1. We did not buy in an area that was over-priced
2. We bought in an area where the history was depopulation, but the area is open to a paradigm shift
3. We bought the worst house in the best street, close to services
4. We bought a house which has loads of potential, with elevated views of the sea
5. We bought a house on a deferred settlement basis
6. We bought at a low point in the NZ-USD and NZD-AUD
We wanted to be on the coast, but at the same time close to services. We did not need or want to be in a large city like Auckland, Christchurch or Wellington, though we wanted reasonable access to at least one of those cities, as well as access to regional centres. Wanganui-Castlecliff is 2 hours from Wellington, 6 hours from Auckland, 1 hour from Mt Ruepehu (volcano), snow skiing, as well as being on the doorstep to a beautiful hinterland. Wanganui has a good beach by my standards (elongate, arcuate, with surf zone, little traffic), and the town is actually well-serviced. It has several shopping centres, a number of entertainment facilities with something for everyone. Internet services are relatively expensive, but speeds are ok.
Looking at the property itself, we purchased a 2br house with study for $NZ78,000 ($US44,000). We paid cash because it was hard to get finance. We did however require deferred settlement so we could get the best exchange rate. The house was built in 1910, it has excellent (14 foot) high ceilings with wood panels, timber entry aisle, and sweeping views over Castlecliff, which we will enhance by adding an elevated sunroom to the back. The high ceilings in the front of the house will mean there should be little difficulty getting approval for the extension.
After some basic repairs we would be able to rent this property for a gross rental yield of about 8.5%, though we actually intend to live in it whilst we do more substantial improvements that should lift its value to closer to $180K. The 760m2 property is actually on a ridge with sweeping views over the area. The improvements will include a retaining wall, creation of a garden and patio area, the upgrade of the bathroom, and finally the sunroom above the bathroom. Having completed all those works, enjoyed the premises, and allowing for 1-2 years to pass, we might just be in a good position to sell and move on to the next opportunity. At that time, we would expect the NZD to have recovered against the USD and other currencies.
Looking at the property itself, we purchased a 2br house with study for $NZ78,000 ($US44,000). We paid cash because it was hard to get finance. We did however require deferred settlement so we could get the best exchange rate. The house was built in 1910, it has excellent (14 foot) high ceilings with wood panels, timber entry aisle, and sweeping views over Castlecliff, which we will enhance by adding an elevated sunroom to the back. The high ceilings in the front of the house will mean there should be little difficulty getting approval for the extension.
After some basic repairs we would be able to rent this property for a gross rental yield of about 8.5%, though we actually intend to live in it whilst we do more substantial improvements that should lift its value to closer to $180K. The 760m2 property is actually on a ridge with sweeping views over the area. The improvements will include a retaining wall, creation of a garden and patio area, the upgrade of the bathroom, and finally the sunroom above the bathroom. Having completed all those works, enjoyed the premises, and allowing for 1-2 years to pass, we might just be in a good position to sell and move on to the next opportunity. At that time, we would expect the NZD to have recovered against the USD and other currencies.
We bought a place here which is offering 7% yield (unleveraged), though we can lift that to 9% with a bit of basic maintenance & improvements. The move substantial improvements will lift the yield slightly, but its really in the re-sell value where it will add the greatest value, which why that investment will be deferred. The sun room will be a great place to write, particularly to capture the early sun in winter. This room will always have sun on it.
This investment was a great investment for us because it consolidated a large array of positives. It made favourable use of exchange rates, it recognises a future change in Wanganui property values, it makes sensible use of capital, and it was also pleasing from a lifestyle perspective as well. All we need to do now is to buy another property to make better use of our capital. It does not make sense to pay cash for a house. :(
I am already preparing a report on my experiences buying and renovating a property in New Zealand. You can place orders at our e-Store.
----------------------------------------------This investment was a great investment for us because it consolidated a large array of positives. It made favourable use of exchange rates, it recognises a future change in Wanganui property values, it makes sensible use of capital, and it was also pleasing from a lifestyle perspective as well. All we need to do now is to buy another property to make better use of our capital. It does not make sense to pay cash for a house. :(
I am already preparing a report on my experiences buying and renovating a property in New Zealand. You can place orders at our e-Store.
Andrew Sheldon www.sheldonthinks.com
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