I am hoping someone can give some advice on taking yen based loans for NZ rental properties. I have read what I can on the web about this, but the information generally seems sparse, old and on tacky websites that suggest they are not going to be the originator of the loan.
My general hypothesis is that I earn Japanese yen (approx. nzd200,000 of which approximately nzd80,000 can be put away without any real pain) so the fx risk is limited on one front. From recent memory the yen has sat at about 70-77 yen per dollar (I will do the proper stats analysis on this sometime soon). At the moment it is sitting at 60.5 yen to the dollar, so considering the elasticity of the currency pair I might be able to make something on a possible currency move over the course of a few years. Then of course there is the interest rate. I am not absolutely sure of where it would sit - but from what I have read it seems as if it would sit a few hundred basis points below what I would get from a nz bank back at home - which makes sense as nz has some of the highest interest rates in the world and japan has some of the lowest.
So, here I am with a hypothesis that is very much only surface deep. I am only just starting to look at whether this makes sense or not. I would like to know from the community what pitfalls I might need to watch out for over and beyond being a local market buyer using a nz originated mortgage. I am also interested in hearing from people who have done this and hearing what their experience was like - and of course who would be reputable to use as the loan originator/broker for the loan.
At 40 with a wife, one kid and another on the way it's about time I started accumulating a nest egg - I am thinking this might be a good way to force a disciplined approach - not so much concerned about capital gains as much as a steady income from a rental property that more or less can pay for itself once I have put the 30% down for the loan - with that said we would probably put an extra nzd50,000 into paying off the mortgage each year. If my assumptions above are correct, I can't see why this wouldn't be possible - and could do with some more knowledgeable types telling me why it might not happen as envisioned.
All thoughts and ideas are appreciated. With being out of nz for most of my 20's and 30's I feel extremely green in this area.
Thank you in advance.
Stuart
My general hypothesis is that I earn Japanese yen (approx. nzd200,000 of which approximately nzd80,000 can be put away without any real pain) so the fx risk is limited on one front. From recent memory the yen has sat at about 70-77 yen per dollar (I will do the proper stats analysis on this sometime soon). At the moment it is sitting at 60.5 yen to the dollar, so considering the elasticity of the currency pair I might be able to make something on a possible currency move over the course of a few years. Then of course there is the interest rate. I am not absolutely sure of where it would sit - but from what I have read it seems as if it would sit a few hundred basis points below what I would get from a nz bank back at home - which makes sense as nz has some of the highest interest rates in the world and japan has some of the lowest.
So, here I am with a hypothesis that is very much only surface deep. I am only just starting to look at whether this makes sense or not. I would like to know from the community what pitfalls I might need to watch out for over and beyond being a local market buyer using a nz originated mortgage. I am also interested in hearing from people who have done this and hearing what their experience was like - and of course who would be reputable to use as the loan originator/broker for the loan.
At 40 with a wife, one kid and another on the way it's about time I started accumulating a nest egg - I am thinking this might be a good way to force a disciplined approach - not so much concerned about capital gains as much as a steady income from a rental property that more or less can pay for itself once I have put the 30% down for the loan - with that said we would probably put an extra nzd50,000 into paying off the mortgage each year. If my assumptions above are correct, I can't see why this wouldn't be possible - and could do with some more knowledgeable types telling me why it might not happen as envisioned.
All thoughts and ideas are appreciated. With being out of nz for most of my 20's and 30's I feel extremely green in this area.
Thank you in advance.
Stuart
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