advice sought - lifestyle change

[zimbonz]

Hi All,
Thank you in advance for taking the time to read this.
I am considering a life change move with my family. I am 42, with 3 primary age kids, and we live in Auckland.
we bought in 2011 our main home, and our paper equity has grown to about $750k - for now anyway.
I also have a small business that I will look to sell.
Apart from the business I have no other investments.
Our plan is to move to Brisbane and with any home equity that we make, refrain from the temptation to purchase our family home (for the time being), and purchase a couple or more investment properties.
My hope is that this could be structured in a smart way so as to gain some positive cashflow from these investments to contribute to rental expenses and possibly school fees. My wife and I can both work as professionals, but we do want to have more flexibility in our lifestyle, so we can support the kids in sports, and take trips etc. (I know right!)
One idea I had was to look at purchasing 3 homes in QLD (perhaps Sunshine Coast or similar) with enough deposit so as to ensure a positive cashflow, to enable the contribution to rent and perhaps school expenses etc. With the idea that in 10-15 years all would be paid off - including a family home if possible. Any money from the business could be invested or put towards a more permanent home, but it would not be much more than $400K I imagine.
I would sincerely appreciate any advice you may have on the viability of this as an option, or any others you may have instead. I am concerned about global markets, that a crash is coming soon, so not too keen on that option, but open to ideas of course.
Staying in NZ, is not really an option as we would feel better joining family in Aus.

thanks again for any help.

Cheers
Zimnz

[Davo36]

I think that sounds like a reasonable idea.

Sad to lose good people like yourself to Aussie though.

The rentals should easily cover you renting a house, and there should be some left over.

I guess the thing to do is look online at investments you could buy, and how much they're returning. Then do your sums.

[Keithw]

In the past i would have agreed it was a good idea, however now i caution that things have changed and you need to look closely at many issues that in the past we have taken for granted.
in no particular order:
Aus has elections coming up in a couple of months and there is a high chance Labour could get in. They are wanting to remove negative gearing. This will push rents up, decrease property values and mean you have to put in more of your own money in order to be cash positive.
If this does happen, just like the ring fencing in NZ, I will be looking very closely at whether i am better off earning in Aus or moving back to NZ.
When I first came over, the exchange rate was much better and it made good economic sense to earn in Aus.
I worked out some time ago that it costs me $10k to be in Aus, so as long as i earn more than the 10k difference then i am better off earning in Aus.
With changes in negative gearing / ring fencing in both countries, i need to re-evaluate this difference.

Qld property values are very unpredictable, when overseas buyers had free reign things were great, now i believe most areas have been stagnant for many years, except for mining towns - some have continued to go up while many are in a big slump.

Tenancy laws in Aus have been changing in recent years, along similar lines as NZ but not nearly as bad. It is very hard to evict tenants and rents are no where near what they are in NZ.

NZ is getting very expensive to live, with constant new taxes. The price of fuel is a big contributor to this. Last week in Melbourne i paid A$1.25 / ltr, in the same week i paid NZ$2.12 (after 6 c discount) this week Aus jumped up 25c to A$1.50 and it will fall back to around A$1.30 over the next couple of weeks.
I still buy milk at A$1.10 per Ltr (it recently went up 10c to support farmers) in NZ i paid NZ$3.60 for 2 l (ie NZ $1.80 per ltr) from the Warehouse.
Currency is pretty much 1:1 right now

Mortgage rates in Aus start with 3, in NZ they start with 4.
Be aware that investor loans are at a slightly higher rate than owner occupiers, and interest only is even higher, they are trying to transition investor loans to P&I as much as possible.
Investor loans are also just as hard to obtain in Aus now as they are in NZ, the banking royal commission has caused many areas to be tightened.

Property prices in Auckland are much higher than most of Aus, except perhaps in Sydney. As a huge generalisation, you could say you can still buy a house in Bris for A$450k whereas in Auckland you start at least $650.
In Melbourne you can still buy a 1 bed B&T unit for under A$300k, Same unit in Auckland NZ$450 -500

Aus has a much bigger market for everything, so depending on your business you are probably more likely to do better in Aus, even with the slowdown.

The political uncertainty caused by Taxcinta and her incompetent crew has resulted in huge loss of business confidence in NZ, a huge economic downturn (have you visited a local mall recently and noticed the vacant shops and lack of customers ?)

Socialist policies of Taxcinta are aimed at destroying the middle class and making everyone beneficiaries (they always vote labour cos thats who hands out the free money)

Insurance is going through the roof with all the bush fires and flooding.
In QLD water is getting to be more expensive than in NZ (& that is getting worse by the month) because of the desalination plant running costs.

In summary, I believe you will have a better standard of living in Aus/ Bris, but there are many substantial costs that eat into your income.
The returns on property investment are getting to be less & Less while the liabilities and protenant laws are getting worse.
Look very carefully, do your sums and dont assume that the way things used to be will remain in the future.

[zimbonz]

That's some great advice thank you, bleak as it is!
I too share your concerns about the economic climate in NZ,however that is not a primary reason for the decision. One main reason really (if I am honest) is that given the disparity on housing markets, I was hoping to be able to afford more in terms of investment properties in Aus, than I can in NZ, thereby creating some diversified (across multiple properties) CF. Say I put down 200k on 3 properties worth about 400-450, then use the remaining for relocation and possibly renovations, that money will go a lot further than in NZ, is my somewhat uneducated feeling. I am in IT and my wife is an accountant, so I guess if we needed to get back to work we could - but the idea really is to take a bit of a break, and maybe travel for a bit - hence the lifestyle change component of the thread. I am not convinced that this is viable in NZ, given regulatory environment and higher costs of everything. Hapy to take on any contrary opinions of course, that is the reason for the question on here!

[Don't believe the Hype]

If you think you’ll achieve better cash flow in Aus you’re mistaken. I’m guessing your scope is Auckland so comparing to Brisbane is far from apples to apples.


Dont mix up your issues/decisions. If you want to be in Bris for some reason do that but you may not get the return you need from IP’s.

If your priority is setting up a cash flow to allow you to not work in future - focus on that it might mean you need to focus outside Auckland.

Set up the foundation for your future first. It may take a bit longer than you want but build a plan, be clear on priorities, stick to them... review progress annually and make changes to achieve your goals.

[OnTheMove]

I dont blame ya mate. Lived there 15 years.

Im going against the grain of others with a different outlook, nobody has a crystal ball, but this is my experience. NZ health is 3rd world compared to basically health insurance in your tax at a no higher rate than NZs, plus your free 9% minimum super sure adds up over 10 years.

Brisbane house prices are roughly half Aucklands, which was the same when I moved in 2000. bought a house for $120k, sold it in 1 year for $250k, then the GFC hit and thing plateued quite a lot compared to Auickland, as Key pumped borrowed paper into our Economy and then people thought sweet lets buy more houses creating a double bubble. So if you are selling up, IMO you are taking risk aversion. But some still think nothing will happen and street cleaners will afford to help pay $1.2m dollar mortgages. Sooner or later the borrowing from the reserve bank and the government borrowing internationally will have to be paid and there is only one outcome in a double bubble.

The other thing is there are still plenty of houses to buy below CV in Bris, 60 day early access, reno, sell. Just another option.

But for me the other thing is eventually NZ's economy will take a major dive just like it use to in cycles, if/when and you come back potentially it might be at 70cto the AU and there is another 30%.

Take everybodies opinion into consideration and do whats right for you in your gut. Then you only have yourself to be accountable to.

Im doing the same, but for me Im not worried about any NZ risks as I only intend to buy if around $600k total on the northland coast. I dont intend to ever sell it, so thats my risk aversion. Meanwhile on twin 6 figures and no dependants, we should have roughly $3m upon return in 10-12 years. If the property market is still in plateau I will buy local IPs in Dunedin etc simply for cashflow. 7-8% minus tax is a comfortable income plus any money generated from our part time activities. I plan to do small business and the Mrs is an in demand Dr in Biology and is asked to do a lot of publications and speaking, so thats her thing, being 8 years younger she may want to continue this more 40 hours a week, we will see.

IMO retirement is nuts if you dont have something you are passionate about, look at David Attenborough. 90 and still pumping out docos like a boss.

[JBM]

Great time to shift IMHO NZD/AUD closing at highs cross-rate your get .97 cents AUD for every NZD

Housing much cheaper ..loans cheaper ... smart move IMHO if I had family over in QLD and could handle the HEAT I'd certainly be considering it...

would go back renting if the wife would get on board could sell our home here in Central Otago for 60%+ more than we paid 2.5yrs ago.

think the whole NZ property market is due a major correction that will see many forced sales

[OnTheMove]

Great time to shift IMHO NZD/AUD closing at highs cross-rate your get .97 cents AUD for every NZD

Housing much cheaper ..loans cheaper ... smart move IMHO if I had family over in QLD and could handle the HEAT I'd certainly be considering it...

would go back renting if the wife would get on board could sell our home here in Central Otago for 60%+ more than we paid 2.5yrs ago.

think the whole NZ property market is due a major correction that will see many forced sales

Totally on board with the above thinking.

I remember in 2000 when I moved it was 75c and we didnt think that was too bad.

The Exs old man had the same issue with his Mrs, she was stuck in a church in Auckland and felt she was leaving all of her life if she left, but the old man he had already moved and it was, if you wanna come, do so, if not Im staying here lol, loved his swag. Kids all grown up, age late 50s hes doing his thing.

There are many ways to make income streams. IPs are only one if it does turn out to be non conducive, but I dont the elections will make it that bad. Anything better than inflation is a positive haha.

[JBM]

Personally, I'd be looking into Aus Commercial property investments 8%+ yield ?? that and ASX Gold shares have got 100% of my sharemarket investment in the ASX AUD's etc

AUD Gold is currently at record highs so the Gold miners are making very FAT margins

Also I like MFD on the ASX is a Melbourne Childcare provider high earnings to market value paid like 8.9c dividend recently current share price 87.5c ...the sector is looking bullish with new childcare subs and Labour Govt policy

[jack2016]

which website do you use to invest in aus shares?

[DaveW]

@JBM mentioned commercial real estate investment with 8%+ yield.
With $750,000 down payment you will be looking at $2.14M property.
8% rental yield = $171,400
Mortgage = $1.39M
Interest rates a percentage above residential = say 4.6%
Mortgage payments therefore = $63,940

Net taxable income = $107,460

That might be enough to cover the kids and travels?

[JBM]

which website do you use to invest in aus shares?

I have two account one with ANZ share investing.au for ASX (use to be E*Trade) and the other with ASB securities for both ASX/NZX