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  1. #11

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    Quote Originally Posted by Rosco View Post
    Hi Chelsea,

    Back to your original question - If I was to gamble on capital gains, I would gamble in Auckland. Ideally with something that can be subdivided long term. In the past Auckland has always jumped in value first and then other regions have followed. So much of NZ immigration goes to Auckland and it appears to be getting bigger and bigger all the time. Plus Auckland is constantly mentioned as having a housing shortage.


    Ross
    I recall seeing charts that use a base year of (2004 i think) that show that with the exception of the latest spike in values Auckland has not outperformed from a CG perspective. While I agree Auckland is the low risk bet if you wanted to bet on a capital gain (the favourite in betting terms).

  2. #12

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    Quote Originally Posted by Chelsea View Post
    yes agree it's a huge loss but in 3 years I should be able to turn the loss into gain.
    on a yearly basis I should be able to repay the loan by $100k (outside of monthly mortgage pmt and without compromising my living standard) so technical in year 3 the rental property should be able to turn into positive cashflow (if interest remains around 4%).
    Thanks for the advice and concerns, not an easy decision to invest huge amount of money in current market.
    This is a mistake I see people make all the time. Thinking they can turn a poor performing asset into a better performing asset due to investing a huge amount of their own resources (in your example $100k/yr).

    You need to consider the opportunity cost of having to plow $100k/year into this asset just so it can become CF+ in 3 years.

    If you were able to buy a CF+ property instead of this one you could use the next 3 years to fund $300k deposits so in theory have a $1million portfolio (at purchase price) in 3 years on top of what every you hold today and the purchase you're thinking of making now.

    If you'd said to me that you were going to buy the property in a CF- position, leverage the strong cash flow you have to fund a renovation or alteration that including the additional investment would result in CF+ then the additional investment is a good choice. But to simply pay down debt to get to CF+ is a mirage

  3. #13
    Join Date
    Oct 2005
    Location
    Auckland, NZ.
    Posts
    621

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    Quote Originally Posted by Don't believe the Hype View Post
    This is a mistake I see people make all the time. Thinking they can turn a poor performing asset into a better performing asset due to investing a huge amount of their own resources (in your example $100k/yr).

    You need to consider the opportunity cost of having to plow $100k/year into this asset just so it can become CF+ in 3 years.

    If you were able to buy a CF+ property instead of this one you could use the next 3 years to fund $300k deposits so in theory have a $1million portfolio (at purchase price) in 3 years on top of what every you hold today and the purchase you're thinking of making now.

    If you'd said to me that you were going to buy the property in a CF- position, leverage the strong cash flow you have to fund a renovation or alteration that including the additional investment would result in CF+ then the additional investment is a good choice. But to simply pay down debt to get to CF+ is a mirage
    That's great advice.

    ps - what does it cost to subdivide in Hamilton?
    Auckland is 160k - 200k basic.

    Completely absurd cost.

  4. #14
    Join Date
    Feb 2018
    Posts
    126

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    Buy cashflow positive properties from day one (work on 100% financed), they are out there, especially in and around Hamilton.

  5. #15

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    Quote Originally Posted by GLin View Post
    Buy cashflow positive properties from day one (work on 100% financed), they are out there, especially in and around Hamilton.
    Good to see you've finally learned how to create wealth.

  6. #16

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    Was searching around here for some discussion re: Hamilton so thought this might be an appropriate place to ask a question.

    I purchased my first house house in 2017, in Hamilton. Over the past 2 years, we've put some work into it and made decent capital gain to the point where we've ended up with about 45% equity in a house worth approx $450k. So me and the significant other have roughly $180-$200k equity in the house give or take.

    I've considered selling up and taking the gain to move into something new..... While we can service this on our current incomes, the proposition of a $600k mortgage does not excite me however. I've also thought about using the equity in the current place, buying a new house, and renting the current place out. However, the current house is probably cashflow break even in it's current state, so option B would open us up to a bit of risk.

    Right now, I just feel is my best chance to make a move in some way shape or form. But does anybody else feel that properties in and around Hamilton are really overvalued? I like the new subdivisions in the northern parts of the city but $800k for 3 bdrm 200m2 house just seems like a big YIKES

    Disclaimer: Only knowledge of property comes from half assed internet research


 

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