too scared to make a move

[karenpnz]

You are obviously risk averse which is not a bad thing. So just minimise the risk as much as possible ie. make sure you are not overinvesting. Can you afford to pay for the property if in worst case scenario it is untenanted for a time? I was terrified buying my first home but I did it anyway. I did a LOT of research first though. And I lived in the home myself and got in flatmates for a few years and I aggresively paid down the mortgage as quickly as I could so that the rent now covers the mortgage etc. Absolutely no regrets, it is the best thing I ever did. Now five years down the track I think I am ready to buy my second home. So in short just do it, four years is enough dithering!

[frazzledfozzle]

Thanks everyone for taking the time there's some good advise there and I will have a stern talk to myself and get something happening.
I will be sure to post here first when I find something I like just to make sure I'm on the right track

[donna]

Mindset is everything - I think you need to work through your 'worries' before you take any action. I may be the opposite to you frazzledfozzle I worry I am not taking action and therefore not doing all I can to build up my equity by investing and leveraging.

cheers,

Donna

[mrsaneperson]

wondering if anyone has been in the same position as me and how did you turn things around.

I want to get into property investment, buy and hold principle and interest with the view to having them paid off by the time I retire and live off the rental income how ever I have a problem I'm too scared to take the plunge and even buy 1 property.

I know that I would have to have a property manager because I couldn't do the landlord thing I'm not tough enough I would need to invest outside my hometown of Nelson because property here is rediculously expensive but I dont want to buy in an undesirable area.

I have a small business which is going very well a lifestyle block thats freehold no debt either personal or business and savings in the bank whats wrong with me? why can't I just get on with it?

just a quick edit to say that the first time I thought really seriously about property investment was about the time I joined the forum in 2008 nearly 4 years of twiddling my thumbs, reading this forum and perusing property magazines

I would advise not purchasing property for renting out, if you do not have a good legal knowledge of the Residential Tenancies Act. It can quickly turn into a nightmarish situation for those that don't have a basic understanding of it. The term "mini lawyer" comes to mind. Real returns are very low with rental property when considering all the maintenance & tenant headaches. Over the years i have had to take onboard new skills ,some plumbing & general handyman otherwise i would be straddled with debt.Property managers are a dime a dozen & i believe there are only a few very good ones out there.

The only real return on rental property unless you have exceptional tenants year in year out is when you come to sell the property & you achieve capital gain. For this too happen you generally have to be in it for the long term or have a crystal ball to see the next land rush .

[spaceman]

^LOL.... that's a pretty jaded view.

Even though I recommended not investing in property, I would also recommend that you don't let jaded views like the one above be the reason you don't.....while what was said was true up to a point it's also true to say that lots of people have had experiences opposite to mrsaneperson and made lots of money PI without too much drama.

Cheers
Spaceman

[Clark Kent]

I would advise not purchasing property for renting out, if you do not have a good legal knowledge of the Residential Tenancies Act. It can quickly turn into a nightmarish situation for those that don't have a basic understanding of it. The term "mini lawyer" comes to mind. Real returns are very low with rental property when considering all the maintenance & tenant headaches. Over the years i have had to take onboard new skills ,some plumbing & general handyman otherwise i would be straddled with debt.Property managers are a dime a dozen & i believe there are only a few very good ones out there.

The only real return on rental property unless you have exceptional tenants year in year out is when you come to sell the property & you achieve capital gain. For this too happen you generally have to be in it for the long term or have a crystal ball to see the next land rush .

Even if you make a mistake with buying (paying more than you should), property can be very forgiving over time in terms of increasing value from capital growth (unless your property is in a town of 10 people). The above comments is very cynical point of view of property. If you have a good plan of what you want to do in terms of goals for your investing in property and have a set criteria for the property you are buying, by criteria I mean yield, area, how many bedrooms, add value, sub-divide etc, and you are determined enough you have a good chance of making it work.

That said if you cant sleep at night because of debt, then perhaps looking at other investment options is for you. All the best whatever you decide.

[DazRaz]

This best way to combat doubt is to do your homework. Read all the property investing books. Made sure you understand how it works, what the costs are, what the risks are and how to mitigate them. In the end, you will need to act.

Our first IP in 2003 was a little scary at the time but we did our homework and knew that if things turned out worse that expected, we could still manage. Since then that first IP has never been vacant. Almost want to give them notice so we can do some maintenance!

Purchase a place using a fixed rate for 2 years interest only. You will know that you can afford the place for 2 years. Credit check tenants. There are good threads here on tenant selection. Basically, that comes down to can they pay the rent and will they look after the place.

Remember too that initially the finances can be tight and the gains marginal. It gets better over time. You don't need a deposit, you don't need to repay principal - well for a few years anyway. Concentrate on paying off your own mortgage.

In the end, its not that hard.

[VirtualT]

I've jumped in with both feet and bought 2 properties in the last couple of years. Not fantastic yields (around 7%), or greatly undervalued (slightly under CV), but reasonably desirable 3 bedroom homes in average to good areas in Tauranga that should get moderate CG's, moderate rental increases and lowish vacancy rates, nice and safe, and like an earlier poster said I was more concerned with doing nothing and then kicking myself in 10 years when I could have had houses half paid. Now I'm kicking myself I should have done it 20 years ago (I'm 43) so I was a very late starter.

[ScottSI]

Davo what scares me the most is the debt and the tenant hassles, I can get round the tenant hassles by using a property manager tho. On the tenant hassles thing the program on the telly thats just finished about renters and property managers is that pretty much true to life?
I'm also not good at fixing things sp would need to pay people to be a fixer upper.

Mortgage broker no I dont want to expand I'm running at pretty much full capacity now.

One, yes freehold home on a lifestyle block

Actually Davo when I think about it a bit more the debt scares me because I worry that If I use my savings to buy property what happens if there's a downturn in my business and I need money to prop it up.

You are already in business so apply the same principals. You don't have to invest your cash to purchase a IP put it in an offset account and borrow 100% using the equity you have in your place. The offset account will save you interest but means you have the cash if needed for your business.

The debt is always scary and I was scared when I brought my first rental but as I had run the numbers, got to know the market, what was cheap and rents etc ( took 8 months of research and road trips) it made money from day one and has never missed a beat. I owe more than powerball but sleep well at night as my assets are greater than my liabilities and reduces every week as I pay principal.

You may need to look outside Nelson as hard to get bigger returns without being up Toi Toi or Murphy St etc $ 160 to 200K will get you a better place in Dunedin, Ashburton, Timaru, Oamaru, Greymouth, Blenheim.

Don't rush in, plan and get to know the numbers, talk to other investors - join a group.

[mrsaneperson]

Even if you make a mistake with buying (paying more than you should), property can be very forgiving over time in terms of increasing value from capital growth (unless your property is in a town of 10 people). The above comments is very cynical point of view of property. If you have a good plan of what you want to do in terms of goals for your investing in property and have a set criteria for the property you are buying, by criteria I mean yield, area, how many bedrooms, add value, sub-divide etc, and you are determined enough you have a good chance of making it work.

That said if you cant sleep at night because of debt, then perhaps looking at other investment options is for you. All the best whatever you decide.

If i was posting that comment more than a few years back you could say i was being somewhat cynical. But times have changed,tenants expectations have increased exponentially, the goalposts have been moved substantially . Tenants & maintenance factors are in many cases nightmarish & costly if you are not well acquainted with the RTA & are not of the home handyman type. Just calling out a plumber for an hour will cost over a $100. Thats why i have had to sharpen up on my own handyman skills. There is NO real return in renting out property , it is not a passive income source like bank interest is. You have to be proactive & i often get calls from tenants to fix minor problems on a week to week basis , this week alone i spent 5 hours on very simple issues.But they all take time to fix you can't just sit back & watch your investment grow. The only real return is when you come to sell , dependent very much on time factors.A few years back it was quite a different ballgame.

[ScottSI]

If i was posting that comment more than a few years back you could say i was being somewhat cynical. But times have changed,tenants expectations have increased exponentially, the goalposts have been moved substantially . Tenants & maintenance factors are in many cases nightmarish & costly if you are not well acquainted with the RTA & are not of the home handyman type. Just calling out a plumber for an hour will cost over a $100. Thats why i have had to sharpen up on my own handyman skills. There is NO real return in renting out property , it is not a passive income source like bank interest is. You have to be proactive & i often get calls from tenants to fix minor problems on a week to week basis , this week alone i spent 5 hours on very simple issues.But they all take time to fix you can't just sit back & watch your investment grow. The only real return is when you come to sell , dependent very much on time factors.A few years back it was quite a different ballgame.

I agree its a business not an investment like money in the bank. You do have to work at it like a business.

Have you thought of getting some staff part time, it made the world of difference for us having our own handyman in Dunedin and Christchurch. When they are not fixing things they are doing lawns, gardens and programmed maintenance (can take them 4 months to paint a house though). Many semi retired persons out who like a few hours a week.

I do disagree that there is no real return as we average $ 87 pw cash off each property even after paying staff so real weekly income can be reached + capital gains if you sell.