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  1. #1

    Default Thinking of buying and managing rental property 100% remotely

    Hi everyone
    I live in Christchurch and hearing about 9+ % yields all around the country is making me think of buying investment property elsewhere and get it managed by property manager. If I'm happy to live with property management costs + not being able to 'view' my property, is it a good idea? Downside is I'll probably have to pay market value.

    Anyone here investing and managing properties remotely? For example living in Auckland and investing in Southland? (extreme example just so we get an idea).
    You can buy a 3 bedroom property in a good suburb for under $100k and have weekly rental of $170.

  2. #2
    Join Date
    Mar 2007
    Location
    Auckland
    Posts
    3,032

    Default

    Factor in getting all repairs and maintenance done by market-price charging professional tradies.

    Yesterday afternoon I went out to two of my rentals and repaired a window security catch, installed a hook-and-eye retainer on a french door, tightened up the cold water tap on a handbasin and while I was there dug the accumulated leaf litter of of a storm-water drain.
    How much would that lot have cost me to get done professionally?

  3. #3
    Join Date
    Aug 2013
    Posts
    1,509

    Default

    Quote Originally Posted by rooney111 View Post
    Hi everyone
    I live in Christchurch and hearing about 9+ % yields all around the country is making me think of buying investment property elsewhere and get it managed by property manager. If I'm happy to live with property management costs + not being able to 'view' my property, is it a good idea? Downside is I'll probably have to pay market value.
    This idea is crazy. Where shall I start with the list of reasons?

    RE agents can't be trusted. If you buy something without knowing the flavor of the area and the real prices you're gonna get screwed.

    Quote Originally Posted by flyernzl View Post
    Factor in getting all repairs and maintenance done by market-price charging professional tradies.
    People living in major cities seem to under estimate the complications with tradies in smaller areas.

    If you live in an area you will get to know who's good. Otherwise you can find things quite cliquey, even incestuous.
    Last edited by PTWhatAGreatForum; 21-04-2016 at 08:02 PM.

  4. #4
    Join Date
    Oct 2013
    Posts
    1,620

    Default

    Quote Originally Posted by rooney111 View Post
    Anyone here investing and managing properties remotely? For example living in Auckland and investing in Southland? (extreme example just so we get an idea).
    I've done it. Too recently to tell you whether it's a success or not, but it's absolutely possible and hasn't been a disaster yet.

    Your Auckland/Southland example isn't so extreme. For the last two years I have been living London, and I bought properties in Rotorua and Lower Hutt in the last six months. I've never seen the properties in person, but do intend to visit them when I return to New Zealand later this year.

    I purchased through iFindProperty, a buyers-agency (real estate agents working for the buyer, not the seller). I'd happily recommend them on the service and professionalism they provide. As I said, too early to say whether the overall purchases were a success or not, but I'm happy enough so far.
    AAT Accounting Services - Property Specialist Accounting - AATAccounting.co.nz
    Lower fees for investors, traders & real estate agents!
    [email protected] for more information.

  5. #5

    Default

    It is both possible and profitable. However, if you're going to do it you will need to get scale - i would not recommend it unless you're prepared to get a 10+ portfolio. Being away from your investments there are a number of things you need to do better than if you invest in your home market.
    i) Become an expert on the area - research research research
    ii) Pick your team carefully - As you will come to rely on their recommendation and how they spend your money
    iii) Build a relationship with selling agents - know who is good, who can be trusted and who to avoid.

    You definitely will be at a disadvantage vs. on the ground investors but that doesn't mean you will have to pay 'market prices' - the art of negotiation doesn't require you to be face to face - while it's easier to be there - it can be done!!

    I am speaking from experience - i have bought 90% of my properties sight unseen using investment rules guiding pricing decisions and my specialist team on the ground to advise. I have only occasionally had problems but on the whole i'm well ahead!

  6. #6

    Default

    Thanks, I was thinking out loud.

    Advantages -

    1. Easier to get on the ladder with cheaper prices than my hometown.
    2. Higher rental returns

    Disadvantages -

    1. May have to pay market value
    2. Purchasing without seeing may not be the best idea (however if it's a great deal, one flight won't do much harm(.
    3. Extra costs for property manager
    4. Unable to add value by yourself, tradesman prices for repairs and/or reno work.

  7. #7
    Join Date
    May 2004
    Posts
    2,794

    Default

    Also PMs usually add a margin on maintenance, and might have their own reasons for choosing maintenance firms. All of which may be fine. Or not.

    Not all PMs are created equal.

  8. #8

    Default

    You don't need 9%+ for a property to be a good investment when lending rates are below 5%, although yield does help.

    I think there will be some good buying in Christchurch in the next 12 months, the market there is tipping from "greed" to "fear" and as people panic and exit the market (or don't enter) opportunities will come up. If long term you plan to invest in Christchurch you might as well start when there are good buying opportunities.

    The trick is to
    a) realise what makes a good buying opportunity and b) reducing your risk. Taking on a property coach or working with a local property finder is a good step, albeit more pricey than DIY, because they will help you analyse and secure a property, plus you get to learn how they think. While being more pricey than DIY, it's 10x cheaper than getting it wrong with your first purchase.

    Remotely.. thanks Anthony for the nice comments. A good buyers agent makes sure the deal works with fees included, otherwise they (we) wouldn't be in business. Most of our clients don't live where they buy so we put them onto our preferred property managers, tradies etc. There is a cost to having a PM, but it also doesn't take up any of your time. I'd use a PM even if I lived in the same city I think, my time is best spent trying to get into another investment.

    Cheers
    Free online Property Investment Course from iFindProperty, a residential investment property agency.

  9. #9

    Default

    I bought 2 houses in Auckland, one seen before purchase and the other bought unseen. Both are rented out whilst I work overseas, one for 10 years and the other for 2 years so far. I have a good agent and both properties are successful investments. But as mentioned above, you get stiffed by tradies every time a small task is required. In the recent past I have paid a handyman $700 for some basic DIY which I could have done myself in a few hours for $50. Putting up a new length of gutter goes from $50 to do it yourself, to $100 callout + $80/hour rounded up+ $50 hand wipes + $50 tea allowance+ GST .But that is the only disadvantage I have found so far. Tradesmen charging the same as open heart surgeons.

  10. #10

    Default

    Quote Originally Posted by Nick G View Post
    You don't need 9%+ for a property to be a good investment when lending rates are below 5%, although yield does help.

    I think there will be some good buying in Christchurch in the next 12 months, the market there is tipping from "greed" to "fear" and as people panic and exit the market (or don't enter) opportunities will come up. If long term you plan to invest in Christchurch you might as well start when there are good buying opportunities.

    The trick is to
    a) realise what makes a good buying opportunity and b) reducing your risk. Taking on a property coach or working with a local property finder is a good step, albeit more pricey than DIY, because they will help you analyse and secure a property, plus you get to learn how they think. While being more pricey than DIY, it's 10x cheaper than getting it wrong with your first purchase.

    Remotely.. thanks Anthony for the nice comments. A good buyers agent makes sure the deal works with fees included, otherwise they (we) wouldn't be in business. Most of our clients don't live where they buy so we put them onto our preferred property managers, tradies etc. There is a cost to having a PM, but it also doesn't take up any of your time. I'd use a PM even if I lived in the same city I think, my time is best spent trying to get into another investment.

    Cheers
    That is true if you can pay me off your purchase in the time frame of rates staying at sub 5%... Not sure many people are planning to pay off their mortgage in the 5 years they can fix a mortgage.

    can you help me understand if the investment still makes sense with interest rates at 7-9%?


 

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