Archive for the 'Landlords/Investment' Category

Auckland Buyers Storm Wellington?

In the last week I have had three offers from Auckland investors: one has bought this beauty in Thorndon from me. Way over its silly RV of $1,050,000. Yielding over 6%, on a lovely 550 m2 section in a great street in Thorndon ( Burnell Avenuemain). Bought without physical inspection though the buyer knew the property and carried out full diligence. The other two offers were made sight unseen also. I’ve rarely  had even one offer like that in 26 years real estate. A trend or an anomaly?

October 30 2015 | Around Wonderful Wellington and Auckland real estate and Landlords/Investment and New Zealand Real Estate Market and Notable Property For Sale | No Comments »

“Finders” still getting business!

Should I be horrified? High income past clients tell me in street on Saturday ” we are buying 3 houses through ( outfit I have never heard of) mostly using equity in our ($1m)  house.  Interest only. ( You have heard this before?) One Auckland, one Hamilton, one Westport. Only for capital growth. The figures stack up”  I could scarcely avoid flinching. Was I wrong to feel so negative? Does “only for capital growth”  really mean “hardly funds the borrowing”? Could, in fact, this make them rich?

December 05 2011 | Auckland real estate and Landlords/Investment | No Comments »

Wow! Landlords Look at This Wellington Judgement

This is told to me by local landlord. Would say Tenancy Tribunal go about things in an “Interesting” way sometimes.
Hi Colin,
You might appreciate this little twist on the story of giving notice. We bought our latest property on a tenanted basis. The tenants’ fixed term lease had ended a month or two before the property was put on the market. The vendor didn’t bother to get the tenants to sign a new written agreement. A week before we settled, the tenants walked out. According to Tenancy Services legal advisor, because they hadn’t signed a lease, they didn’t have to give notice and we couldn’t recover lost rent from them. Instead, the vendor had to pay us an equivalent sum to compensate us for not rolling over the tenancy.

To which I replied:
“Hi ……
Tenancy services said they didnt have to give any notice whatsoever, or only 3 weeks?

Tenancies become periodic at the end of fixed term. It is a easy to miss issue!”

But the kicker was her reply:
“No notice required at all.
If a fixed term lease ends and the tenants remain in possession of the premises, there is a stand down period of 90 days before the Acts deems there to be a periodic tenancy (s60(2)). At first I thought s 60(1) gave us the right to notice bc it says the tenant’s obligations shall continue in force but of course it didn’t because the fixed term lease didn’t include any notice period.
Everyone was taken by surprise – our lawyers, their lawyers, the agents….”

April 27 2010 | Landlords/Investment | 2 Comments »

Rents Up, Overcrowding to Rise

Its likely Tax changes to property will reduce the suply of rental property.
Rents will rise not because landlords can increase rent to restore profitability just becaue they want to, but because tenants will have to compete for less homes. It will be messy, because with high land & building costs & unattractive tax changes, the private sector will not build any new rental property for this surplus of tenants.
In fact NZ is facing a housing supply crunch all round.
Sections need to be $50, 000 to $100 000 cheaper, ( ie, basic new 400 m2 section, cheap area, with sevices for $75 000 to $125 000) & true build cost to fall from a true all up cost that really has to be $2200 m2, to say $1500 m2 before this messy situation is averted.

My prediction? Either massive state building again, or steady backdown on tax law.

You will see Tax INCENTIVES on rental property within 5 years! Heard it first here

April 18 2010 | And What About The Wellington Market? and Landlords/Investment | No Comments »

How Badly The NZSX Has Done.

Property is about to get a tax thump.
So investors will put money in the stock exchange?
I think not.
The Securities Commisin is widly derided. The public, often castegated for an absense of rational decisionmaking, are very astute to put money in property, which is governed by clear , enforced laws. Not The NZ Wild West.
Even after the ’87 cock ups, and susequent fiddling, the sharemarket is still an easy place to loose ALL of an investment.

Think about this aweful indictment: In ’87 ( at it peak) the Australian sharemarket value was 4.2 times the NZ value. Now it is 33 times.

Dont beat up property Bill, Beat up the Securities Commission!

April 18 2010 | Global Markets and Landlords/Investment | No Comments »

This Really Peeves Me About the NZSX vs Property

The New Zealand Stock Exchange Index compounds itself by adding dividends in. AND can only achieve 6.5% pa over the last 17 years.

Yet often its’ performace is compared to basic house price movements. Imagine if rent on a house, nett, was added to the price movement…then compounded! Say that nett rent was 4% The comperable figure after 17 years would be ….huge. It would have to be a compound 12%, ie doubling in less than 8 years.

Any comments from someone good at compounding?

April 18 2010 | Global Markets and Landlords/Investment | No Comments »

I agree with the bank man

Tony Alexander of the bnz ( no its not the BNZ, they have marketing people so its the bnz,) has always done well in commenting & predicting, in my opinion. I say that allowing that the economist Galbraith once said at a party ” astrology was invented to make economics look good”

Tony said today, & I agree “In the housing market there is some evidence – based on Auckland data – that worries about tax changes have stalled turnover but prices are holding up and listings are not escalating madly.’

Rocky times for rental property, I predict

April 15 2010 | And What About The Wellington Market? and Landlords/Investment | No Comments »

What about the Tenants?

Personally I think tax changes to Residential real estate investment could be a disaster about to unfold…for tenants
I dont say that because I sell Real Estate..

this is why.

There is a general agreement rents will have to go up if landlording is made less profitable. Its as as simple as that.

For every tenant there needs to be a landlord. NZ owner occupier property ownership has been only slightly declining.
( claims the owner occupier percentage was falling were rebuffed when it was pointed out properties going to family trusts were going in statistics as a change to investment vs “owner occupier”)

No, many people who have never owned a house , but could buy a house rent because….they are going overseas soon.

As Ive said before, playing with property is an easy one for the government. But its the lack of profitability in the economy thats the problem.

If the government make being a landlord less atractive…who will tenants rent from?
If yields have to be higher, values have to be lower. How does a loss of capital of say 20 % help redirect investment? It dosnt make other options suddenly more profitable…just reduces wealth. I cant see sellers of investment property putting it in the bank, or buying NZ shares. It will go overseas.

And the question I can not even begin to answer:
Who will the 30% of New Zealanders who rent ( & remember, only 3 % of NZ tenants live in state owned rental houses) have as landlords, if the government make it less attractive to own rental property?

April 15 2010 | And What About The Wellington Market? and Landlords/Investment | No Comments »

Changes are Gonna Come

No denying now, that tax changes on owning Investment Residential Real Estate in New Zealand are in the short term, not going to be for the better….for anyone.
Actually thats not true: What do you think of this scenario?

Being a landlord becomes less attractive ( I assume you know what the budget will do, if not a few “comments” here & I will explain.)
The worst properties get dumped on the market. I can tell you, in Wellington these really are very good location, very bad condition 100 year old houses.
Prices fall.
who buys them? Young first owners wont get funding. & they are high income hard workers…not the old Kiwi “do up a house instead of have a life shopping in Sydney” The buyers with money wond buy dumps. Some of this investment stock really is in terrible condition.

Da Da Da Da!….. Return of the Doer Upper, flick on, make a buck, hard worker!

April 15 2010 | Landlords/Investment | No Comments »

New Zealands Problem isnt the Property Market

Property isn’t the cause of New Zealands’ problems…its everything else!

I’m delaying the series I will do on proposed taxes on Property, so Kiwis invest in “more productive” things.

I’ve decided that there is something more important to discuss first.

Property isn’t the problem here in New Zealand, its the poor state of the profitability other “asset classes”.

Security for investors is still pathetic in the share market. It is a global sharemarket joke.

Put it in the bank or finance house? Another joke. If you dont lose i, by the time they tax 6% returns, you are going backwards.

Stories I heard over the the last 5 years here in Wellington were that the Labour government were advised bluntly and repeatedly that finance companies were a disaster unfolding. They did nothing.

I deal with the sad , tragic stories of those that lost their savings from that inaction by Labour on pathetic banking regulation. Many that lost their savings to finance company were lesser educated, older people…I suggest Labours own constituency.

It was probably hard for Labour ministers to hear the advice that a disaster was unfolding when thy were in the back of $250 000 BMW’s.

I think its a disgrace those “socialist” ministers chose not to veto those gross, ugly, obcemly expensive BMW pigs. They should have bought something to set a good role model to their “subjects ” like a hybrid Lexus at half the price. Its hardly better than politicians driving round in V 8 Fords while negotiating the Kyoto accord. Just like Lord of the Flies to me.

I digress. We live by exporting…but nobody is getting rich doing it. So who would?

Look at “our” billionaires or very rich: are they exporters? Fay & Richwhite, Gibbs, Giltrap, Jones , Hart, Watson, Morgan, Tindall… sorry, no. Not a one. A country reliant on primary production and not a really rich exporter. That says it all.

No, a high flying exporter in New Zealand is… is …. is someone about to fall a long way. Or be bought by their main client. I cant recommend being an exporter
.
Even the fairly well off economic commentator Gareth Morgan agreed recently in the Listener, more or less that “exporting is for idiots”.

So what is the failure in New Zealands performance? Thanks Peter, a respondent to these blogs, for a blunt summary of why we are in trouble & exporters have to be fools to do it :The exchange rate disaster.

NZ has the 77th biggest currency in the world…but is the 13th most “traded.” Making money betting against the ” Kiwi” has been described as “like shooting rats in a barrel.”

Our currency is the worlds traders’ plaything. Because of our simplistic rules on monetary policy. We are often told how “admired” the Reserve Bank rules are. However no successful currency seems stupid enough to copy them as we do it.

So, whether you agree with me or not. If you took money out of the New Zealand property market… firstly: WHO DO YOU IMAGINE WILL BUY THAT PROPERTY OFF YOU?

That is, if a good number of Kiwis decide, that they take their money out of property & put it somewhere more “useful”…who do they sell to?
For the 35% of New Zealanders who have a landlord….who becomes their landlord if its “not a place we want Kiwis to have their money tied up”?

Secondly: WHERE WOULD YOU PUT THE MONEY?

NZ shares?

NZ Banks or finance companies?

NZ debentures?

Direct investment in small to medium NZ business?

Global shares?

Global Debentures?

Foreign property?

Foreign Banks?

Well I don’t think a lot of that investment would stay in NZ. If the Government wont even leave 20% of the Kiwisaver money here, why should you?
Sorry for talking about the Emperors clothes, but this is my opinion.

Comments please!

March 06 2010 | Global Markets and Landlords/Investment | No Comments »

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