House - Rent or Buy

[justsomeguy]

There are a number of advantages of owning a house - one is you can customise it the way you want. Want a 2 ton hydraulic crane and 440V 3ph power in your gargre? You can have it with money and owning the house. Landlords don't normally appreciate that kind of thing. OTOH, owning a house ties you down. If you are young, mobile and have itchy feet, don't buy. if you rent, you can go for that big OE on 3 weeks notice. Overall, owning is better than renting long term.
This applies to your own house - the numbers are different if you are buying to rent out to others. in that cse, you need to compare the return with that of equally risky investments, and most residential properties have piss poor returns when compared with the risk, and you have to deal with tenants (ickky)
Geoff

My whole interest was to pay (get paid by tenants) my own mortgage ...instead of renting which just pays someone elses mortgage or means i never see that money again.

[justsomeguy]

Another issue which has come up is whether I buy an apartment or a house.

What are the pros and cons of buying an apartment. What exactly are the mimimum that body corporates do for their fees.......????

From my browsing the real estate papers it seems a 3-4 bedroom city outskirts apartment would be cheaper than a three/ more likely two bedroom house which is the most I can afford wayyyyy out in the suburbs.

[mstriumph]

I hated renting ------ it was hell having to wheel the bikes out of the dining room when the rental inspections were due

[justsomeguy]

I hated renting ------ it was hell having to wheel the bikes out of the dining room when the rental inspections were due

Stupid landlords - they really should try and understand that we want all our family members living inside our houses

[justsomeguy]

My suggestion would be to hold fire about 6 months on the house buying thing.
Every indication is that the local (auckland) house market has gone soft and is gonna get worse
The best time to buy is in a slow market

Really?? I thought (personal opinion not based on facts)......

That in summer/Christmas lots of people buy new homes and as a result prices go up....... is this true or a myth??

[Fart]

Another issue which has come up is whether I buy an apartment or a house.

What are the pros and cons of buying an apartment. What exactly are the mimimum that body corporates do for their fees.......????

From my browsing the real estate papers it seems a 3-4 bedroom city outskirts apartment would be cheaper than a three/ more likely two bedroom house which is the most I can afford wayyyyy out in the suburbs.

Never invest in an apartment for the following reasons.

1. Body corporate fees for an apartment is very expensive.
2. The cost of running and maintenance for an apartment is very high. Especially serviced apartments with lifts and airconds.
3. Unlike other major cities around the world, NZ/Auckland has a small population and large land area for development. Supply of land exceeds demand in the long term.
4. Banks only lend 50% for apartments due to the low returns on capital gains and high risk.

If you look at the stats for house prices compare to apartments, you wil find that in the last 5 years house prices have gone up substantially, while apartments have stayed the same price.

All the best on your house hunting.

[Warr]

Own a Town-House here. Just 4 on the section and be a we back one. Minimal bit of lawn so next to no garden etc to look after.
Lucky to be the back one so no traffic.
Single residence's all round so not over-crowded.
Only single garage so it will look a bit full with 2 m/bikes in it!
Nicely planned and set-out. Private deck, Joins next house at the garage so minimal noise
And I'm in Hamilton and no not for sale.
Oh yea.. price is escalating same as other houses.

[justsomeguy]

Never invest in an apartment for the following reasons.


4. Banks only lend 50% for apartments due to the low returns on capital gains and high risk.

while apartments have stayed the same price.

All the best on your house hunting.

Thanks for the info matey. That pretty much strikes apartments off my list then...

[Fart]

Thanks for the info matey. That pretty much strikes apartments off my list then...

If this is your first house, just buy it and dont try to guess the market. In the long term, you will make on capital gains due to the leverage effect and also gives you comfort that you will have a house to live in. As long as inflation is at a high level, your house value will go up. Watch out for the interest rate movement. High interest rate will eventually have an impact on the house market.

I will give you a reason why you dont put all your money in the bank account at 6.5% interest. With inflation at 3% + tax you are only getting less than 2% per annum return on your investment if you put your money in the bank. If you buy a bike or car, you are losing 25% or more on your depreciating asset. Unless you can claim on tax, it is not worth putting most of your capital in a depreciating asset.

[Fart]

Big jump in value of city houses

17.09.05
By Wayne Thompson and Bernard Orsman

Aucklanders will soon receive confirmation of huge increases in the value of their homes, following three years of growth averaging 54 per cent across Auckland City, North Shore and Manukau.

A Weekend Herald survey shows the biggest increases have occurred not in upmarket suburbs but in working-class areas where first-home buyers and immigrants have been snapping up cheap and rundown properties.

Homeowners in Auckland, North Shore and Manukau will be receiving the latest three-yearly valuations of their properties over the next four months. To give them an idea of what to expect, the Weekend Herald surveyed more than 100 suburbs across the three cities, comparing house sales this year with the last official valuations, in 2002.

When the three councils revalue properties, they will use the new figures to set rates. Houses with an above-average rise in valuation will have an above-average increase in rates, and vice versa.

Suburbs such as Glen Innes and Otahuhu in Auckland City, Birkdale and Beach Haven on the North Shore and Manurewa East and Otara in Manukau have seen values rise much more than the average across their cities.

Terry Costello, Barfoot & Thompson Papatoetoe branch manager, said working-class suburbs such as Otahuhu, where house prices have risen by 81 per cent, were coming into their own after years of neglect. Immigrants were also fuelling the boom.

Many ex-rental properties were being snapped up and tidied, contributing to the sharp rise in prices.

Martin Cooper, of Cooper & Co, said the under-$500,000 market was strong on the North Shore, with many properties attracting multiple offers. His firm's last 50 auctions resulted in 92 per cent of the houses being sold within 14 days.

Overall, of the past 60 sales, one in five purchasers was a first-home buyer and one in six was an immigrant, Mr Cooper said.

Beach Haven is a good example of a relatively inexpensive North Shore suburb on the rise. Since May, 31 houses have sold for an average $343,445 - 76 per cent above the 2002 official valuation.

Desirable coastal suburbs on the North Shore such as Campbells Bay and Castor Bay have also experienced strong growth of about 80 per cent. Houses there start at about $450,000 and rise to more than $2 million, according to latest sale figures.

In Manukau City, strong demand for Manurewa East homes has led to them selling on average 59 per cent above their CVs, with average prices of $247,900.

Waitakere City valuations were done in March this year and showed residential land values rose an average 65 per cent.

Westpac senior economist Nick Tuffley said the much-talked-about slowdown in house prices had proven to be mild. "Next year we won't see prices going up at much of a clip."

Bank of New Zealand chief economist Tony Alexander said the increases were similar to other places in the country.

"Prices might pull back but that will happen mainly where they went ballistic, like Nelson and Hawkes Bay.

"Up in Auckland, really the only area likely to see outright price falls would be inner-city apartments."

http://www.nzherald.co.nz/section/st...ectID=10346000

[Groins_NZ]

So how is the house hunting going justsomeguy?

My partner and I are also looking for suitable properties around the Wellington suburbs - Wellington CBD is way toooooo expensive and beside we'd rather not live in the city.

Can anyone offer advise when it comes to open and closed tenders? Seems to be a lot of houses that are up for tender and you have no immediate idea of the propertys actual worth.

There must be some valid reasons why people (who are selling) are advised to put their home up for tender though?

[justsomeguy]

So how is the house hunting going justsomeguy?

My partner and I are also looking for suitable properties around the Wellington suburbs - Wellington CBD is way toooooo expensive and beside we'd rather not live in the city.

Can anyone offer advise when it comes to open and closed tenders? Seems to be a lot of houses that are up for tender and you have no immediate idea of the propertys actual worth.

There must be some valid reasons why people (who are selling) are advised to put their home up for tender though?

Still looking - may end up buying sometime early next year or my give the money to the olds and get a combined mortgage for another house - have them live in that other house and I'll stay in my current house and get some flatties.....

Tenders - no idea - CaN, MDU, Fart, care to comment ??

[Bartman10]

Personally I like the independence of renting. I can pack up and move anytime without any fuss.

I also like not having to spend all my weekends doing DIY. If there is a problem with the washing machine or drier or the plumbing in the bathroom leaks and wrecks the ceiling and carpet in the hall way I all need to do is ring the landlord. He gets someone to fix it, no worries.

Another thing - how many people do you see selling their motorbikes because of "house purchase forces sale".

In addition I figured I'm paying less in rent then I would be in interest on the same place.

But there are disadvantages too, like lack of security and no capital gains. You just have to decide whether you want care free living or the security of owing a house.

Another thing is that I don't really care about money that much - you can't take it with you - so you need to decide on your philosophy and act accordingly.

[Charlie]

Am in Wellington also looking to put my money into my own mortgage rather than the landlords. I owned a house in Palmy a couple of years ago and loved the freedom and security it gave me.
Now in Welly and another whole price bracket I've been renting and HATE it! I have a dog and going from home owner to tenant has been a hard game. I'm got tired of hearing "sorry no pets". I do understand the landlords view but its still frustrating when you need a roof over your head and soon. Took me 6 weeks of hard work to find a place and then had to compromise something I really wanted (garage or safe storage for the bike) just because they'll accept pets. The pickings are slim! Anyway, thats my biggest motivation for buying now...

The tender thing; have not had any experience with tenders but my understanding is that prospect buyers submit an unconditional contract with price, settlement date and any other requirements they want the vendor to comply (eg; fix something, obtain permits etc) to the vendor by close date.
Then the vendor is presented all contracts at once. After considering them all they hopefully choose one and sign.
There is no real backwards and forwards negotiating etc, they can see in the tenders what spread the market is prepared to pay and the interest in the property. They simply pick the one that they like all the conditions/terms of the most, (if any) and hopefully tadaaa - SALE.

Feel free to correct me if I'm wrong - but I'm sure a quick phone call to any real estate office could answer you question.

Good luck with the decision/house hunt!

[ManDownUnder]

Still looking - may end up buying sometime early next year or my give the money to the olds and get a combined mortgage for another house - have them live in that other house and I'll stay in my current house and get some flatties.....

Tenders - no idea - CaN, MDU, Fart, care to comment ??

I prefer buying, simply because I know I'm in it for the long haul (like 20+ years) - with a couple of things to consider when you do it

1) Location. Work out where you want to live and why. If you hate being in town then there is no point in considering apartments. What amenities do you want to be near?

Go "open homing" and make a check list of all the things you spot that you'd like. A Spa, 3 bedrooms, en suite, roof in good condition etc. and give them a rating from 1 - 5 showing their importance. Go through a house, giiving each a ranking and take a digital pic if you can - after a few of them I found it was hard to remember which was were etc...

Don't forget to think/find out about the unseen stuff... how noisy is it on Friday nights? Is there a pub just down the road (parties etc). Bus Stops (you want one handy but not up your nose) etc.

Ask about projected works in the area (motorways going through etc). A giveaway for that one is that a lot of houses will be for sale for no apparent reason in one area... stop and ask why. Hell knock on a door of a house you are NOT interested in and ask. What are they going to do - say no?

As you look at each house check them off alongside your items.

2) Utility. If you are buying the house as an investment, consider setting up an LAQC Company - you'll get tax rebates and a bunch of other things.

Find an Accountant that knows about them - an Accountant outside of Auckland ... in a small town (they're cheaper), they went to the same schools and email is a wonderful thing when wanting to go over your accounts...

3) Market Timing
Right now the market is hot - good for sellers. The future is uncertain but interest rates are going up (and threaten to do so again) and there are a number of other factors indicating the market should slow.... but when, and how much is the great unknown.

Anyone saying they know for sure is lying, or trying to sell you something. Simply be prepared for the worst (i.e. house prices drop and interest rates go up... AFTER you bought). Don't cry, just hold onto the house because interest rates WILL drop (given 4 or 5 years), and house prices will recover.

4) Investment or Personal use. If you're going to use the house pesonally, the fittings etc you will choose will be different - more expensive, better looking, less industrial and "durable".

If investment, consider setting up the LAQC I mentioned above.

5) Budget and Advisors. Find out what you can afford, and stay within it.

Establish a budget you can reasonably afford in the worst times, and put in place some extra cash to tide you over hard times and unexpected expenses... Most common technique is to get a revolving credit account with (say) $100,000 when you only need $30,000 as part of the house purchase.

Manage your money wisely. Put all your pay into the Revolving Credit Account and spend as little as you need to. Put everything on your VISA and pay it off in full EVERY month. If you can't do that you need to learn it. VISA debt is a killer, and so easy to avoid.

Read books - there are PLENTY. Dolf de Roos, and Olly Newlands are two that come to mind.

Get independant advise onb structuring up your mortgage. Someone that knows the tricks (see my post to Kwaka Kid following his house purchase a while ago) and structure up the mortgage to suit you. Once a bank has you "signed up" they know it'll cost you money to change banks, so the riskiest time for them if BEFORE you sign up.

You are doing them the favour of bringing them business. Don't ever forget it. If they want to earn the $200,000 in interest from you they need to give something back. Free account fees, no setup fee... there's a bunch of stuff you can ask for. Write 'em all down, and take them in.

Don't give in to the "loyalty" stuff - "I've banked with them for 10 years... they know me". Nope. They have you on record and know what you've done. A Prison would have similar information...

Find and deal with a good Real Estate Agent (or a couple of them). When you get to know them they'll know you, and be able to help better. Be honest with them. If they ask for your top dollar - tell them the most you are prepared to spend. If/when they come back asking for more send them away. They got the answer last time. You're not playing hard ball - you';re being honest.

Find someone that is a real estate agent you can learn from. The aim of the game is to put pressure on everyone involved (vendor ond purchasor) in order to bring them to a sale as quickly as reasonably possible.

NEVER forget, the RE Agents are in this for the money, they act for the vendor but are actually selfish (as we all are). Don't bow to pressure, do things in your good time, and if something doesn't feel right then tread carefully.

Have someone experienced sit alongside you while making that first purchase. I know squat about Tenders so don't ask me for detailed advice on them.