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  1. #1

    Question Advice on a Lifestyle Block Given Current Conditions

    Hi Everybody,

    Long time lurker here but would love to draw on the collective views and opinions of the many bright minds on a decision I'm not sure is best delayed.

    My wife and I want to make the dramatic lifestyle shift from living in Auckland(which we hate) to living in rural Canterbury.

    Here's the full story, but have put a tldr at the bottom and I know time is precious:

    I'm a 30 year old with a wife of similar age, one toddler and a baby on the way. I'm a tradesman, and have been a hard worker most of my life, working 3 jobs in my mid 20's and buying rentals, gradually selling them off for various reasons. Now I have a business focused on repairing, installing and maintaining industrial machinery up here, the customers I'll give to my father when I go.

    I earn the bulk of the income in our family, with my wife being a stay at home mum while helping run 2 small e-commerce businesses we started from nothing which earn us enough to eat and pay bills from, but not enough to service a new mortgage and continue to build investments comfortably. I'd love to give them more time, but my electrical work earns far more than these do.

    We have 2 properties, a tiny unit in a bad area of Auckland which we live in and a 4 bedroom home in a very nice area of Rotorua, which is rented out to tenants for 25% below market. We're trying to sell it but a combination of current conditions and tenants intentionally making it difficult is complicating the process. Funny that the tenants are living in a nicer home than us in a much nicer area, but...I digress.

    These properties are worth approx $1M combined(according to bank), with a combined mortgage of in the early $200s

    We also have (what was to us) a sizable share portfolio, but uhh, let's not go there right now...

    Essentially we want to make the move down to Canterbury, with negotiations on a property in progress in the mid $500s. We have approval from bank and would take on approx 450k of debt to purchase. The serviceability wouldn't be viable if we moved as I would give up the majority of our income by handing business over. Ideally we'll sell all our properties to make a fresh start, as I'm really over being a landlord frankly(I have a lot of stories there).

    TLDR - Pregnant, married couple just turned 30 with 1 toddler. Have side hustles that will feed us wants to move to Lifestyle block but will have to give up core of income. Have to take on 450k of debt which we'll struggle to service without work or(ideally) sell up and have minimal debt, or a small hoard of cash.

    Want to get feedback on timing, whether now is a good time(in life and in the economy) to make a lifestyle shift like this, given our side businesses are also feeling effects of constraints on consumer spending(given one caters to small businesses and the other to end consumers).

    Have been working towards this my whole life, we're finally about to make the plunge, then covid-19 hits and throws a spanner in the works. I know it's not a new thing, been following since early Jan, but didn't think it would get this bad, frankly.

    I'm also worried about missing buying opportunities in other markets(shares, namely), and paying too much for a property that might be cheaper later. There's also the downside of having to sell what we do have for far less , meaning we'd lose there as well.

    Just hitting my 30s, I don't want to leave our dreams until we're too old to enjoy them, nor do we want our kids to miss out. I don't want to get a job if I can help it, so I can spend time integrating into a new community, building our businesses and helping my wife after the baby is born.

    TLDR - Basically I just don't want to get hit on all fronts(buying selling, and surrendering income) if I can avoid it - mostly due to current economic conditions.. But it might come at delaying a better lifestyle I've been aiming at(on and off) for 12 years.

    Any input is appreciated. Perhaps it'll help others looking to make dramatic life decisions as well. Reason I'm asking strangers over friends and family is because nearly all people around us are against us moving their own reasons leading got very biased opinions.

    Thanks for your time.

    Sorry if this has been too long or not enough info, hard to sum the collective efforts and thoughts of over a decade into a single post. Happy to add or summarize if required. Thanks again.

  2. #2
    Join Date
    Apr 2004
    Posts
    825

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    I'd certainly would be selling Auckland properties(trying to get my wife on board selling our home as well!!) but wouldn't rush in and buy Chch just yet... why not rent for a period
    Get a feel for your new location ...maybe you change your mind and move back to Auckland in time ..you would say have $800k in cash (make sure you put that across muti banks in case of bank bail-ins think its like $250k max covered by bank bail-ins etc ... having cash ready to go is going be a HUGE advantage next couple of years

    I have couple properties one being commercial long term lease 10.5% net yield...the other family home ..total LVR only 25% ..

    I also have 260k AUD loan in the ASX sharemarket(plus small business) with 70% invested in GOLD/Silver plays which are holding up well and will go very well over the next few years as profit margins have never been higher..

    So many kiwis are ticked up in low yielding bubble priced properties locations like Queenstown will get hit very hard ..AIRBNB ??? short term rentals ...gone
    Last edited by JBM; 26-03-2020 at 02:21 PM.

  3. #3
    Join Date
    Apr 2018
    Posts
    258

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    Quote Originally Posted by JBM View Post
    So many kiwis are ticked up in low yielding bubble priced properties locations like Queenstown will get hit very hard ..AIRBNB ??? short term rentals ...gone
    Suburbs in Welli with 200k people having a median the same as Remuera, where the majority of 6 figure jobs and OLD money is. Im rubbing my hands together clicking my heals and riding off on my broom in glee to wait and watch what unfolds. :-)

  4. #4

    Default

    No guarantee in NZ banks. Australia is $250k.

  5. #5
    Join Date
    Apr 2004
    Posts
    825

    Default

    Right well that just brilliant zero safety holding cash at the banks if they force bail ins .. cash + Gold/silver bullion + holdings in liquor spirts / guns ammo etc would be safest (I know bloody mad max but if your not comfortable owning shares in a company something cashed up safest like NZO.nzx

  6. #6

    Default

    Hi mate, give me a shout about your Rotorua place. We sell a lot of investment property in 'vegas. Email nick at ifindproperty dot co dot nz

    I would stay in Auckland and make sure you are an asset buyer for the next little bit. I don't really know what will happen to prices, but interest rates are already 20% cheaper so even if prices stay flat you will do well.
    Free online Property Investment Course from iFindProperty, a residential investment property agency.

  7. #7

    Default

    Quote Originally Posted by Nick G View Post
    Hi mate, give me a shout about your Rotorua place. We sell a lot of investment property in 'vegas. Email nick at ifindproperty dot co dot nz

    I would stay in Auckland and make sure you are an asset buyer for the next little bit. I don't really know what will happen to prices, but interest rates are already 20% cheaper so even if prices stay flat you will do well.
    Hi Nick, I am looking for some property, IYHO what are we looking at coming out of this lockdown, do you see any bargains on the way, maybe 3-4 months down the track?
    "Remember, people will judge you by your actions,not your intentions.You may have a heart of gold -but so does a hard-boiled egg".

  8. #8
    Join Date
    Apr 2004
    Posts
    825

    Default

    Quote Originally Posted by Frezzinghot View Post
    Hi Nick, I am looking for some property, IYHO what are we looking at coming out of this lockdown, do you see any bargains on the way, maybe 3-4 months down the track?
    Just go to any tourism, holiday hotspot and pre end of year there will be many great deals .... NZ hasn't had a real Property correction for a very long time it stalled 2007/08 but really was a picnic compared to what we will see play out next couple of years..

  9. #9

    Default

    Quote Originally Posted by JBM View Post
    Just go to any tourism, holiday hotspot and pre end of year there will be many great deals .... NZ hasn't had a real Property correction for a very long time it stalled 2007/08 but really was a picnic compared to what we will see play out next couple of years..
    JBM, I guess we will not see any of this play out until this scamdemic is played out, the rest is crystal ball gazing aye?
    "Remember, people will judge you by your actions,not your intentions.You may have a heart of gold -but so does a hard-boiled egg".

  10. #10
    Join Date
    Apr 2004
    Posts
    825

    Default

    Quote Originally Posted by Frezzinghot View Post
    JBM, I guess we will not see any of this play out until this scamdemic is played out, the rest is crystal ball gazing aye?
    Yes and no ... we know NZ will be basically closed to overseas tourism for sometime... Vs projected growth of 4% growth pa 2020-25

    The 3.9 million overseas visitors who came here last year spent the equivalent of $47 million a day... once we come out of this lockdown how long will it take to rebuild will certainly be more domestic tourism

    As I live close to Cromwell I'm going to be keeping a close eye on listing numbers in the local property markets(have been involved in several property transactions spec builds over the years) ..Queenstown currently has 497 listings -but with many listings covering many hundreds of new apartments coming into a tourism collapse like NZ has never seen- I think it will rise to record levels in turn stopping the Neg+Auctions price hyperbole ... to a race to exit listings when the reality sets in we will see many more sale price advertising ...

    Wanaka + Cromwell both will come under pressure as well ... IMHO. I think we will see 10-20% pull back in prices for good properties (freehold family homes in good locations) but see much larger falls in -Apartments/units/tiny family homes upwards to 50% etc

    I have played Golf with many local RE agents over end 2019/20 and they have all seen a real slow-down in the sector ,,,, so COVID is hitting right when the market was getting weaker ...as prices just outrun sanity


 

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