Innholdsfortegnelse for Mar 2017 i NZ Property Investor

THE LATEST DATA OFF THE RANKS indicates a quieter market, particularly in Auckland and more recently a reverse halo effect of slowing sales seen in markets around the country. Many commentators agree the market may be in the midst of a slower period, but generally think the cycle has not quite reached its end game, albeit they say growth will continue at a slower rate. Certainly, supply-side dynamics suggest it’s feasible we’ll see further growth in 2017 (read our commentary on p12 for more detail). However, despite commentators’ optimistic views on house price growth this year the latest ASB Housing Confidence Survey shows there has been a drop in price growth expectations in every region around the country, although it is most pronounced in Auckland. If a lack of growth…

There has been a lot of concern about tenant liability for damage following the Osaki decision last year. But now a District Court has overturned a controversial Tenancy Tribunal ruling on the issue. We are keen to hear people's thoughts on the topic… COMMENTS ▶ First ruling is ridiculous and a time waster. If decisions like that continue to be made renters will find it even harder to obtain accommodation. ▶ Good news that common sense has prevailed in this case. About time. ▶ Shows that finally a tenancy agreement is more than the paper it is written on. Australian investors seem to make greater use of property managers than New Zealand investors tend to. We are keen to hear people's views on the pros and cons of using property…

When the IRD initially red flags your tax return, it will look at doing a ‘risk review’ rather than a full audit and will often give you an option to make a voluntary disclosure. This means you’ll be able to make sure you have filed correctly. At this point it would be prudent to get an accountant to look over your return. Naturally if you have dotted your I’s and crossed your T’s you’ll have nothing to worry about. If IRD proceed with a full audit the only thing that should concern you is how much time you’ll have to spend with your accountant – and the corresponding fees. Many accountancy firms offer insurance against tax audits – this insures their client against the cost of complying with an audit…

As you can see from the above deal, there’s some good margin to be made in an ‘as is’ flip BUT it must be done correctly. After all, these are quake damaged homes that are being on-sold as repaired so they must be completed to an extremely high quality of both repair and renovation if you are to achieve a good sale price. For the Tumara Park deal, we worked backwards from an end sale price of $490,000 - so the end result of $520,000 was delightful to see after just three days on the market. The agent did a tremendous job and I believe quality staging pushed the envelope, it presented the property as a home and not merely as a repaired ‘as is’. TEAM WORK We had the…

WHEN THINGS CHANGE, BANKS GET NERVOUS AND FOR YOU THIS CAN LEAD TO A LOSS OF CONTROL OVER YOUR PROPERTIES -CAMPBELL VENNING MANY SEASONED INVESTORS are set in their ways, whether it’s purchasing solely in the location they live, only buying multi-flat properties, or dealing with only one lender. I understand this approach, as in my first 12 years of investing I lived by similar rules. While these few examples of bad habits may not prevent an investor from growing their portfolio, diversification into multiple areas equals spreading your risk among multiple markets. Any investment advisor or property savvy AFA would agree this is less risky. When choosing banks, any decent property accountant or asset planner would insist on spreading your debt among multiple lenders. If you avoid one holding…

THIS IS A CRUDE ATTEMPT TO FORCE PEOPLE TO SPEND LESS ON THEIR HOME AND MORE IN FINANCIAL SERVICES BY TAXING HOMES AND OTHER INVESTMENTS OVER AND ABOVE FINANCIAL ASSETS – ANDREW KING I LIVE IN THE MT ALBERT electoral area. As you read this, the results of a by-election in my area will have been announced. It is an interesting by-election as National are not putting forward a candidate, but Gareth Morgan's new Opportunities Party is. This is interesting to our industry and many others because cats are not the only things that irritate Gareth Morgan. For many years housing has also caused him a lot of angst. He does not like homeowners living in their own homes without paying rent to themselves and paying tax on that rent.…

1 Tenant Damage Ruling Overturned A controversial Tenancy Tribunal ruling on a case where dog urine ruined a rental property’s carpets was overturned by the Palmerston North District Court. The infamous case involved a Foxton tenant who let her dogs urinate in the house she rented – even though the tenancy agreement specified no pets were allowed. Landlords around the country were disturbed by the initial ruling as it appeared to demonstrate how a new Tribunal rule, adopted following the Holler & Rouse v Osaki case, would be applied. 2 Regional Stars’ Sales Plummet Declining sales activity and increasing housing stock are not just an Auckland story: the latest data shows some former star markets have cooled significantly. Sales volumes across the wider Waikato and Bay of Plenty region fell…

REINZ HOUSE SALES: DOWN Once seasonally adjusted, sales volumes were down around the country in January. The decline was particularly pronounced in a number of markets, notably Auckland. INTEREST RATES: UP Interest rates remain low, but banks are now announcing increases on a regular basis. OCR: DOWN The Reserve Bank left the OCR on hold at the record low of 1.75% in February. IMMIGRATION: UP Annual net migration just keeps going up: it set a new record in December. However, monthly net migration was down slightly on November. BUILDING CONSENTS: DOWN Once seasonally adjusted, building consents were down, both nationwide and in Auckland, in December. Further, the overall trend appears to be on the decline. MORTGAGE APPROVALS: DOWN Reserve Bank data shows that mortgage lending dropped in December, following a…

1 Get a coach. “Someone who has already achieved what you are aspiring to achieve; this will ensure that you avoid costly mistakes, progress quickly and that you maximise profits and minimise headaches along the way! After all, to be successful, even the All Blacks have a coach.” 2 Be up to date. Books and DVDs are always out of date because the market changes every week. You should always be taking advantage of the current market conditions and adjusting your strategy accordingly. 3 Take the property news with a grain of salt. Not only are the statistics always out of date, but news items are often just one person’s opinion. 4 Do your due diligence. It’s more than just avoiding a lemon. It should also include the rentability of…

Case#1 Adam is 24, single, employed, earning $80,000, with a 15% deposit to buy $500,000 property KRIS PEDERSEN SAYS: This client may actually be bankable. Key factors will be stability of employment and likelihood of income increasing. I am working off no outside debt obligations. Case#2 Steven and Michelle are 40, married, both employed earning a combined $200,000, with a 5% deposit wanting to buy $350,000 property. PEDERSEN SAYS: NZ Credit Union may be an option here as they can do 100% up to purchase prices of $250,000 and then 15% on the portion above so a $15,000 requirement here when the clients have $17,500. Note that there can be regional restrictions and other criteria. Resimac and Liberty may be also worth looking into based off the strength of income.…

HAVING THE ODD CUP OF TEA WITH THEM IS FINE, BUT IT'S A MISTAKE TO GET TOO FRIENDLY - OLLY NEWLAND HAVING A PROPERTY SITTING VACANT for a lengthy period is every landlord’s worst nightmare. But when it comes to commercial property it can be a far more intractable problem than it is in residential. Legendary ex-pat Kiwi investor Dolf De Roos says that when a house is vacant for more than a few weeks, there is only one problem: the rent is too high. But getting the desired level of rent may only require making a few small upgrades to a property. In commercial property, the lack of a tenant means there is no cash flow – and cash flow is the driver for commercial investments. This means that…

THE GAIN ON A PROPERTY PURCHASED AS PART OF A PROPERTY TRADING ACTIVITY WILL FOREVER BE TAXABLE, UNTIL SUCH TIME AS THE PROPERTY IS SOLD TO AN UNRELATED PARTY – NICK ASHFORD DID YOU JUMP ON BOARD the crowded property trading train, and are now unsure when, or how, to get off? Over the past five years we have seen a growing number of property investors try their hand at property trading. However, with auction rooms now showing mixed results, many short-term traders are looking at their remaining properties and considering whether it is worthwhile jumping off the train by taking their properties off the market. But is it that easy? GOODS & SERVICES TAX (GST) In general terms, as a property trader you (or your property trading entity) should…

IRD HAS WARNED KIWIS TO BE WARY OF TAX IMPLICATIONS IF THEY ARE RENTING OUT THEIR HOMES OR ROOMS SHORT TERM – SUE IRONS INVESTORS HAVE CAUGHT onto the Airbnb trend, many wanting to bring their rental property into the online short-term rental marketplace. We’ve noticed a huge surge in interest in Airbnb with our mentoring clients, as many of them look for investments that are ideal to rent short term. And no wonder, short-term rentals, when done well and in the right location, can provide fantastic yields for investors. But the IRD has warned Kiwis to be wary of tax implications if they are renting out their homes or rooms short term. And it’s important to realise that online rental transactions via sites like Airbnb can be accessible to…

THE DATA Rental data is sourced from the Ministry of Building Innovation and Employment (formerly the Department of Building and Housing) based on rental bonds lodged. This rental data is supplied to us grouped into geographic areas based on statistical area units used by Statistics NZ for the census and as a result do not always match well with common usage suburb names. The rental data for each area is matched to house price information from our database to determine property prices and therefore yield. The yield is calculated as the annualised rental income divided by the median house value calculated using our E-Valuer. MARKET COMPOSITION The rental market in Dunedin, like the rest of the country, is dominated by houses. Half of the areas profiled here are exclusively houses,…

NORTHLAND NEXT MEETING: Wednesday March 29, at Distinction Whangarei, 7 Riverside Drive, Whangarei. TOPIC: Tbc MEMBERSHIP: $180 single or $210 couple; includes subscription to the NZ Property Investor and NZPIF discount card, plus local trade discounts. Please email npiacontact@gmail.com for more information.PO Box 1640, Whangarei. AUCKLAND NEXT MEETING: Tuesday 14 March. TOPIC: Details of this meeting will be posted on www.apia.org.nz. APIA hosts 100+ informative property events throughout the year to further members’ knowledge of the market and confidence in investing MEMBERSHIP: Sign up for an APIA membership at www.apia.org.nzjoin. APIA memberships include a free subscription to the NZ Property Investor, networking opportunities at over 100 events throughout the year, an excellent discount card, free subscription to APIA TV, and massive savings off mortgage interest rates with the ANZ bank.…

RENTAL SNAPSHOT Median house rents of the dominant dwelling type for the area EXPLANATION OF STATISTICAL TERMS No. of Properties: Total number of residential properties No of Bonds: Total number of bonds lodged in last three months Median Rent: Weekly rent based on the bonds lodged in the latest three months Rent Quartile Range: Inter-quartile range of weekly rent based on the bonds lodged in the latest three months Median value: The median value of properties in the group based on estimating the current market value of each property using our E-Valuer at the end of the latest month Gross Yield: Annualised median rent as a percentage of median property value for specified time period NORTHLAND AUCKLAND WAIKATO / BAY OF PLENTY HAWKES BAY / GISBORNE TARANAKI MANAWATU / WANGANUI…

At Home Property Management 022 303 3449 www.athomepropertymanagement.co.nzB&N Property Management 0800 111 252 www.bnproperties.co.nzBarfoot and Thompson 09 638 9158 www.barfoot.co.nz/589852Bayleys Real Estate 0800 BAYLEYS www.bayleys.co.nz/commercialClick Property Management 0800 1 CLICK www.click4rent.co.nzCoreLogic 0800 355 355 www.corelogic.co.nzD&D Financial Consultants 09 369 5144 www.dandd.co.nzDiamond Ideas Ltd 0800 164 461 www.healthandsafetycompliance.co.nzDiscount Property 021 280 6655 www.discountproperty.net.nzEnviroCheck 0800 378 483 www.envirocheck.co.nzFresh Tax 0800 18 18 19 www.freshtax.co.nzG.J. Gardner Homes 0800 424 546 www.gjgardner.co.nziFindProperty 021 486 000 www.ifindproperty.co.nzImpression Real Estate Ltd 09 300 5001 www.impression.co.nzKeith Hay Homes 0800 KEITH HAY www.keithhayhomes.co.nzKey Exchange Property Group 027 271 2053 www.keyexchangepropertygroup.comKris Pedersen Mortgages 09 476 1199 www.krispedersenmortgages.co.nzMaintain to Profit 09 929 4546 www.maintaintoprofit.co.nzMeth Solutions 0800 638 4522 www.methsolutions.co.nzMethsafe 0508METHSAFE www.methsafe.co.nzMike Pero 0800 500 123 www.mikepero.co.nzNZ Property Investors Federation 03 357 9243 www.nzpif.org.nzNZ Tax Refund 0800 030405 www.taxrefunds.co.nzOxygen Property Management…

ALTHOUGH VINCENT WONG’S PROPERTY ENTREPRENEUR IS WRITTEN FROM A UK PERSPECTIVE, IT’S A CLEVER, INSIGHTFUL READ AND MUCH OF THE CONTENT APPLIES TO A NEW ZEALAND SETTING VINCENT WONG’S NEW BOOK Property Entrepreneur: The Wealth Dragon Way to Build a Successful Property Business is an intelligent and accessible guide to property investment that overflows with personality. Wong opens the book by establishing that no matter your background you can achieve your entrepreneurial goals, as he himself started from humble beginnings; he studied and worked as a pharmacist before soon realising it was not going to get him where he wanted to be. After a failed business venture and a Master of Business Administration degree, he laid the foundation of his property investment legacy and began to make profits. His main…

I WOULD BE LOOKING TO IMPROVE THE QUALITY OF MY EXISTING STOCK BY WAY OF A SIMPLE RENOVATION OR EVEN A MAJOR ONE IF THE END RESULT WILL BE AN INCREASED YIELD AND LOWER LVR IT’S BEEN A FEW YEARS SINCE I’VE spent my nights in the houses of clients who are genuinely seeking advice around what to do and how to grow their portfolio, rather than what’s the best rate. It doesn’t feel like that long ago that I was a mobile banker approving an investor’s four properties at 90% loan-to-value ratio (LVR)… In reality it was five years ago and what a five years it’s been, full of reducing rates and increasing cash backs. I had lunch with a banker only 18 months ago and I said that…

WHEN MARKET FORCES MEAN WE CAN RARELY AFFORD TO BUILD THEM, ANY HOUSING SUPPLY PROBLEM IS GOING TO HAVE A VERY LONG TAIL - AARON TUNSTALL WHAT HAS KEPT AUCKLAND property prices so high? The problem is “predominantly” a shortage of dwellings, according to Finance Minster Stephen Joyce. The main theme of government policy to counteract high Auckland values has been to encourage the construction of more dwellings. Simple, right? We just build more houses and the prices will steady out. Unfortunately, even if you subscribe to the idea that more dwellings will solve the problem (I’d suggest that’s another oversimplification, but let’s run with it), then the undersupply problem is here to stay for the foreseeable future. Around 10,000 consents were issued last year for new dwellings and the…

INFLATION IS PAYING OFF YOUR DEBT FASTER THAN YOU CAN PROBABLY PAY IT YOURSELF - MICHAEL YARDNEY INFLATION CAN WORK ITS MAGIC ON YOUR HOME LOAN - MAKING IT WORTH LESS IN REAL DOLLAR VALUE - MICHAEL YARDNEY THE WORD INFLATION IS OFFENSIVE to many people. In fact, the thought of increasing inflation produces negative connotations because we know that each year, because of inflation, we end up paying more for everything. But here's the thing… While inflation is the enemy of the average New Zealander, especially for those with savings which get slowly eroded over time, inflation actually helps property investors as their assets increase in value due to inflation. So, while those who are dependent on the interest on their savings find the value of their nest…

MOSGIEL/FAIRFIELD/ ABBOTSFORD Completion of the southern motorway improved commuting to the CBD. Biggest growing area for new builds and mainly owner-occupied. CORSTORPHINE Formerly predominately state housing boasting good views, sun and big back yards. A long term affordable housing area with higher returns but slower capital gains. ST CLAIR/KEW Popular family suburb close to the beach, a great café scene with a strong community spirit. Rentals are generally good quality, easy to rent-especially in the local primary school zone. UNIVERSITY Students are becoming more discerning. Housing in average condition tends to stay empty as students prefer new builds or renovated flats. They are prepared to pay for insulation, heat pumps and quality finishes. CENTRAL An emerging market where older buildings are being renovated into apartments. This area has attracted beautification…