Buying Real Estate for investment has for a long time been a tried and trusted way to make some money. But like everything there are risks that need to be weighed up and taken into consideration. When it comes to looking at buying an investment property there are a couple of things that you should keep in the back of your mind the whole time. Some of these are:
1. Do your research. If you are buying a property in the hope of becoming a landlord then make sure you have checked the areas rental potential and make sure the types of properties that you are planning on buying are the ones in demand by tenants. If you are planning on flipping the property, make sure you buy a property that is wanted by homebuyers.
2. Don’t’ blindly trust what anyone says. This includes so called experts. Talk to a few different property professionals to try and get a balanced view on things such as:
- What type of property to invest in.
- What location is sought after.
- What type of tenant to aim for.
Sometimes it is only after canvassing lots of different opinions that you can really formulate you own strategy with confidence and with solid reasons why you plan to do what you plan to do.
3. Get comparables for everything. Rental comparables, sales comparables – everything you can. Make sure your comparables are as much like for like as possible. For example: if you want to rent out a two bedroom flat next to a railway station, then try to get the rental comparison of other two bedroom flats next to the same railway station.
If you use a two bedroom flat that is ½ a kilometre away from the railway station, then your comparisons maybe way off. ½ a kilometre can be a long distance if it takes you from the desirable part of town to the rough drug dealing part.
4. Get your finances in place. This is a good thing to do even before you start looking for properties to buy. If your finances are sorted out before you start looking at how to buy investment property, then you will be more likely to be looking with confidence and purpose because you know if you find that bargain property you have the finances already in place to do the deal.
But if you don’t have your finances in order there might be doubts in your mind about whether you can finance a deal even if you find it, this in turn may cause you to self sabotage any deal you see even before you put an offer in. They key is to being confident in what you’re doing. And if your confidence in knowing your financial position your well on the way.
5. Employ the right professionals, whether that means builders, solicitors, contractors, or someone else, skimping on employing qualified people to do a job correctly can cost you a lot more money than you expect. Just because someone is cheap, doesn’t mean they can do a good job and just because someone seems expensive doesn’t mean that they can do a better job than someone who is cheaper.
The only way to find out for sure is to check references and their qualifications to do the job. Try and speak to real people, preferably face to face, that they have worked with before. Once you have done this homework you should again be more confident your doing the right decision for you.
At the end of the day you need to do what works for you. My advice is to know your finances inside and out before you go looking then once looking do all your homework before you proceed to buy. This way you will be totally confident that you will be doing the right thing and there is a lot less chance that something could go wrong.
Investing in Real Estate is rewarding and exciting. There are many different avenues that you could go down. There is no right or wrong way. It’s just about what your comfortable with. I wish you all the best.
Deon Swiggs
Property Profits
September 04 2008 | Buyers | 3 Comments »
Why is it that when the price of oil goes up by a small fraction the price at the pump goes up instantly. But when it goes down it seems to take forever for just a slight correction at the pump occur. And then you hear about the fuel companies boasting record profits. Is it to me that in this time if economic hard times they are the only business that’s actually creaming it?
This is an article that was published in England on the sky news page. The start of it goes
“BP announced first quarter profits of £3.32bn – a 48% leap – while Royal Dutch Shell revealed a 12% rise to £3.92bn.
The figures have been buoyed by rising oil prices and come at a time when motorists are paying on average almost £5 a gallon at the petrol forecourt.
Crude oil prices have reached an all-time high of around £60 a barrel.”
To me this just does not seem right. Now I did a little digging and found some interesting things about theprice of crude oil vs the price of petrol at the pump for us here in New Zealand.
The price of crude oil today is at the same levels it was in May this year. At approx $110 USD per barrel of crude. Which during may translated to pump prices for 91 Octane Fuel to be $1.55 per liter. But what is the level of fuel prices today. They are at a whopping $1.99 per litre. This is a huge .44c more per litre for the same level. How does that work??? Now fuel companies dropped the price of gas at the pumps to that level three weeks ago, when the price of crude per barrel was USD $120+. And it has dropped a further $10 since then. So someone is creaming it…
Also what I wonder about is at its peak Crude oil peaked at $146 USD per barrel which translated to 91 octane fuel being its most expensive here July 7th 2008 at $2.189. Now I worked out taking into account exchange rates and everything else that at this peak time a barrel was approx NZ $ 195. Now if I use the same thinking and translate to what a barrel of crude oil costs now it will be NZ $150. (Remember that exchange rates are taken into account as our dollar has slipped againt the American over this time). But if I take this and compare our price at the pump today it should be approx $1.67 per litre of 91 octane. Now that’s some massive 32 cents from where it is today. Don’t call me smart but something doesn’t sound right.
Now I know there are many factors that must be taken into account here but a varience of 32 cents and then you hear things like the oil companies are making record profits. This actually really makes me cross.
I don’t mean to sound like I am complaining but I think we all as New Zealanders need to know the truth about the fuel prices. There is all this fuss about How the Real Estate market needs to be more transparent. But HELLO!! Its like pretty straight forward I would have thought. The real transparency needs to be in our fuel prices which effect the day to day running of our lives for everyone in more ways than just our personal cars.
I think there needs to be someone paying closer attention to the price of our fuel at the pumps because I believe we are all been totally ripped off every single time we go to fill up. But its not just the price of fuel that affects us. Its almost everything. And at a time where money is quite tight the last thing we need is to taken for a joy ride by greedy rich petrol companies!!
UPDATE 16/9/08
this post has recieved thousands of hit since being put up. People must be interested and concerned.
Alonside here I have posted a picture of the latest monthly graph. which shows crude oil at just over 90 USD. Along with that Our New Zealand Dolllar is suffering dropping down to .657 USD this partly due to the drop in our OCR drop and also the strong US Dollar but after the Lehman Bros collapse this may be under threat. Meaning the price of fuel at the pump should be approx 1.53 or something around that. Not 1.97 still!!
Leave a comment if your concerned with the pertrol price at our pump being over the top still..
UPDATE: 19/09/2008
Price of 91 Octane fuel down 6c/l to $1.939
UPDATE 16/10/2008
Price of crude oil in US Dollars is now at $71.50
New Zealand Dollar is at 60.3c against the US Dollar.
Therefore crude is $118.573 NZD per barrel.
Now if using the same logic petrol (91 octane) should be approx $1.39 NZD which is far from the current $1.87 it currently is. Its 48 cents difference per every litre. WOW!!
The first picture on the right in this update is from july 16th 2008 and it shows that the crude price has been falling pretty much the entire 3 months. The one below that is the last years graph which shows clearly the peak and then the drop back. The price of oil is now lower than its been for over a year.
Just after I wrote this I wrote in to the New Zealand Herald and this was their response. Click the link….
Hopefully this puts pressure on the fuel companies.
UPDATE 13/11/2008
Price of crude oil $59USD
NZ Dollar to the US is .59c
Crude barrell price in NZD is $100
Price at the pump if using same methods is approx $1.22 for 91even with the exchange rate the way it is. But 91 octane is still as high as 1.57 in many places. thats a 30c gap still!
UPDATE: 21/11/2008
For the first time in 4 years crude oil is under $50USD per barrel. WOW!
This is huge news and is a true telling sign at how much confidence there is in the world economy. But on the flip side to this the New Zealand Dollar continues to fall and is now at .51c againt the US. the price of fuel has come right back to approx $1.46 in most areas for 91. This makes it alot more affordable.
Barrel Price is now in NZD $96 Which means the price of fuel to be approx if following the trend should be approx 1.18c which is still .30c more than it is now.
UPDATE 24/12/2008
Price of crude Oil Down to a staggering 39USD a barrel.
New Zealand Dollar risen a little against the US to .56c
Price per barrel in NZD is now only $70.
This would mean if using the same calculation the price of fuel for 91 at the pump should be approx .96c which is .43c off the price it is at the pump now of $1.39.
Update 24/1/2009
Well one month on from the last update and there has been some large movement in the price of petrol. But only petrol. Diesel has stayed the same price at around $1 per litre but petrol in the last week has jumped up .20c
The cause for this is the small spike in crude oil prices and the drastic drop in our New Zealand dollar after figures were released stating that our business confidence is at a 30 year low. So the dollar tumbled. But looking at the figures now crude oil will cost in NZD $79 which is a big jump. But not one to justify a almost instant .20c increase in petrol prices. Petrol Price in my jusdgement should be approximately $1.07 per liter. About where diesel is at the moment.
Update 1/2/2009
Price of crude oil is still falling now at $42 a barrel. But with the latest OCR drop by the RSBNZ on Jan 29th the New Zealand Dollar fell about 2c to where it closed for the weekend at .5052 And this has seen a futher 10c jump in the petrol price, where diesel is still $1.03 per liter.
If I work off the same principle going back to October 2007 when fuel was increasing fast I can figure out how much a liter should cost at the moment in todays prices. Crude oil would cost $84NZD which is a slight increase from the last update because of our dollar dropping so much. But its only a small increase. The cost of fuel (91 octane) at the pump should be only at about $1.24NZD which is over 40c off where it is today. So where is it all going wrong???
UPDATE 10/2/2009
When the value of out dollar dropped and the price of crude oil slided 2 weeks ago we saw an instant price increase by the fuel companies. They put their price up by 30c on petrol in almost a week. As of today the price of crude is $39 per barrel. And the New Zealand Dollar has gained great ground with jumping up to about .54c against the US. This means a barrel of crude would cost approx $72USD which is considerably less than it was last week.
In saying that using the same logic as before fuel prices should be back around the $1.11 mark. A marked difference which is less than last week.
UPDATE 14/03/2009
Two days ago we saw the price of petrol 91 octane come down to 1.589 per liter. This 5 cent drop is a great help for many as money is starting to become tight as the financial crisis around the world is starting to take full grip in New Zealand. In the last month our dollar has dropped a fair against the USD but has recovered from the lowest points which went down to under .50USD.
Currently our dollar is at .5247USD and the price of crude oil is sitting at just on 45USD a barrel. As you can see from the graph to the side the price has been increasing slowing over the last month. This means though that the price of crude to by in NZD is 85.78
If I use the same calculation from the past 18 months I believe the price should be around 1.32 per liter.This is 20 cents more than a month ago.
The strange thing is that the price of crude oil etc is costing more as the dollar drops and the oil increases but as I said right at the start the price of fuel actually come down. I cant figure it out at how they work it.
Update 7th April 2009
Crude oil price is $51.2USD a barrell
New Zealand dollar has climbed to a respectable .587USD
A barell of crude oil in New Zealand Dollars costs $NZ87.2 per barrell.
Cost per liter in my view would then come around to NZ$1.34.
Not alot of change in the last month as you can see. The Value of our New Zealand Dollar has offset any of the change seen in the price of the crude oil. But as you can see there is still a 20c difference from what it is now. It is although good to see this margin dropping slowly. 6 months ago using the same calculation there was over a 50c difference. But there is still some way to go before consumers in my view are getting a fair deal.
Update 1/5/2009
Petrol prices in New Zealand have dropped 5c a litre to $1.539
The official reason by the oil companies are
BP spokeswoman said it had been 49 days since the price of petrol last went down.
Caltex spokeswoman Sharon Buckland said for a while the international prices of fuel had been dropping but the weak Kiwi exchange rate prevented a drop in pump prices.
49 Days ago if you look at our New Zealand Dollar was at its lowest point at .49USD and this was approx when the price of petrol last dropped. If you read above, according to the Clatex person the reason that petrol hasnt dropped in that amount of time is because of the exchange rate. But this has been steadily climbing for over a month and has now dropped off to about .575USD
If you look at the other picture to the right you can clearly see that the Price of crude oil has remained fairly steady over the past month and only slightly increasing over the 3 month period the picture shows.
The price of crude oil now is at 51.5USD a barrel or 89NZD which is slightly more than earlier in the month.
If I continue on my predictions the price for 91 Octane fuel should be only $1.37NZD.
So I dont buy the reason why the price has only come down now, I think they have been holding onto their high prices and raking in profits for charging more than they should be.
Update 1/6/2009
Over the last month we have seen the price of fuel in New Zealand rise by 10 cents a liter and is now $1.63 per liter of 91 Octane fuel.
This is on the back of increasing crude oil prices which is has now been slowly increasing for about 5 months now. And I dont think its going to get any cheaper any time soon eigther. The reason is below in this update.
Price of crude oil in USD is $66.64
Our New Zealand Dollar is at .6382
Crude oil in NZD will not cost $104.5 NZD
This would mean that the price of crude oil if I continue with my calculations would be $1.60 This is only a .03c difference now. There has usually been a difference. This difference has slowly been coming down though. if you look back to earlier this year the difference was around .40c to last month when it was about .17c and to now where its only .03c
Watch out people I have a feeling fuel prices are about to jump probably another .10c a liter in the next week or so.
Here is an article that I do think that you will find very interesting. I think I am going to have to sell my BMW M5 soon and buy another car. Trade down from a 4.8L V8 to a straight 6 or something because it is going to get expensive as soon as the economy turns around a little bit.
Also could be a good time to invest in oil shares.
Read This
It took only 5 months for the price of oil to plummet from $150 to under $40 in the second part of the year. Meanwhile oil consumption did not even decrease 10%, so what is the real cause of this collapse you may ask?
Hedge funds. Let me explain.
o fund government programs and prevent political instability.
One constant however is the depletion of major oil fields, worse than predicted at 9.1% year over year as we close 2008. It’s a matter of when not if the economy recovers and when it does, expect a strong bounce back in the price of oil.
Property Profits
September 02 2008 | Uncategorized | 24 Comments »
New Zealand All Blacks will be playing a historical test match in New Plymouth. The match will be played on Wednesday September 3 at Yarrow Stadium – the first time an All Blacks test has been played in New Plymouth. The match will kick off at 7.35pm with the Wednesday date to avoid a clash with Air New Zealand Cup matches.
The reason for the match being played in the middle of the Try Nations is that the All Blacks want an extra test as there is a four-week break between their Tri-Nations game against South Africa in Cape Town (Saturday 17 August) and their last game of the tournament against Australia in Brisbane on Saturday 13 September.
The game in Australia will be the decider of the try nations with the winner taking all. After Australia’s record breaking loss against the Spring Bocks my bet is it is going to be an all out game. Especially with Australia trying to save face and Robbie Deans putting his mark against New Zealand.
This is the first time the All Blacks are to hit New Plymouth. But we have shown in the past that we can host big matches, including most recently the British & Irish Lions match against Taranaki in 2005 and the New Zealand Maori v England match in 2003.
The biggest crowd to ever attend a game of rugby in our province was on July 17, 1965 where 37,100 people turned up to support their local Taranaki team, who at the time were the holders of the Ranfurly Shield. But they went down to South Africa 11-3. The game was held, of course, at New Plymouth’s Rugby Park. The ground was redeveloped during 2001-2002 and was renamed Yarrow Stadium, following significant support from the late Noel Yarrow CBE JP and his family.
The Taranaki province also has strong links to the All Blacks with 70 players from the province going on to represent New Zealand, including current squad member Andrew Hore.
Many of the New Plymouth Businesses are getting in behind this great event with a Province wide black out! Shop windows are being painted black, The Taranaki Daily News has Black around it and Taranaki Harcourts have run a black out blueprint publication with a large auction campaign launched, with blue turning into black. The community is buzzing at the moment. Driving through town today was a rather nightmare. The streets were clogged with cars and people are out and about walking all over. And its only to get worse towards Wednesday.
The best part is weather has really turned out a good show as well with probably our best couple of days in several months. The great thing is the warm fine weather is here to stay until the match is over. Maybe spring is here.
I was down watching the team at the Bull Ring have a quick familiarise with the grounds and to meet some of the locals. It was awesome to see how many people turned up in support. The entire bull ring was chocker of people out to see the Team and give their support.
Well I wish to welcome Manu Samoa to New Plymouth. I hope they enjoy their time here in Taranaki and lets hope for a good game of rugby on Wednesday Night.
Deon Swiggs
Property Profits
September 01 2008 | Uncategorized | 3 Comments »
September 1st 2008. The official 1st Day of Spring and 6 days till my birthday 
Let’s hope that winter is finally over! Officially Winter is from the 1st of June to 31st August. This years winter was pretty wild. Our first major storm of the year way June 25th. I even wrote a post about it here, but what followed from this for the last 2 and a half months has been just shocking. In New Plymouth we have not had a fine Sunday in 7 weeks until yesterday. And this is echoed by the latest NIWA Research stats where it says wellington had only half the amount of sunny days as on Thursdays so far this year.
Many of the country saw more than two times the average rainfall in only a few short days at a time. Sometimes this happening more than once in the same month. Now after a drought this was a huge change and much of the country was not prepared for so much water to fall. The other side of this is the amount of snow fall in New Zealand. Mt Taranaki experienced its lowest snowfall recorded in 10 years and Whakapapa Ski Field has got the deepest base ever recorded of 4.5 meters. And many south island roads were closed because of snow fall and slips and water related problems. So it’s been fairly dismal. But the NIWA predictions for this spring are to be warmer and sunnier than usual. We will see.
Now will spring “spring” some life into the real estate market? Well here is hoping. Winter was dead and quite frankly a letdown… But traditionally this is how the housing market works. And spring always brings heightened activity to the market. With more people coming to the market and buyers starting to buy there will be more sales and movement. So if you’re a Vendor that has had your property on the market over winter and still haven’t sold. Don’t give up hope. The new season may well bring more interest to your property.
Real Estate is a very much run on the people and how they feel about things. Winter is genuinely a time when we like to relax, stay warm and nothing much happens. During the winter people’s property doesn’t look as good as well so many sellers don’t want to come to the market. Trees have no leaves, the lawns could be soggy, no flowers are out and the vege garden may be in a terrible state. But spring is when all this turns all around and starts to beautify. The gardens are all in flower. The daffodils and other bulbs are in full flower. The trees are starting to leaf up. Everything is just full of colour and its warmer. The downside to the ones of us who get hayfevor is the pollen at this time of year.
So from here on let’s look upwards to a good season. There is no looking back.
September 01 2008 | Buyers and Sellers and The Market | 2 Comments »
