To grow portfolio now or wait

[Grads]

Hi guys, currently have multiple properties in AKL, Htown, TGA & Rotorua double digit portfolio.

Yes we are in new waters which present new risks..

My experience / background includes mortgage lending, commercial finance + business degree with major in starts ups / business development.

Every investor is running a business and most businesses fail long-term (80% ~5 yrs). Main reasons for failure is due to lack of practical experience and insufficient working capital.

Some posters on this forum have been around for years & know what a downturn involves & how banks can react (when it rains).

If you don't have practical property experience / experienced trader I would not be buying more property B&H investments in current market. The next possible shock investors may face could be completely new, quick & unexpected.

For those that do and don't have solid foundation and sufficient available capital the risk is not worth it. I have had experienced multiple lines of credit cut in 09 without notice. For those that do buy make sure you have a A,B,C,D,E back up plans if things go wrong. Cheers

[investorak]

Thanks Grads, i havent been through a downturn yet, i do have sufficient cash due to a property i sold in Auckland with 2 solid incomes but will be down to one in 12-24 months.

How long do you think people that are buy and hold investors should/will need to wait for before being able to get good investments?
Is it normally 2 years after the peak, do the yields get much better?

[Kbkiwi]

Won't happen Gary. As the banks lose market share the non banks will already be scrambling to find more money so the LVR rule won't slow anything for long. The banks are handing their ar*es to the non banks, they will find ways around it.

The notion that non-bank lenders will be able to step in to take over lending to investors is ludicrous nonsense.

They are several magitudes in size smaller than the big banks, and even if by some miracle they manage to somehow obtain massive amounts of funding - at that point they would then be covered by the reserve bank requirements anyway.

[Grads]

We won't know the peak in AKL until after the fact.. How long to wait.. I would be waiting to owners must off-load stock - which can be due to number of reasons - bank forces, interest rate rises, relationship split, tenant damage, unemployment etc etc.

I have always believed in making $$ on the buy, anything else is speculative. Yield can always be created. Don't follow the crowd. Follow those that have result you want.

[Nick G]

If you can create a yield it is still a good time to invest. Rents almost never come down and interest rates will go lower. In most cases creating a yield creates equity also and that really sets up up well if the banks get antsy.

If you are stretched, ie with high LVR and marginal cashflow then now might be the time to look at selling any rentals that haven't worked for you. You want to be holding and buying during any dip, not scrambling.

Follow those that have result you want.

Yup

[PTILoveYou]

Won't happen Gary. As the banks lose market share the non banks will already be scrambling to find more money so the LVR rule won't slow anything for long. The banks are handing their ar*es to the non banks, they will find ways around it.

Yeah I heard through a broker that Resimac is so flooded with requests they are not taking any new business for now!

[Bobsyouruncle]

The notion that non-bank lenders will be able to step in to take over lending to investors is ludicrous nonsense.

Already happening in Auckland.

[wodger]

Yeah I heard through a broker that Resimac is so flooded with requests they are not taking any new business for now!

They said on Steve goodeys webinar last night they have a 10 day turnaround right now.

[Beginner1]

Properties aren't selling much at all.. Auctions I have been going to had 90-100% clearance last month can't even get 30% clearance. Prices are down big time as well..

They said on Steve goodeys webinar last night they have a 10 day turnaround right now.

[Don't believe the Hype]

If you risk assess the current situation...

Current growth trends annually in fastest growing region/s is 30% annually - if this is straight line growth then over next 90 days you should expect to see the fastest growing areas of the country prices rise ~7%-8%.

so if you wait 90 days to see if these change have a significantly negative impact on market (and you're wrong) you should expect to pay no more the than 7-8% premium over today's prices (in fastest growing markets)... I. Markets with much Lowe annual growth - say 10% - should expect see prices rise in the next 90 days 2-3%.

if you're investing large chunks of cash based on this risk assessment I'd suggest caution and spend the next 90 days watching and waiting to see what the herd does. I see the potential downside risk to be greater that what you would have to pay as a premium if you held off your purchase till Nov/Dec16

this assessment discounts demand/supply fundamentals driving long term trends - I.e under supply of housing and migration etc it is simply a risk assessment of the risk/benefit of this market turbulence brought about by RBNZ intervention in the market.

[Bobsyouruncle]

Assuming you're in Auckland beginner that certainly isn't happening out East. I think that lower clearance rates, if true, are a reflection of the banks current uncertainty. Everything I look at is selling but auctions are becoming less favoured as people are worried about pre approvals being nixed etc. PBN is increasing.

[eri]

lots of agents

and agencies

begging for listings

Barfoot chief says slowdown unmistakable

http://www.propbd.co.nz/barfoot-chief-says-slowdown-unmistakable/

[Beano]

My advice would be to not buy any holds in this market unless you can get at least an 8-10% yield which is very tough, or can you even create the cash flow by re-configuring the house?

Trading works better in this market.

Buy for holding when the market is crashing.....

8 to 10 pc gross or net yield ?

[Nick G]

Most residential investors think in GY.

My valuer in Wgtn dropped 1% from his cap rate in 3 months. Nuts. Helped me buy another place even at 40% lvr tho :-)

[Beano]

Most residential investors think in GY.

My valuer in Wgtn dropped 1% from his cap rate in 3 months. Nuts. Helped me buy another place even at 40% lvr tho :-)

What was the net yield you obtained the property at ?