- This topic has 14 replies, 5 voices, and was last updated 17 years, 5 months ago by
blue_sky.
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July 20, 2007 at 2:18 PM #9552July 20, 2007 at 2:26 PM #66744
blue_sky
ParticipantCan you describe the purpose of your investment?
How large an investment are you looking to make (# of units)?
Are you looking for a long term (>5 years) hold or a quicker flip?
Willing / able to put work into the property?Basically rental property spans a spectrum from ‘no work’ to ‘lots of work’, with corresponding returns. Being a slum lord pays because it’s a lot of work, so purchase prices are cheap.
10x gross rent in a 9.7% environment is not a deal, which is why you can find them easily.
July 20, 2007 at 2:26 PM #66808ParticipantCan you describe the purpose of your investment?
How large an investment are you looking to make (# of units)?
Are you looking for a long term (>5 years) hold or a quicker flip?
Willing / able to put work into the property?Basically rental property spans a spectrum from ‘no work’ to ‘lots of work’, with corresponding returns. Being a slum lord pays because it’s a lot of work, so purchase prices are cheap.
10x gross rent in a 9.7% environment is not a deal, which is why you can find them easily.
July 20, 2007 at 2:30 PM #66746lniles
Participantif (($monthly_income – $monthly_expenses) >= 0) then buy;
else hold;
end if;July 20, 2007 at 2:30 PM #66810Participantif (($monthly_income – $monthly_expenses) >= 0) then buy;
else hold;
end if;July 20, 2007 at 2:34 PM #66748surveyor
Participanthere you go:
ROE = (CF + AP + LR + TX)/DP
ROE-return on equity/investment
CF-cash flow
AP-appreciation
LR-loan reduction
TX-tax benefit
DP-downpaymentYou can use this formula to evaluate the better return between properties or to choose superior returning properties. In general, anything about ROE greater or equal to 20% is good.
July 20, 2007 at 2:34 PM #66812Participanthere you go:
ROE = (CF + AP + LR + TX)/DP
ROE-return on equity/investment
CF-cash flow
AP-appreciation
LR-loan reduction
TX-tax benefit
DP-downpaymentYou can use this formula to evaluate the better return between properties or to choose superior returning properties. In general, anything about ROE greater or equal to 20% is good.
July 20, 2007 at 2:39 PM #66750ParticipantFor the record, it’s best if you go into real estate investing with the understanding that you MIGHT buy one of of every 10 deals, if you screen your deals well. If you’re just looking at everything in the MLS you MIGHT buy one in 100+.
Also, you’ll get much better deals if you buy in the off season (winter months). I prefer Nov – Dec since you sometimes find people who need to unload by year end for tax reasons.
The ‘off season’ trick may not work in New Zealand since calendar year end happens in the middle of summer for them.
July 20, 2007 at 2:39 PM #66814ParticipantFor the record, it’s best if you go into real estate investing with the understanding that you MIGHT buy one of of every 10 deals, if you screen your deals well. If you’re just looking at everything in the MLS you MIGHT buy one in 100+.
Also, you’ll get much better deals if you buy in the off season (winter months). I prefer Nov – Dec since you sometimes find people who need to unload by year end for tax reasons.
The ‘off season’ trick may not work in New Zealand since calendar year end happens in the middle of summer for them.
July 20, 2007 at 2:42 PM #66751asragov
ParticipantThis is risky territory, so let’s look at just two of the risks:
– Currency risk (New Zealand dollars vs. US dollar – very volatile). The trend has been mostly up the past five years, but there have been plenty of periods where it has not been that way (depending on how long you are going for):
http://finance.yahoo.com/q/bc?s=NZDUSD=X&t=5y
– New Zealand’s own bubble:
http://www.forbes.com/markets/2007/04/26/new-zealand-kiwi-markets-currency-cx_vk_0426markets05.html
Does this sound familiar (“the Reserve Bank of New Zealand today warned that unsustainable home lending was placing the entire economy at risk”)?
http://www.debtdeflation.com/blogs/?cat=16
Maybe just enjoy New Zealand and its beautiful scenery, rather try to speculate in this volatile environment…. ?
July 20, 2007 at 2:42 PM #66816ParticipantThis is risky territory, so let’s look at just two of the risks:
– Currency risk (New Zealand dollars vs. US dollar – very volatile). The trend has been mostly up the past five years, but there have been plenty of periods where it has not been that way (depending on how long you are going for):
http://finance.yahoo.com/q/bc?s=NZDUSD=X&t=5y
– New Zealand’s own bubble:
http://www.forbes.com/markets/2007/04/26/new-zealand-kiwi-markets-currency-cx_vk_0426markets05.html
Does this sound familiar (“the Reserve Bank of New Zealand today warned that unsustainable home lending was placing the entire economy at risk”)?
http://www.debtdeflation.com/blogs/?cat=16
Maybe just enjoy New Zealand and its beautiful scenery, rather try to speculate in this volatile environment…. ?
July 20, 2007 at 3:03 PM #66757Ash Housewares
ParticipantI would probably be looking at a single condo, not multiple units. The rents run around $300 per week, so if I could buy the place for 150k and put 20% down my payment would be ~$1030 a month, less than I would pay in rent. Of course I haven’t a clue yet what property taxes run over there…
Here’s an example:
http://www.allrealestate.co.nz/cgi-bin/rsearch?a=o&id=104161773&f=0&p=10&t=res&ty=&fmt=&header=®ionid=9101&c=33939061&s=nzni&snf=rbs&tm=1184968853Thanks for the formula surveyor, I’m sure I’ll be using it for many years.
asragov I know NZ has it’s own bubble…I’m moving from one to another…they seem to be a few years behind the US in their bubble stage though. I’ll probably end up renting; this is more of a learning exercise for me.
July 20, 2007 at 3:03 PM #66822ParticipantI would probably be looking at a single condo, not multiple units. The rents run around $300 per week, so if I could buy the place for 150k and put 20% down my payment would be ~$1030 a month, less than I would pay in rent. Of course I haven’t a clue yet what property taxes run over there…
Here’s an example:
http://www.allrealestate.co.nz/cgi-bin/rsearch?a=o&id=104161773&f=0&p=10&t=res&ty=&fmt=&header=®ionid=9101&c=33939061&s=nzni&snf=rbs&tm=1184968853Thanks for the formula surveyor, I’m sure I’ll be using it for many years.
asragov I know NZ has it’s own bubble…I’m moving from one to another…they seem to be a few years behind the US in their bubble stage though. I’ll probably end up renting; this is more of a learning exercise for me.
July 20, 2007 at 5:30 PM #66781ParticipantIf you’re going to live in it that sounds quite reasonable to me. Btw, an appt that rents for equivalent in SD (1200/mo) would probably cost you 250-300K now, and 50K more than that back at the peak.
July 20, 2007 at 5:30 PM #66846ParticipantIf you’re going to live in it that sounds quite reasonable to me. Btw, an appt that rents for equivalent in SD (1200/mo) would probably cost you 250-300K now, and 50K more than that back at the peak.
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