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  1. #1

    Default Need advice on buying a second smaller property to live in

    Hi all
    I need some advice. I own a 4 bedroom house in East Auckland. Havenít done a registered valuation but I believe I have an equity of around 30% equity in the house. I wish to move out as itís too big for me to maintain mortgage wise and also taking care of it. What is my best option? I am not on a very high income but might get a half decent loan considering the equity on my current property which may be used as deposit and I can also borrow around $30,000.00 from parents. Ideally a 2 bedroom place would be nice. Not looking to move immediately but donít mind buying soon.
    Would like to have a chat to an expert but donít know where to look.

  2. #2
    Join Date
    Nov 2013
    Location
    Auckland, New Zealand.
    Posts
    199

    Default

    Quote Originally Posted by quebec View Post
    Hi all
    I need some advice. I own a 4 bedroom house in East Auckland. Haven’t done a registered valuation but I believe I have an equity of around 30% equity in the house. I wish to move out as it’s too big for me to maintain mortgage wise and also taking care of it. What is my best option? I am not on a very high income but might get a half decent loan considering the equity on my current property which may be used as deposit and I can also borrow around $30,000.00 from parents. Ideally a 2 bedroom place would be nice. Not looking to move immediately but don’t mind buying soon.
    Would like to have a chat to an expert but don’t know where to look.
    Morning Quebec,

    It sounds as if you may benefit from speaking to a mortgage broker.

    They are qualified, generally willing to offer advice for free and deal with these sorts of situations on a regular basis so have the experience you are after.

    I have had a good experience dealing with John Yelverton from Mortgage Express.

    [email protected]
    021 462 826

    Good luck!

  3. #3

    Default

    Quote Originally Posted by kmor110 View Post
    Morning Quebec,

    It sounds as if you may benefit from speaking to a mortgage broker.

    They are qualified, generally willing to offer advice for free and deal with these sorts of situations on a regular basis so have the experience you are after.

    I have had a good experience dealing with John Yelverton from Mortgage Express.

    [email protected]
    021 462 826

    Good luck!
    Thanks kmor110. So far, I haven't had much luck talking to them. They are helpful in getting mortgage but not in giving advice I am after.
    Anyways, what do you and everyone else think of this - http://www.ilico.co.nz/
    I am quite keen but not sure if it is the right decision. Price list is on the website under Apartments tab and FYI all 2 bedrooms are already sold or under contract.

  4. #4
    Join Date
    May 2004
    Posts
    2,776

    Default

    I had a quick look at the site. A couple of observations. The best units have probably already been sold. I was unclear if these are constructed, under construction or off the plans. There are issues buying off the plans (think pillars in bedrooms!). No info on the site about body corporate management and fees. Could be significant, usually several thousand a year and no guarantee they won't increase. Common for the developer to arrange the BC management contract and there have been cases where that contract was onerous and really difficult for owners to change.

    If you like these apartments, might be better to wait till they are built and up for re-sale, so you can see what you are getting.

    About your existing house. Sounds like the drawbacks are mostly financial (mortgage, maintenance). Is there a way to increase your income instead of selling and rebuying? Boarders/flatmates, or convert to a 2 unit property, for example. A few hundred dollars a month can buy a decent amount of maintenance over time. And you still have the option of selling later. Bear in mind that if you sell and repurchase, you are laying out a lot of money in agent and legal fees, moving costs, body corp fees. And stress.

  5. #5
    Join Date
    Nov 2013
    Location
    Auckland, New Zealand.
    Posts
    199

    Default

    Quote Originally Posted by artemis View Post
    I had a quick look at the site. A couple of observations. The best units have probably already been sold. I was unclear if these are constructed, under construction or off the plans. There are issues buying off the plans (think pillars in bedrooms!). No info on the site about body corporate management and fees. Could be significant, usually several thousand a year and no guarantee they won't increase. Common for the developer to arrange the BC management contract and there have been cases where that contract was onerous and really difficult for owners to change.

    If you like these apartments, might be better to wait till they are built and up for re-sale, so you can see what you are getting.

    About your existing house. Sounds like the drawbacks are mostly financial (mortgage, maintenance). Is there a way to increase your income instead of selling and rebuying? Boarders/flatmates, or convert to a 2 unit property, for example. A few hundred dollars a month can buy a decent amount of maintenance over time. And you still have the option of selling later. Bear in mind that if you sell and repurchase, you are laying out a lot of money in agent and legal fees, moving costs, body corp fees. And stress.
    Artemis, sound advice there I thought about the hidden costs of selling and repurchasing.

    We own one 500k property with about 250k equity and were recently looking to sell and repurchase, not due to financial constraints but rather to seek out an opportunity to move up the 'ladder' as a homeowner.

    Once we sat down with an agent and learned the financial cost for us would be about 20k it instantly became less appealing! Now we are looking at our opportunities to buy a second, lower valued house and try to either increase it's rental yield or add value for capital gains.

    Easier said than done though! Good luck to the OP, IMO would avoid the hassle of selling and buying again if possible.

  6. #6

    Default

    Quote Originally Posted by artemis View Post
    I had a quick look at the site. A couple of observations. The best units have probably already been sold. I was unclear if these are constructed, under construction or off the plans. There are issues buying off the plans (think pillars in bedrooms!). No info on the site about body corporate management and fees. Could be significant, usually several thousand a year and no guarantee they won't increase. Common for the developer to arrange the BC management contract and there have been cases where that contract was onerous and really difficult for owners to change.

    If you like these apartments, might be better to wait till they are built and up for re-sale, so you can see what you are getting.

    About your existing house. Sounds like the drawbacks are mostly financial (mortgage, maintenance). Is there a way to increase your income instead of selling and rebuying? Boarders/flatmates, or convert to a 2 unit property, for example. A few hundred dollars a month can buy a decent amount of maintenance over time. And you still have the option of selling later. Bear in mind that if you sell and repurchase, you are laying out a lot of money in agent and legal fees, moving costs, body corp fees. And stress.
    Thanks artemis. I do not plan to sell my current property. Plan is to rent it so Mortgage gets covered by rent, hopefully. I had flatmates before but it's just too much hassle etc. How much do you think will be increase in price on these apartments when they are built. Completion is around March 2015. I would love to live in a smaller low maintenance property. Work near city so closer would be good. Can you explain in layman terms what you meant by "A few hundred dollars a month can buy a decent amount of maintenance over time" Thanks

  7. #7
    Join Date
    May 2004
    Posts
    2,776

    Default

    Quote Originally Posted by quebec View Post
    .... Can you explain in layman terms what you meant by "A few hundred dollars a month can buy a decent amount of maintenance over time" Thanks
    Well it's not going to cover reroofing, exterior paint, major reno, conversion to two units unless used to repay a mortgage for those things. But it would cover lawns and gardens, interior redecorating on a room by room basis, replacement of appliances and curtains. That sort of thing.

    About being a landlord. Do you have experience? It can get tricky.

  8. #8
    Join Date
    Jun 2013
    Posts
    2,103

    Default

    Quote Originally Posted by quebec View Post
    I had flatmates before but it's just too much hassle etc. Thanks
    If flatmates are too much hassle, how are you going to put up with the hassle of managing tenants?

  9. #9
    Join Date
    May 2007
    Location
    Hamilton
    Posts
    3,593

    Default

    What about renting?

    or, renting and buying another rental?

    You don't have to own the property you live in, and often renting is a better financial decision.

    If you do choose to rent your existing house and buy a new personal house, make sure you get good advice from a Chartered Accountant who is a Property Accountant, about restructuring to maximise your tax benefits! Ideally you want to borrow 100% on your existing house that is becoming a rental, to leave all your equity in your new personal house. But this needs to be done right!

    Ross
    More Profit from Property? TEACH ME MORE
    Ross Barnett - Coombe Smith Property Accountants
    Proud to give the best property advice for over 13 years.

  10. #10

    Default

    Quote Originally Posted by quebec View Post
    Thanks artemis. I do not plan to sell my current property. Plan is to rent it so Mortgage gets covered by rent, hopefully. I had flatmates before but it's just too much hassle etc. How much do you think will be increase in price on these apartments when they are built. Completion is around March 2015. I would love to live in a smaller low maintenance property. Work near city so closer would be good. Can you explain in layman terms what you meant by "A few hundred dollars a month can buy a decent amount of maintenance over time" Thanks
    Yes I do have experience being a landlord and trust it was easier than managing flatmates.


 

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