TV3 Inside NZ: House Trap

[RonHoyFong]

Hi Forumites

Thursday 20th April 2006 at 8:30pm is the first new series of "House Trap", Part 1 of 4

"Tips on how you might afford to buy a bach somewhere in idyllic New Zealand."

Cheers and Happy Viewing
Ron

(Sorry I ain't in this series)

[AustinWong]

Hi ,

Just finished viewing Part 1. The show much like one I saw a year or so ago along a similar line regarding baches was a bit of a waste of time. All the show demonstrated was owning a Bach is still miles outside the average person's affordability. In fact even buying your first home is pretty much in this catergory. I felt the advertisements on tv saying that it is affordable was quite misleading. The best and most cost effective ownership was the Tram at $100,000. I know the site it is on, and I would be stuffed buying on it. I work on river and stream catchments and know what the Te Puru Stream can do. Others thoughts on the show?

[McDuck]

yup.

They are milking a dead cow with that one.

Was interested on the LQAC turn around expectation.

[CJ]

Was interested on the LQAC turn around expectation.

What? Are they planning on changing a LAQC into a LQAC?

What did they say re the turnaround?

[drelly]

It made me laugh they way they kept describing all the properties as "affordable"! The TV3 execs are obviously over-paid!

[Dean@Massiveaction]

I agree Austin. I guess we view these shows through investors eyes and mostly think "what a load of old #&$^#". But I thought it was very misleading for the uneducated. Could easily tempt someone into big debt with the hope of renting out over summer. By far the riskiest way to getting into IP.
My brother in law did exactly this in Taupo without any education and he goes backwards over 30K a year.
I guess also similar to P Climbers the info on House Trap is old and prices have moved enormously since they recorded.

[SuperDad]

I agree with Dean - buying a premium property (beach or lake) with the hope of renting it out (cashflow+ve) as a holiday home is not a good idea. I have briefly looked into this, as I would love a lakeside property in Rotorua, but the figures don't stack up. Prices have simply gone through the roof. A two bedroom bach at my favourite location on Lake Rotoiti (over the back of Rotorua) recently sold for 1.37 million. I'd have to charge something like $2470 a night over the 6 week summer holiday period to meet the interest repayments on the loan for that ammount!!!

Paul.

[AustinWong]

Looking at the 5 friends who bought a place at Okahune for $175k and placed it into LAQC. Correct me if I am wrong, but I do not recall the show mentioning how they balance their use of the property against renting it out.

If it is their bach and they are using it as well as renting it out, they are effectively tax dodging if they claim all expenses.

Did I miss a bit? I had to get up a few times to check my 2 banana cakes in the oven.

[CJ]

Looking at the 5 friends who bought a place at Okahune for $175k and placed it into LAQC. Correct me if I am wrong, but I do not recall the show mentioning how they balance their use of the property against renting it out.

If it is their bach and they are using it as well as renting it out, they are effectively tax dodging if they claim all expenses.

Did I miss a bit? I had to get up a few times to check my 2 banana cakes in the oven.

Aren't you domestic.

I have friends who did this (wonder if it was the same ones as I didnt see the show) and they charge who ever stays there $10 a night regardless of whether you are thw owner or just a guest. May not sound like much but in the peak of winter they maybe over 20 people staying there. On this basis, I do not think it would be seen as a tax dodge that they are staying there themselves (provided they are paying the same as everyone else. I do think you would have to show that the $10 was reasonable though.

[McDuck]

What? Are they planning on changing a LAQC into a LQAC?

What did they say re the turnaround?

I thought they said something about the Tax departments expectation that a LAQC would eventually turn around and stop making a loss….which seems daft to me…or else the name is daft….?

[RentMaster]

I thought they said something about the Tax departments expectation that a LAQC would eventually turn around and stop making a loss….which seems daft to me…or else the name is daft….?

An LAQC most likely would make a profit eventually - when the mortgages are paid off, and the rent keeps increasing. Most properties would become positve cash-flow at some time, if they are not positive to begin with.

[RonHoyFong]

TV3 Inside NZ: House Trap (Episode 2)

Hi Forumites

Thursday 27th April 2006 at 8:30pm is Part 2 of 4 in a new series of "House Trap",

"A look at the Australian Market. Plus, Kiwis living in Australia talk about their experiences."

Cheers and Happy Viewing!
Ron

[CJ]

An LAQC most likely would make a profit eventually - when the mortgages are paid off, and the rent keeps increasing. Most properties would become positve cash-flow at some time, if they are not positive to begin with.

I agree. Unless you bought a real dog or you continue to max out your LVR ratio by investing more.

[RonHoyFong]

TV3 Inside NZ: House Trap (Episode 3)

Hi Forumites

Thursday 11th May 2006 at 8:30pm is Part 3 of 4 in the new series of "House Trap",

"Identifies 10 key areas where you can add significant value to your home, and follows a range of Kiwis as they put some of their ideas into play."

Hopefully this episode will be more in line for Property Investors adding "Massive Profits in Real Estate by Adding Value & Renovations" to PI's than the previous 2 episodes which were more in line with lifestyle alternatives.


Cheers and Happy Viewing!
Ron

[kolzee]

I think people's motives or 'strategies' haven't always been explained very well with this type of purchase....

I will attempt to explain my (and i think many other's) rationale.....

If you can withstand the cashflow funding requirements of this type of property then the gains on the property can actually make these costs (the ongoing interest and upkeeping costs) look minimal.

In some cases then, you may look at the achieved rental as a yield which is misleading as the rental received is simply 'subsidising' the holding costs while capital gains are achieved.

I have benefited from and have seen others benefit from large increases in a coastal property's value while paying the holding costs with no rental income. The overall return however has been more than the majority of residental properties with good cashflow returns.

While it's not for those without the means or desire to fund the cashflow, the idea should not be written off as not 'stacking up' as many see it. It's just an extreme example of the balance between rental yield and capital gain potential....

Does this give a bit of an insight??

I agree with Dean - buying a premium property (beach or lake) with the hope of renting it out (cashflow+ve) as a holiday home is not a good idea. I have briefly looked into this, as I would love a lakeside property in Rotorua, but the figures don't stack up. Prices have simply gone through the roof. A two bedroom bach at my favourite location on Lake Rotoiti (over the back of Rotorua) recently sold for 1.37 million. I'd have to charge something like $2470 a night over the 6 week summer holiday period to meet the interest repayments on the loan for that ammount!!!

Paul.