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**fudosan** · 19-05-2005, 12:34 PM

Hi Cash, welcome to the forum

As far as where the market is heading, I believe it has peaked. Read the April 7 issue, if still available, of Tony Alexander's Weekly Overview on http://www.bnz.co.nz/About_Us/1,1184...9-1567,FF.html

and you can see a property cycle chart starting from 1961.

**Cash** · 19-05-2005, 01:10 PM

Hi Fudosan,

Yeh I feel like the market is about to see a flat perod over the next 8-15months which could mean some good buys are out their. It's always hard to know but for those that can use LAQC's to off-set loses over that peroid it's not so bad.

Is it just me or is the rental market in Auckland WAY behind the current market prices that are being paid??

**Glenn** · 20-05-2005, 08:14 PM

Re your question commercial or residential.
I would think that you might not have enough money to get into commecial at this stage. Most of the good buys are over the $2m range these days. Had someone trying to sell me an industrial this week. Tenant on his way out. No sign of another tenant (adverts looking for one). I think the place should be worth $300000 vendor paid $472000 last year, and the agents are telling me to give them an offer over $500000.
I told the agent I would be the one who set the price of my offer not him. I would be the vendor who would decide to take it or not.
It was the agents job to convey the market's comments to the vendor.

**MarkS** · 21-05-2005, 01:30 PM

Hi Cash

Welcome to the forum

**Cash** · 21-05-2005, 02:18 PM

Hi Glenn,

Yeh the commercial thing is just something I'd like to get into in the future.

For now their is enough to learn in the residential market. At the moment I'm just looking at property within 5km of Auckland Central, I'm mainly after older houses or townhouses that aren't already done up. The plan being that over a 5-10year period the captial gain from being close to the city centre will easily cover any loses over that time and by then the rentals will be covering the mortagage anyway.

I can afford to top up the rentals to pay for the mortagage and plan on using a LAQC to offset some of this loss against my income. All opinions welcome.

**Glenn** · 21-05-2005, 05:47 PM

Yeh the commercial thing is just something I'd like to get into in the future.

now that is a smart move Cash. The first investment I tried to get into not long after the 87 share crash was a commercial. Mortgage sale. The banks just laughed at me. I thought we had plenty of capacity. So we built a little residential (still have it) and a couple of years later returned to the bank to borrow again on our first commercial (still have too). I made the comment to the bank manager that we had proved ourself and he agreed.

just looking at property within 5km of Auckland Central, I'm mainly after older houses or townhouses that aren't already done up. The plan being that over a 5-10year period the captial gain from being close to the city centre will easily cover any loses over that time and by then the rentals will be covering the mortagage anyway.

I really do not know anything about that market although I know the area really well. (well used to 30 years ago)
I suspect that the field has been picked and raked over thousands of times over the last boom years and that there might not be much out there. I remember when I was selling real estate in Nelson back in the early mid 90's. The market got over picked again there was hardly a run down place to be found. After a few flat years of bad tenants there were heaps of the do it uppers again when the boom came through in 2002.

I have seen heaps of people make a tidy sum from doing up and onselling.
I also manage a few properties that started out as hovels and the owners gave them a total and the rent I can get off them is great.

However I also have picked up a few properties in the last 6 to 12 months that the owners had refurbished and could not sell at the price they had purchased then for despite having done a total refurbish. Those owners are not distressed. They have enough money to sit it out. However if the houses had been purchased on 100% borrowings they might not be happy chappies.

Just remember the sun shines on the just and the unjust regardless. It is true that eventually regardless of what city you in that central city stuff will be sought after. But it can take a long time and timing is not a skill that I believe anyone can learn. There is a fair amount of luck and it can take a lot of patience. My observations of the market are this.
When the market is going hell for leather the good areas go up first, then the bad by about the same percentage.
When it all cools the bad areas fall first then the good areas follow along not long after.
The difference between the good areas and the bad areas are that you get better class tenants. But as the bible says. We will always have the poor with us. They will always have to rent. The rich guys can pack up and head off to Aus but the poor sods have to stay and suffer renting in the bad areas.

**muppet** · 21-05-2005, 07:13 PM

Hi Guys

Glenn said:

Just remember the sun shines on the just and the unjust regardless. It is true that eventually regardless of what city you in that central city stuff will be sought after. But it can take a long time and timing is not a skill that I believe anyone can learn. There is a fair amount of luck and it can take a lot of patience.

This quote is probably the most profound thing that has been said on this forum to date.
Well said Glenn.
This would be the introduction of Chapter 14 of your up and coming book.

Regards

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