Wow!!! On the verge of First IP investment

[FreezingandHot]

Hi

This is my first time online at property talk and a great site I might add.

I am currently going through growing pains as I am learning the ropes
so to speak about property investment. I am reading and studying everything I can to make sure when I do buy the first property that
it is a good investment.

The problem I have at the moment is that I am looking at houses as the bank has agreed to loan up to $220,000 for our first IP and the houses at
the moment where we live (Papakura) are not that cheap.

eg. 2 bedroom B&T flat in a block of 3 close to main centre.
Price: $189,000
rental return on this place would be $230 - $240per week
and the loan repayment would be about $270 - $280.

I am not sure if this is good as I have been reading on this website that
a lot of investers do not like to negative gear their investments.

Would love any advice as this is all new to me but I do realise the sellers
at the moment seem to have the upper hand when it comes to selling their properties as there are so many eager buyers at present.

Thanks

Patrick

[tamara]

Hi Freezinghot

Welcome to Pt.

I guess this depends on your investment plan but if you intend to buy in Papakura I would keep looking. There are positive cashflow properties and in desirable areas.

I suggest that that you refine the specific parts of Papakura that you are interested in then go and visit some property managers. Good ones will be able to give you some more information to help you in your search. Papakura is a large diverse area with properties ranging from low end high cashflow to million dollar properties.

Regards

Tamara

[muppet]

Hi Patrick

Have you talked to any Property Managers in the area?

They are an excellent source of information as they will be dealing with your clients and they should know all the easy to let streets and thus the areas for you to be looking in which to purchase.

I suggest that you have a talk with Dennis Keith of 1st National in Station Street in Manuwera.

Regards

[AustinWong]

I am wondering if you have set yourself some investment rules yet, if not have a look at this post

http://www.propertytalk.co.nz/posts2224-start0.html

Then you could look at one that I started, because I am much like yourselves.

http://www.propertytalk.co.nz/postt2380.html

You will see my wife's and my investment rules in there too.

I personally think that you should be at least neutrally geared, particularly if you want buying power for your next IP.

Also, why not property down the road? Say Takanini or Manurewa. I know for instance you can buy houses in Manurewa for $135,000, which may have the right calcs, albeit they will likely not usually being in the best parts of town.

So assessing your risk capacity is really important too.

Remember to be patient.

All the best !!

[FreezingandHot]

Thankyou all for your reply.

I think that talking to a property manager is a good idea and will be doing
so. I think that being neutrally geared is the best way for us @ present as we can ill afford to pay extra for our tenant to live in our investment.

Lawrence I have thought about other areas it's just that I live in Papakura and have done for so many years. I know the best areas to live and Takanini & Manurewa seem to have less desirable areas. I know that there are cheaper properties for sale there but I am concerned with
the potential tenants that I could attract for the money spent in those areas.

I know I have to be patient and wait for the right property to arrive but as this is my first I am really keen to get under way. At least now I have
a new set of rules to follow and realise that negative gearing is not an option for me.

Thanks

Patrick

[whitt]

I thing to consider when purchasing in less desirable areas is the ripple effect during a boom.
Take the last boom we have just been through as an example. Some of these less desirable suburbs got there big jump in prices later on in the boom after others had already been through it.
Implications for a portfolio of property. Is possibly if next boom follows ripple effect pattern you may not get the big price rise until the boom is well under way/ nearing its end.
This is not to say you will not get slow growth just that the large portion of any equity which may be created during a boom will not be usable untill boom is well in truely arrived.
We want to be right there at the start of a boom ready to pounce before the rest of the herd push the prices up. Then when they do, they propel our property prices with them.