800k Investment advice.

[Atheum]

Any advice welcome. Have been granted 800k 2nd mortgage to buy investment property. I already have one property I live in.
I want to invest in Auckland. I also live here.
Plan is to buy and hold. Not sure if I should put the full 800, or close to it, into one property, or buy 2 cheap units or apartments ( can top up if needed) or buy around 600-700k do-up and invest the remainder into Reno.
I am in the building trade ( own a Painting Decorating company) , so have plenty of trade resources and can do a large amount of Reno work myself.

Cheers in advance.

[Nick G]

Hi, what you should do depends greatly on your own personal circumstances such as assets, debts, income, dependents, ages, income potential from work/businesses etc. Could you elaborate a bit more please?

Although if you have the resources to do a renovation cost-effectively then that is a good strategy generally because you will be rewarded two-fold, for buying a decent property and also for improving it. Be sure of your end-game rent levels and value before you start and work back from there.

[Atheum]

Hi thanks for your reply.

Lending is based on my partner and I.
No children, owe 370k on our home mortgage which we are easily paying 4K per month. House has been valued at 810k. Otherwise no debt, we pay everything up front. No hire purchase. Vehicles are paid off. We are both in our late 30's. Since we realised we had good equity in our house and plenty of income after expenses, seemed like a good idea to invest in property for the simple reason that we like the idea of property investment. No big plan yet, hence why I am looking for advice. As far as Reno. I am constantly doing Reno for property investors with my business and know what to expect from start to finish, have been for 15 years. which makes Reno appealing to me. I even have contra deals with other trades so can pull plenty of resources.

Cheers.

[JBM]

must have good income if the banks happy to lend you 800K+ ....

[Atheum]

must have good income if the banks happy to lend you 800K+ ....

Good income is subjective.

My partner and I do ok. Both small business owners. We don't over spend, good at saving, no kids. So look good to the bean counters.

[Don't believe the Hype]

Atheum - can I ask why you are questioning whether to buy one ~$700k ish properties or 2 cheaper properties. Is this because you're looking at diversification of risk (buying 2) or is it that you're asking about growth potential in the low vs. medium house price markets?

If it is about diversification 2 properties will not really achieve diversification especially if you're buying them in close proximity to each other.

my recommendation would be to play to your strengths - with your background in trades you have an advantage over many in that you know how to do value added work and probably even a cost advantage - but you do need to remember to account for your own time - you f all you achieve out of a value add Reno is about the cost of the labour saving by doing it your self then why take the risk on the capital?

before you jump into anything you need to have an exit strategy - you'll make a killing if the current trend continues along with anyone holding an assert increasing in value - as they say the tide lifts all boats - but you need to know your plan if values start to slide (or stagnate) - if you are confident that your plan works in a flat or even declining market and/or a higher interest rate environment then go ahead...

if if like many here your business model is on TIMING the market and on property prices going up then you need to asses you're risk tollerance. how much fun it would be having a cash flow negativity be property where the loan on the property is $800k but the value is $700k - can you afford a $100k hit?

[azzatasi]

Hi there

What specifically are you looking for in your rental (yield,land, equity etc)? I help investors build their portfolio in South Auckland. While the yields are down on what has previously been achievable we have been getting strong results for our buyers. Yields from 6-7% and instant equity. We have done two deals within the last month at these levels. These deals don't pop up very often and are usually through tip off by agents or private sale purchases but they're out there if your looking hard enough and your networking is wide enough. Mainly home and income based properties where two seperate tenancies help produce those bigger rents and get your yield up. Happy to show you all those deals if you are interested and look through the numbers.

Kind regards

Aaron
021570448

[sidinz]

Having been in a situation where a property was empty for a few months, I'm a fan of spreading the risk by having two income-producing assets instead of one expensive one. That way if one is empty, you've still got money coming in from the other meaning you're not carrying the whole can.

But I know that others here would argue that one house will cost less (in terms of % of rents) to cover rates, insurance and repairs and theoretically increasing the yield.

So as already pointed out, it depends on your priorities