Christchurch - Net Yields and Property Coaching

[weera2500]

About 18 months ago I joined a so-called reputed property education company. They are not cheap as you may know. They have looked at my situation and have recommended I focus in Christchurch for my first investment property (I am based in Auckland). The criterion was that I choose potential IP's capable of returning a net yield of 5%.

It's been difficult to get preapprovals but I have managed to get preapprovals in the range of 400-450K. While I have come across many suitable properties in ChCh that fit this price bracket, I have excluded all of them since my property coach insists not to purchase properties without a net yield of at least 5%.

What would you do? I strongly feel that I should ignore what the property coach is saying. I have listened to them for 18 months but have nothing to show for it. Had I bought a property 18 months ago that was returning at least 4% NET, I'd have at least received a little capital gains by now.

Any thoughts please? Is a net yield of 5% (as recommended by my coach) even realistic to achieve in ChCh at the moment? I am not impressed with the property coaching guys even though they are super friendly. They are the ones holding me back right now!

Many thanks in advance.

[MS1353]

who is you coach? I believe to some of them but some are only name coach.

[donna]

So the break even is 5%? And below that you'd need to dip into your own pocket to top up for say maintenance, and poss. some healthy homes compliance. Or are you saying with much lower interest rates the break even is realistically less than 5% so you should be purchasing? At the end of the day, it's your call. If you choose a lower yield then you can not blame your coach.

In my humble opinion with a 5% yield you've got some wiggle room for the unexpected.

cheers,

Donna

[weera2500]

who is you coach? I believe to some of them but some are only name coach.

Don't think it is appropriate to publicly say their name here. It is quite popular and Auckland-based

[weera2500]

So the break even is 5%? And below that you'd need to dip into your own pocket to top up for say maintenance, and poss. some healthy homes compliance. Or are you saying with much lower interest rates the break even is realistically less than 5% so you should be purchasing? At the end of the day, it's your call. If you choose a lower yield then you can not blame your coach.

In my humble opinion with a 5% yield you've got some wiggle room for the unexpected.

cheers,

Donna

When you say 'break even' I am not sure whether you are referring to gross yield or net yield.

After I have subtracted expenses for rates, insurance, property management, property maintanence I need to have 5% is what my property coach is wanting.

[Don't believe the Hype]

weera - i think your coach needs to do more teaching and less telling... the idea of coaching is to enable you to make your own decisions, which it seems you still have some confusion about.

[donna]

I just clicked on the 'SEARCH FORUMS' on our horizontal menu-bar and put in 'yeilds' in the search box - and to highly relevant search results of forum discussions - here is what I got .

You might have other keywords you want to search on. PropertyTalk has 17 years of NZ property investment discussions - it is unique. Use it - here is another 'search' What is a good yield?

cheers,

Donna

[HomeMe]

From what I understand with these coaching programs they should have built you a game plan based on
your investment ability and goals. Then put forth the type of properties that can hit those goals.
I don't think that it should have kept you back by being unrealistic with the market though.
I think that either your game plan needed some slight changes or perhaps property type and area
could have been expanded ?.

[weera2500]

I just clicked on the 'SEARCH FORUMS' on our horizontal menu-bar and put in 'yeilds' in the search box - and to highly relevant search results of forum discussions - here is what I got .

You might have other keywords you want to search on. PropertyTalk has 17 years of NZ property investment discussions - it is unique. Use it - here is another 'search' What is a good yield?

cheers,

Donna

Thanks, Donna

[weera2500]

From what I understand with these coaching programs they should have built you a game plan based on
your investment ability and goals. Then put forth the type of properties that can hit those goals.
I don't think that it should have kept you back by being unrealistic with the market though.
I think that either your game plan needed some slight changes or perhaps property type and area
could have been expanded ?.

They have built a game plan of sorts or recommended buying rules along with the location to look for. In the beginning they wanted me to find properties with a NET yield of 5.5% and then I managed to get them to lower it to 5% but even that seems unrealistic in these times.

[chook]

About 18 months ago I joined a so-called reputed property education company. They are not cheap as you may know. They have looked at my situation and have recommended I focus in Christchurch for my first investment property (I am based in Auckland). The criterion was that I choose potential IP's capable of returning a net yield of 5%.

It's been difficult to get preapprovals but I have managed to get preapprovals in the range of 400-450K. While I have come across many suitable properties in ChCh that fit this price bracket, I have excluded all of them since my property coach insists not to purchase properties without a net yield of at least 5%.

What would you do? I strongly feel that I should ignore what the property coach is saying. I have listened to them for 18 months but have nothing to show for it. Had I bought a property 18 months ago that was returning at least 4% NET, I'd have at least received a little capital gains by now.

Any thoughts please? Is a net yield of 5% (as recommended by my coach) even realistic to achieve in ChCh at the moment? I am not impressed with the property coaching guys even though they are super friendly. They are the ones holding me back right now!

Many thanks in advance.

At least they are trying to stop you buying a negative cashflow property which is good, but why are you even looking in this falsely elevated market. The NZ Govt is doing the exact thing the US Govt is currently doing with the Dow Jones and keeping it 'pumping' when in all reality it should have crashed months ago. They are creating the illusion that everything is fine and the country is doing well all due to unlimited printed money stimulus that is going to bankrupt the country for decades. When people in the street see our hot property market they think everything must be fine, when in reality when you have a look to see what is hiding behind the curtain ...what you see is a nightmare scenario which is yet to play out..

[donna]

^^ But when? As you say we carry on with what's happening right now as it is the reality we have. When will we see drastic change? No Government wants it - can ours hold out for 1,2 or more years and then let the pent up demand for all things NZ including immigration, tourism etc fill the coffers.

cheers,

Donna

[weera2500]

At least they are trying to stop you buying a negative cashflow property which is good, but why are you even looking in this falsely elevated market. The NZ Govt is doing the exact thing the US Govt is currently doing with the Dow Jones and keeping it 'pumping' when in all reality it should have crashed months ago. They are creating the illusion that everything is fine and the country is doing well all due to unlimited printed money stimulus that is going to bankrupt the country for decades. When people in the street see our hot property market they think everything must be fine, when in reality when you have a look to see what is hiding behind the curtain ...what you see is a nightmare scenario which is yet to play out..

I am a newbie so my thinking might be naive here. My goal is to buy a cashflow positive property and adopt a 'buy and hold' strategy. So what if the property market crash?! Wouldn't I still be making a profit during a crash if I stick with positive cash flows? Property crash would be detrimental only if we are relying on capital gains, is it not?

[donna]

Depends on the size of the crash - how long is a piece of string? However the magic net yield of 5% now makes sense aye. Consider housing stock that needs some work done to create the 5% net return potential.

cheers,

Donna