the next 12 months.

    Save this link as a bookmark and gleam from it what you can re the property market and what 'could' happen over the next 12-24 months.

    http://www.bnz.co.nz/About_Us/1,1184...9-1567,00.html

    Ask as many questions as you can on forums such as this, school yourself up on books on property investing (there are a number for sale on this site - do a search for the top 5 reads on this site) and use those professionals that have actually been recommended from fellow investors rather than those that say they are the experts.

    Good luck.


    LK


 

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