New Zealand - The Good, The Bad and The Ugly.

[patham]

7 minutes ago, hayleyearth said:

I'm with Suntory Oceania now, not in beer anymore. I was with Lion, so competitors of Asahi.

 

I flying in to Brisbane tomorrow again until Thursday.

Don’t mind me just bumbling along here then, misremembering all sorts of stuff. Obviously all Japanese drinks manufacturers look alike to me.

Do you at least get put up at the good side of town, ie nowhere close to the factory?

[patches]

On 3/12/2025 at 4:41 PM, davetapson said:

Speaking of investment properties - I've always hankered after a mini-commercial unit.  Doing a bit of W.A.B the other day, I investigated the really really nice units around the corner from work in Orbit Dr.

The last one that was sold went for $770k in 2023 and there are adverts to rent it from the normal estate agencies for $36k / yr.

So an immediate, real return of over 4%. 

Not that I'd want to rent it, because I want to build boats / cars / motorcycles in it.

If I was a young single bloke, I'd buy one and live in it! 

One of my colleagues has a few commercial investment properties (along with a residential or 2).

Like you say, the yield on them can be great. Additionally, the agreements typically put more on the tenants (like rates, maintenance etc).

I did consider going this route, but I don't know enough about the commercial market, especially whether the capital gains are decent or not. My plan was for a 15-20yr investment (i.e. sell to top up my retirement savings). 

On 5/5/2025 at 7:37 PM, hayleyearth said:

You can invest in an investment offer from ANZ for 4.3% garenteed for your option of time and amount. I also thought of buying a small place and renting it out and when I did the maths it was better to put the money away for now. 

Yeah, for a straight up cash investment (particularly under 10yrs) an investment property is not the best bet.

As mentioned above, we've done it for the long haul, plus no cash was required (although we did pay the deposit with savings, even though we didn't need to).

With about 60% equity in our own home, we had the leverage, so we figured we'd make that work for us.

A former colleague (and current CFO of another organisation) once put it this way.

One can save $200,000 and invest it in funds, shares, etc... but the growth is still on $200,000. Or, one can invest in property where the bank will top up the investment to $1M, and the investor can benefit from the growth on that. Yes, the bank wants their pound of flesh (i.e. interest), but the gains are still worth it. Plus banks generally won't lend $800,000 against $200,000 to buy shares or invest in funds. (And when it comes to leveraging equity, the bank will give you the whole $1M, no deposit required).

I'm no mathematician, but some rough figures:

Again, this is the rough idea. It may not account for all expenses on the property side, but at the same time, it doesn't account for capital gains tax on the investment side (which currently doesn't apply to property, but I bet in 20yrs time there will be a CGT on investment properties).

Anyway, the basic idea is there... make the bank's money work for you.

Disclaimer: patches is NOT an registered financial adviser or authorised services provider, but just some fool doing Excel sums, and his sums probably need checking 😅

Edited May 29 by patches

[davetapson]

Yeah -  I remember having this discussion with my father a long time ago - his comment was "Well, the bank ain't gonna lend you $1M to bet on the stock market, but they will lend you that against a mortgage.".

Suspect now is as good a time to buy property as any.

Although we just fixed a portion of our mortgage hours before Reserve Bank dropped the rate, so I'm not sure I'm one to listen to.

[patches]

4 hours ago, davetapson said:

Yeah -  I remember having this discussion with my father a long time ago - his comment was "Well, the bank ain't gonna lend you $1M to bet on the stock market, but they will lend you that against a mortgage.".

Suspect now is as good a time to buy property as any.

Although we just fixed a portion of our mortgage hours before Reserve Bank dropped the rate, so I'm not sure I'm one to listen to.

Don't worry, we're in the same boat. Refixed our home mortgage, and took out a new mortgage (for a rental property), all at the beginning of the month, so it dropped about 0.3% since then.

Not worth the break fee though.

As for buying, now is a pretty good time. Better stock is coming on the market, but it hasn't quite started to pickup yet, so prices are reasonable. Interest rates are a lot better than they were 12 months ago.

Rental market is down, but the right property will still get tenants. We managed to get tenants within 1 week at 10% above the rental appraisal, so it's not all bad.

[patham]

On 5/30/2025 at 7:57 AM, patches said:

One of my colleagues has a few commercial investment properties (along with a residential or 2).

Like you say, the yield on them can be great. Additionally, the agreements typically put more on the tenants (like rates, maintenance etc).

I did consider going this route, but I don't know enough about the commercial market, especially whether the capital gains are decent or not. My plan was for a 15-20yr investment (i.e. sell to top up my retirement savings). 

Yeah, for a straight up cash investment (particularly under 10yrs) an investment property is not the best bet.

As mentioned above, we've done it for the long haul, plus no cash was required (although we did pay the deposit with savings, even though we didn't need to).

With about 60% equity in our own home, we had the leverage, so we figured we'd make that work for us.

A former colleague (and current CFO of another organisation) once put it this way.

One can save $200,000 and invest it in funds, shares, etc... but the growth is still on $200,000. Or, one can invest in property where the bank will top up the investment to $1M, and the investor can benefit from the growth on that. Yes, the bank wants their pound of flesh (i.e. interest), but the gains are still worth it. Plus banks generally won't lend $800,000 against $200,000 to buy shares or invest in funds. (And when it comes to leveraging equity, the bank will give you the whole $1M, no deposit required).

I'm no mathematician, but some rough figures:

Again, this is the rough idea. It may not account for all expenses on the property side, but at the same time, it doesn't account for capital gains tax on the investment side (which currently doesn't apply to property, but I bet in 20yrs time there will be a CGT on investment properties).

Anyway, the basic idea is there... make the bank's money work for you.

Disclaimer: patches is NOT an registered financial adviser or authorised services provider, but just some fool doing Excel sums, and his sums probably need checking 😅

Hi Patches totally not a financial services person. 
 

Do you New Zealanders have a stamp duty / property tax payable on purchase? Here in Aus, that adds an extra  4 or so percent up front to the purchase price. Add in the cost of conveyance, lawyers and estate agents when you sell that’s a chunk of fixed costs that we here would need to account for. If you keep the property for enough time they dwindle in relative magnitude for sure, but if you need to sell rapidly due to changed circumstances it could be at a loss.

I have kept my spare cash to date in shares, to retain liquidity and to build up a reserve so that if plans fall apart I would not need to sell an investment property. However, it’s now probably time to take on the admin involved in purchase, renting etc. and have started researching in earnest. I’m leaning towards a single storey low maintenance townhouse that we can rent out for now, but can become a downsizer suitable for retirement  & geezerhood later on in life. With room for an e-bike of course by then.

 

[patches]

12 hours ago, patham said:

Hi Patches totally not a financial services person. 
 

Do you New Zealanders have a stamp duty / property tax payable on purchase? Here in Aus, that adds an extra  4 or so percent up front to the purchase price. Add in the cost of conveyance, lawyers and estate agents when you sell that’s a chunk of fixed costs that we here would need to account for. If you keep the property for enough time they dwindle in relative magnitude for sure, but if you need to sell rapidly due to changed circumstances it could be at a loss.

I have kept my spare cash to date in shares, to retain liquidity and to build up a reserve so that if plans fall apart I would not need to sell an investment property. However, it’s now probably time to take on the admin involved in purchase, renting etc. and have started researching in earnest. I’m leaning towards a single storey low maintenance townhouse that we can rent out for now, but can become a downsizer suitable for retirement  & geezerhood later on in life. With room for an e-bike of course by then.

 

Fortunately no Stamp Duty in New Zealand. That, combined with the fact that there's no capital gains tax in NZ, is what makes property investment so popular here.

We do still have all the conveyancing costs and that though, but the cash contribution the bank gives usually covers that (e.g. approx. $9,000 cash on a circa $1M loan).

In Aus you have negative gearing though, so that's a win for you. Here one can only offset investment property expenses (maintenance, interest, etc) against the rental income itself, not one's total income.

As for liquidity, I hear ya! We were worried about that too. We could have taken a smaller mortgage, but exhausted our savings. We chose to borrow more, but have that rainy day fund. We also have wiggle room to relax the repayments on our own home if needs be. The advice we've heard over-and-over is "pay your own home down as fast as possible, and go minimum payments on the investment".

And yeah, I can second that single storey train of thought. Both the multi-level units we were keen on buying has issues that would have been very costly to fix.

We ended up with a 1970s single storey brick & tile unit with a single garage and a bit of garden, in a decent area with good school zones (very important to Kiwis, haha). 

Could have got a new build for less, but they have very little land, and the land is what actually appreciates over time.

RE: Geezerhood plans, that's pretty much what my in-laws did. Bought an apartment as an investment 20yrs ago in a really nice part of North Sydney. When they retired a few years ago, they sold the family home, bought an acreage in the countryside and use the apartment as a 2nd "convenience home" when they need to spend time in the city, or babysit grandkids. So they've essentially downsized and upsized at the same time

 

 

Edited Sunday at 07:36 PM by patches