Generation Rent Investment Guide Episode 1: What you need to know about LVRs, KiwiSaver and liability before joining forces with others to buy property

By Jenée Tibshraeny

Acquire a skill, start working, get married, buy a house, have children, pay off your mortgage, retire, trade in your family home for a smaller place and use the difference to supplement your savings and superannuation.

This formula has historically served New Zealanders well.

Today, I believe there is no formula.

Steps one, two and (broadly speaking) three are fine - even if they’re only completed by age 35, rather than 25.

Step four - ‘buy a house’ - is where things get awkward and throw the remaining steps off course.

I could cut the article here and leave you all to debate whether young people would be able to buy houses if they: spent less on “lattes and Feng Shui consultants”, weren’t locked out of the property market due to the greed of baby boomers, or our entire system didn’t encourage us to get rich by buying houses from each other in a money-go-round.

But I’ll refrain on this occasion.

Instead I will focus on what people stuck at the ‘buy a house’ part of the formula - by force or by choice - CAN do to build towards their financial futures. I will do so in a series of articles - 'Generation Rent Investment Guide'.

Before veering too far off the beaten property track, I’ll begin by looking at how one might go about buying a house by teaming up with others. Then in coming weeks I’ll tackle investing in shares, digital currencies, peer-to-peer schemes and more.

I accept these don’t necessarily put a roof over your head, but the point is renters shouldn’t be an underclass.

Your thoughts and feedback are of course most welcome. 


Teaming up to get ahead

A couple of years ago I wrote about a woman in her late 20s who bought her first home in 2014 by forming a company with three friends.

She didn’t have enough money to make a deposit on the sort of property she was after on her own, so teamed up with others in the same boat.

They forked out about $3000 to create a company constitution and a shareholders’ agreement, before buying a $407,000 newly built, three-bedroom town house in central Christchurch.

After accumulating income from rent, and receiving a Government Valuation of $430,000 for the property six months later, they bought a two-bedroom house in New Brighton, Christchurch for $210,000.

Her rationale behind the group effort was to spread the risk and financial burden, so she could still be in a position to diversify her investment portfolio.

Here is what you need to think about if you would like to consider going down this path:

LVR and KiwiSaver rules

Unless everyone in your group would like to live in the property you are buying, you will be considered an investor, so will have to make a 40% deposit on the property under loan-to-value ratio (LVR) restrictions introduced in October last year.

An ANZ spokesperson confirms that even if one person in the group lives in the house, the fact the other three don’t, means it will still be considered an investment property.

“If [they all] hold the property, borrow and income is received from the property to pay back the debt, then yes it is an investment property,” she says.

Asked how rigid these rules are, and how ANZ might respond if everyone in the group loosely said they intended to live in the house at some point in the near future, the spokesperson says: “The bank will consider you an investor unless you can confirm by way of statutory declaration that the property you are purchasing is intended to be your principal place of residence.”

ANZ says the same principle applies to KiwiSaver.

The only way you can make a KiwiSaver withdrawal to buy a property, is if everyone in your group lives in the house.

Go2Guys mortgage adviser, Campbell Hastie, admits that while people may have been able to manipulate the system in the past, it has become much harder now that KiwiSaver is more established.

  Deposit KiwiSaver withdrawal
House occupied by all owners 20% Yes
House occupied by some owners 40% No
House rented out 40% No

Structures   

There are a number of structures your group could use to organise itself.

Yet at the end of the day, Hastie says the bank will look through whatever structure you choose and weigh up the risk of all the individuals in the group when looking at your mortgage application.

No matter the structure, all individuals will be jointly liable in the eyes of the banks. In other words, if your mate doesn’t meet their mortgage repayment obligations, the bank will come knocking on your door.

It also means that if you use a company structure to buy the property, and the company decides to take on a new shareholder, you’ll need bank approval first.

Martelli McKegg solicitor Matt O’Neale has helped interest.co.nz put this table together, explaining the nuts and bolts of the three most appropriate types of structures a small group of people looking to buy a property could use.

 

What

Liability

Ownership transfer 

Tax

Costs

Joint borrowing

Investors jointly purchase and borrow money in their personal names. All investors are personally shown on the title. Issues such as future contributions, sale of the property and a dispute process can be addressed up front in a property sharing agreement.

Individuals jointly and severally liable.

Ownership transfer more complex. Changes needed to sharing agreement and property title.

Individuals pay tax at personal income tax rate on rental income. Losses (ie incurred if interest payments are greater than rent) can be offset against personal income for tax savings.

Lower set up costs. Higher costs if there’s a change of circumstance in the future.

Look through company

Investors create a company and become shareholders. The company borrows money and purchases the property. Shareholders decide up front how to run the company using a shareholders’ agreement.

Company liable for company’s actions and debts. Limited liability for shareholders, but in practice a bank is likely to require personal guarantees.

Shares can be bought/sold relatively easily. Property title unaffected by changes to shareholding.

Bank approval needed for change in shareholding.

IRD ‘looks through’ the company.  Individuals pay tax at personal income tax rate on rental income. Any losses can be offset against personal income for tax savings.

Higher set up costs. Lower costs incurred if there’s a change of circumstances in the future.

Limited partnership

Investors create a partnership using a partnership agreement. The agreement sets out issues such as future contributions, sale of the property and a dispute process. Limited partnerships include a company which purchases, borrows and is shown on the title.

Limited liability for partners, but in practice a bank is likely to require personal guarantees.

Transfer of partnership interest determined by terms of limited partnership agreement. Property title unaffected by partnership changes.

Bank approval needed for change in partnership.

Partners pay tax at personal income tax rate on rental income. Any losses can be offset against personal income for tax savings.

Similar set-up costs to a company.

Here are some things to think about when deciding whether you’d like to buy a property with friends:

- Are these the right people to be doing business with?

- Do we want to achieve the same goals (IE rental yields vs capital gains) in the same timeframes?

- How might all of our financial circumstances change in the future?

- Does the structure we’ve selected give us the flexibility and security we would like in the event of circumstances changing?

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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107 Comments

Great article but I think it's published on the wrong site. Interest.co.nz is the site for commentators to blame landlords for all the evils of the world

Don't worry, all of those potential evil landlords that have been locked out the market can now group together and buy.

Hopefully if they do group together they will have a thicker skin and will take less offense to the comments.

yeah.. Nah I'm a landlord, I blame politicians for the evils of neoliberalism. I come to this site for the thoughtful economic discussions and the unfiltered commentary which this site kindly allows.

"Evil is allowed to flourish when good people stand by and do nothing."

Each and every one of us both then and now is responsible for the evils of neoliberalism. We have allowed our greed, selfishness and especially ignorance to shape the world into what it is now.

Yet it doesn't need to be that way - and what I don't understand is why individuals think its their right to own 3, 4, 5... properties when they know their decision is causing great finanacial pain for others. Personally I don't think I could ever become a landlord because to me its a modern day version of slavery.

I totally agree. They don't know their decision is causing great financial pain for others. Their desire for self preservation is stronger than their awareness of their actions. Our economic system creates an illusion of scarcity and out of fear they are doing their best for themselves and their family to create security. I do not blame them for this and do my best not to judge. Yet, we are so engrossed in our own little bubbles, our own life time frame that we fail to see the ripple effect of our actions across current and future generations.

Our current world is based in fear and I would lay this at the hands of the Church and the Fear of God. It is much easier to control and manipulate others through fear. Every day fear is used by media, governments and corporations to ensure conformity. The powers that be cannot have the masses thinking for themselves, realising their true potential as a unified, self organised community. Our consumerist society relies on advertising to manipulate people through their emotions to consume stuff in the belief that it brings happiness, acceptance, status. We are encouraged to pursue everything we want and have lost sight of our needs, relying on material items to fulfill emotional and psychological needs. Our economic model requires the exploitation of planet and people to further our illusion of "wealth". This requires a lack of compassion and empathy which, when led by example has further permeated every aspect of society. Greed is encouraged as it is the opposite of generosity, which can only develop from compassion. Selfishness is encouraged as it is the opposite of giving, which can only develop from compassion. Why would we allow the natural/real wealth of the world to be held in the hands of the few if we weren't controlled by fear? We now consider it normal rather than abnormal.

Why do we still have so many forms of "slavery" in current society? Why does inequality even exist when their is enough to meet everyone's needs? Why do we continuously demand more?

Meh - I think most people are very compassionate and understanding.....How about looking at the barriers to entry......and then concentrate on how to eliminate those barriers for you personally?! If you can solve those barrier problems for yourself then perhaps you can help others solve them for themselves.

I'm pretty sure that's exactly what we're doing notaneconomist. We see landlords and speculators as the barrier to our entry into the market - so I am concentrating on how to eliminate them...as you put it.

I understand 40% of buyers in Auckland last year were landlords/speculators so if we remove them from the market, that is a significant dent in demand on existing housing - bang, one barrier smashed down. Good thought.

Landlords and speculators are not a barrier to entry at all that is just imagination and diversionary techiniques. I have 3 kids all millenials and they all own their own homes......they had to eat, sleep and breath property but they all got there........it is called hard work, 7 days a week getting your head around the property market, banks, government and local government polices, bureaucracies and then my pet hate real estate agents......oh and listening to others and how they got there.

The barriers to affordable housing are the RMA, LGA, Building Act etc......plenty of history on interest.co.nz proving how house prices have been rorted upwards using the legislative process....oh and did I mention taxes GST 15%....I can tell you the landlord or speculator has all the same problems as a FHB so he/she is not a barrier to entry.

Instead of always preparing to fire the shots over the bow and think everyone is trying to pull you down perhaps try listening. I do want people to own a home whether they live in it or not is up to them.

To me it is obscene that someone working in a low paid job has to pay about a third of his wages in tax and then pay about half of what is left in rent to some wealthy person who can avoid tax through the big tax breaks landlords enjoy from the Government.

Nobody can tell me this is a fair system.

I do not blame landlords who are only working the system worked out by politicians who own dozens of rental properties. It is solely our politicians who are to blame for our present housing mess. National has had 9 years to sort it out, instead they have just looked the other way.

To me it is obscene that someone in NZ has access to cheap goods made in another country by kids and adults earning hardly enough to survive.

Nobody can tell me this is a fair system.

Plenty of people around here struggling to survive. Had the lines company drop in today and the guy said he is spending most of today disconnecting families who cannot afford their power bill. Great start to winter.

Be a shame if a few water pipes burst on a frosty night in those rentals wouldn't it

Of course, it would be terrible for the tenant

Independant Observer
So what do you think of the many cheap goods you buy that are made overseas in sweat shops by kids and adults who earn barely enough to survive while we enjoy typing on our keyboard in front of a cosy fire with a nice drink ?
Is that not slavery ?

Be honest here Yvil - how many kids and adults do you have living in your rentals who are barely earning enough to survive while you type on your keyboard in front of your fire?

Please tell the readers about your portfolio.

One of my tenants has a live in nanny.

I'll be honest, "0" zero, none : )
Now your turn to answer my previous question...

Landlords are just a subset of the whole rentier economy that we are now in ... way too many people earning passive income or profiting on the labour of others courtesy of debt growth. Poster child, John Key - who in an paradoxical twist is often labelled a self made man.

The irony is they think they are setting themselves/their family up ... oblivious to the fact that thse debt claims have promoted resource use to the point where ecosystems are now past the brink - ie we are consuming the future now so that generations to come dont have one.

I believe many people realise and are aware of this. Yet we are stuck in this story of wealth and the illusion of money combined with a complete lack of understanding of our human selves. Fear - of change, impact on "lifestyles", loss of "wealth", that we have been lied to - will keep us in denial until it is too late.

These readings i found recently may resonate with you:

http://www.yesmagazine.org/pdf/kortennewstory.pdf
Economists debate whether the economy is recovering from the financial crash of 2008. Scientists debate whether Earth will recover from an economy that is destroying Earth’s capacity to support life. An unconscionable gap between rich and poor—between the profligate and the desperate—grows at an alarming rate. Economists assure us that faster economic growth will provide the technology and financial
resources to heal the environment and create jobs to end poverty. Most politicians agree with the economists. Meanwhile corporations in the business of supplying fossil fuels to grow energy intensive economies resort to technologies increasingly destructive of Earth’s soils and waters. Competition
for food and fresh water intensifies in the face of extreme drought and flooding. Some among a confused and desperate public respond with denial. Some pray for divine intervention. Some look for ways to profit from the crisis. Some, inspired by an emerging new vision of human possibility, work to heal our human relationships with one another and nature in a bold effort to turn the human course.

http://davidkorten.org/home/great-turning/
We humans have a brief window of opportunity to navigate the passage from a 5,000 year Imperial Civilization of domination and violence against life to an Ecological Civilization characterized by peaceful partnership with one another and Earth. This passage to a new level of species maturity promises a more secure and fulfilling life for all.

The Great Turning is a possibility: not a prophecy. The choice is in our hands.

http://www.yesmagazine.org/blogs/david-korten/agenda-for-a-new-economy
How can we build an economy that works for all of us? David Korten lays out his vision in his latest book, Agenda for a New Economy. This special blog series is comprised of condensed and updated excerpts.

Thanks - will have a look.
Re awareness - I think most people think there will be "slightly unpleasant" reset before things then get back to some sort of revised normal. But backwards and a growth dependent financial system dont work.

Another question should be added:

What are the implications if I want to remove myself or if any of the partners want to remove themselves?

Furthermore, why does this apply to Generation Rent? It could also apply to to Gen X or Gen Boomer (who could either rent or own) who also want to get more exposure to the magic pudding, but don't have the resources to do so by themselves.

It generally only applies to Generation Rent because Boomers and early Gen Xers benefited from lower house price to income ratios, so they wouldn't need extra people to help scrape together a deposit or service the mortgage (assuming they bought property as early as they could).

I recommend being way about entering into a structure like this with friends. I've seen some outcomes where you only need one person to fail to pay and things collapse rapidly. You need to enter with business partners with a clear relationship and people who are reliable with organising their finances.

I have seen long term business partnerships fail with a similar structure and from my point of view it's almost as financially painful as a divorce.

It's probably worth making sure people understand the meaning of "jointly and severally liable" as many people will not be aware of the legal implications.

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I don't know a quicker way to lose friends than to move in with them...
Sounds like a terrible idea.
Better to wait for the Ponzi to collapse then buy a cheap house off a bankrupted landlord.

Very wise Move

or family can be worse at least friends you can walk away.
my advice put it all in writing before you start, everything from day to day matters, whom will be responsible for what and finally wind up formulas, buy out and how to determine pricing.

Another article with the bank in the back seat finding a way to sell the mortgage to a 'team of mates' as the house purchase is out of reach for normal families and more difficult for investors...

This is showing the way to walk around 40% deposit rule for investors.

I would suggest a better approach than tolerating prices that are *absolutely exceptional* when compared to most of the world is to work for political ends that have precendence in NZ's own history: land tax, government builds and other government policies that fostered the high rate of home ownership achieved by the 1980s.

Better than paying $2 million to share a cold shack on a postage stamp with two other families.

When spending $2M for a cold shack on a postage stamp I always demand a one bar heater.

It is so way past time that houses were again treated for what they are supposed to be, homes!!

I have teamed up with friends before. If I can give any tips to those who are thinking of doing the same ,then I would say:
1) Make sure you really know and trust the people you enter property ownership with, obviously.
2) Take note of the 'JOINTLY AND SEPARATELY LIABLE' clause in the mortgage agreements. What that meant is that when you will want to buy your own property one day, the bank will consider each one of the shareholders of your company as being liable not for a part of your mortgage but for the WHOLE LOT. So if you have 4 mates who borrow a million dollars, you are not each liable for 250k, you are each liable for $1,000,000. It means that if you want to buy your own property later on then you will only be able to borrow whatever you can borrow on top of that $1,000,000 that you are already liable for. Unfortunately.
So if you don't have enough money for a deposit now, but you think that in a number of years you will have a lot more and that house prices are not expected to go up much in the meantime then my advise is wait till you have enough for a deposit and buy on your own instead. Don't rush to buy with your friends, unless house prices are set to go up fast. If you do buy with friends then be prepared to sacrifice the potential for some of your personal purchases in the future. That will be extremely frustrating especially if house prices do start sky rocketing again but you will be unable to purchase your own property because you are liable for a big mortgage with your friends already. Sure, the property you own with your friends will go up too but you will only take a portion of the potential profits from it, rather then enjoying 100% of the benefits if it's your own property.

On the other hand. if you have never bought property before then buying it with the people you love and trust can be a lot of fun , and can feel quite safe, and it will make your friendships grow much stronger (well, either that or it will destroy them! :). I am lucky it made mine stronger:) If I didn't buy when I bought with my friends (even though just after we bought the first house the prices "crashed"- in 2008/2009 ), none of us would be where we are today. So yea, I would do it again if I went back in time. Good luck with whatever you do!

Tulips are too expensive. Join forces to borrow money to speculate on tulips.

Next week. Speculate on cryptotulips.

"cryptotulips". Plus one, would LOL again.

Sucker pool must be getting shallow.

Is going through brokers like Mike Pero Mortgage's going to do anything different over agreements between friends/idiots that are buying a house together? Can those [Ed: bad language removed] put a spin on this matter of protecting the banks perception of you having to foot the bill in full if your friends/idiots cant pay ect?

Possibly a bit risky going in with several other people to buy in Auckland at the moment while the market is settling.
Problem is getting the money out of the property if your circumstances change and agreeing on a price that someone else buys your per centage.
What can work and is cheaper than renting in Christchurch is 2 couples buying and sharing a home that is setup with 2 living areas.
A reasonable home at say 400k would only require a deposit of 80k and that is only 20k each.
You would at least be on the property ladder and if one couple wanted out at a later stage they could easily be bought out by the other couple.

"Possibly a bit risky going in with several other people to buy in Auckland at the moment while the market is settling."
Is it not strange that common belief is "buy low sell high" which means the high/ flatish period at the moment in property is the new low.
Classically illustrated by Mysterys comment above
"If I didn't buy when I bought with my friends (even though just after we bought the first house the prices "crashed"- in 2008/2009 ), none of us would be where we are today. "
Then throw in the cyclic sell up of baby boomers/ retirees, down sizing and moving to places like Tauranga.
Also of note, historically, going back 1/2 century and further, property consistently runs in around 7 to 9 yr cycles. Last flat around 2008, before that around 2002, mid 1990s, the great share market crash of the 80s.

A very timely and informative article

It's a sad state of affairs when you have to think about buying a basic house with three others.

A very interesting and helpful article though.

No its totally common sense, I had a mate that did it although he bought the whole house by himself and had 3 flatmates. He ran like this for 10 years and slowly ran down the number of flatmates until he didn't need to have anyone anymore to help pay the mortgage. He finally sold up and moved into a $1.5M house without any flatmates and got hitched. Things have changed and only for the worse, now you need a really really good job paying 6 figures and even more flatmates.

That's a completely different situation, as your friend had 100% of the deposit and "owned" the entire property. This article is about multiple people using multiple smaller deposits to buy one property.

People have been entering these joint arrangements for years. Not only in housing but also in business. It makes a lot of sense and spreads the risks. Farmers have entered into these types of arrangements for years to get a foot in the door......we can baulk at the information or take it on board and run with it.

So what is wrong with being inventive to buy a house if you can't afford it on your own?
That is part of the problem with many young ones in that they think that everything is easy and they deserve to be able to own a house.
Truth is you need to do more than just expect to work for wages and be able to pay rent and save for a deposit on a home.
The old state advances loans at 2 per cent are not around anymore.
It is still very possible to own but not if you have a closed shop blinkered attitude.

What is wrong with young people targeting political ends that bring back policies shown by NZ's history to have good outcomes, rather than paying ridiculous prices (relative to international norms) to please older investors?

Given such policies have a successful track record in NZ, there's no reason not to advocate for them. It'll be much better for young Kiwis to drive house prices back down to internationally reasonable multiples of incomes than to sign up to 13+ multiples that exist now, and a lifetime of debt slavery.

Young Kiwis would do well to push and push hard - including for such measures as re-balancing tax away from too much income tax into a more balanced split between land and income, for example. I reckon they'll get a better return on investment from such advocacy.

When young Kiwis hear older folks who benefited from such policies themselves (and the affordable housing they created), statements telling them to harden up and just pay ridiculous prices sit a bit too much under "Do as I say not as I do" territory...

There is nothing wrong with being inventive, but the risks involved are far greater than buying one on your own. Not only do you have to worry about interest rate rises and your own income, job security and ability to pay for share of the debt, but also whether the other two/three/however many people are servicing their debt, if they want to opt out of the arrangement, if they want to sell the house, if they want to be bought out of their share and so on. What happens if you or the other couple breaks up? What happens if one of you dies?

"That is part of the problem with many young ones in that they think that everything is easy and they deserve to be able to own a house. Truth is you need to do more than just expect to work for wages and be able to pay rent and save for a deposit on a home."

How the hell else do you expect us to own a house? Deal drugs? Evade tax? Do cash jobs? Leech off our parents? Steal? Prostitute ourselves? Are you actually taking the piss? You've benefited from cheaper housing, wage inflation in line with the cost of living, Housing Corp loans, land taxes to break up land banking (all things my generation has been denied) and you have the gall to tell us working hard, making sacrifices and saving isn't good enough?

I had to jointly purchase a house with a friend to get on the housing ladder in London many years ago so nothing particularly new. Just need to make sure they are completely trustworthy though and have an exit strategy if one gets married etc.

Wildcard, firstly we own quite a few more than a few properties and they have been purchased legitimately and by hard work!
Secondly, my point about working for wages is that you need to more than that if you want to get ahead.
That is a second job or buying and renovating and trading up etc. it is the way that my generation has got ahead rather than sitting on our butts and expecting everything to just happen.
We certainly aren't unemployed at all, we are rental property investors that are providing housing to people that need it.
Finally most of our rents we charge would cover interest only mortgage payments on reasonable houses in Christchurch, so it is up to people to make their own decisions.

Does "hard work" constitute working for wages, paying rent, investing wisely, making sacrifices and living cheaply and saving for a cash deposit for each house? Or do you just use equity/inherited wealth? Sorry, but if it's the latter then it's not hard work. Also, I never said anything about legitimacy.

So, you need more than wages to own a house, and your answer is to work for more wages? How does that work? Where do these additional jobs come from then? Where do full-time skilled workers get part-time skilled jobs of less than 20 hours a week? And how do you renovate when you can't buy a house in the first place? You've got it arse about face.

You also benefited from wage inflation in line with the cost of housing, cheaper carded loan rates via Housing Corp, a government initiative pushing for owner occupation, low immigration levels, "jobs for life," cadetships and apprenticeships, no artificial wage suppression and a low house price to income ratio, all of which Gen Y has been denied. If you worked hard, then in conjunction with those advantages it was easier to own a house then that it is now. Hence why roughly 75% of people who worked during that time own their own house, compared to less than 20% of 25 to 29 year olds now. Working hard is not exclusive to any generation. You can't just say home ownership for young Kiwis is unafordable solely for the reason of an apparent lack of a work ethic.

>"Secondly, my point about working for wages is that you need to more than that if you want to get ahead.
That is a second job or buying and renovating and trading up etc. it is the way that my generation has got ahead rather than sitting on our butts and expecting everything to just happen."

It's the way a comparative few of your generation got ahead, in reality.

Many, many more of your generation simply worked for a wage and bought an affordable house, then have seen it skyrocket in value as the policies of the previous generations were abandoned by recent governments.

Bit sad that you lot feel the need to buy existing properties instead of building and actually ADDING something to society

Yeah, death to hard workers who save!!

Hard workers these days have little left over out of their meagre wages after paying horrendous rents to be able to save

TM2 - I thought you said earlier in the week you weren't a speculator who was operating interest only? But here you say you only charge rent to cover interest payments on most properties? So how much higher do interest rates need to go, with no further capital gains, before your business model sinks so to speak?

Good to hear you are providing housing to those who need it. How many new houses have you built so far?

Wildcard, with that chip on your shoulder you will have trouble getting ahead.
Get rid of the chip and listen to,people that have achieved what you want to.
Purchasing our rentals did not come from inheritance.
We bought and renovated and moved many times to get ahead including building etc. and lived in rental property occasionally.
Fortunately we both have been prepared to work hard in addition to working for wages.
Forget about getting ahead in Auckland at the moment as that market is inflated and will flatten out.
You are totally wrong in regards to us benefitting from all those things you mentioned. none of those things have benefitted us at all! Plain hard work and good business decisions, and not luck at all.
The thing that is going to make it harder to do what we have done to get ahead is the Reserve Bank wanting the LVRs at 60 per cent that is 40 per cent deposit.
But that is what many on here are happy about but ultimately it hampers many that now want to get ahead.
Most property investors are good for NZ it is the speculators in Auckland that you should be annoyed with and not everyone that owns more than one property!

"Most property investors are good for NZ..."

LOL

I have to agree with ham on this one as most property investors aren't good for NZ. Many are unprofessional and neglect their properties to pocket additional cash. Then throw in a few crazy landlords on top of that and you end up with slum like flats for the population to live in.

Let's stop calling these useless parasites landlords for starters. They're getting delusions of grandeur.

Most landlords are in fact nothing more than Government beneficiaries, being subsidized by the state with tax write offs and accommodation supplements supplied by the state.

>"You are totally wrong in regards to us benefitting from all those things you mentioned. none of those things have benefitted us at all!"

It's simply incorrect to argue that supply created through the efforts of previous generations and policies did not benefit you. Without adequate supply, prices would have been too high for you to get into the market.

See the supply/demand equation now for an example of what you would have faced.

Dictator, you also have a chip on your shoulder.
Of course there are some land lords that aren't professional just like any industry.
The reality is that NZ needs investors to provide housing as the Government doesn't want to be in the providing housing for NZ citizens business.
If you are in an awful rental move to one that is well looked after!

"NZ needs investors to provide housing as the Government doesn't want to be in the providing housing for NZ citizens"

A lame argument trotted out to make our parasites feel better . There is a need to provide SOME rental houses, but govts should be promoting home ownership above a parasitic rentier economy - its better for communities.
Successive govts have unfortunately allowed & encouraged this market knows best dogma to prevail (with hopeless law & tax rules) so that population ponzis can grow the books.

Top work thinking outside the box Jenee.

Yup, gotta keep dat bank debt ticking over and dem capital gains a'rising...

Some people complain, some act...

Some take money from the less fortunate, others choose not to

As long as you buy items made in China, India, Indonesia, Philippines etc, YOU take money from the less fortunate, and we all do.

It's great isn't it - we give money to the less fortunate by buying products from them allowing them to feed and educate themselves. Hence extreme poverty has plummeted in recent times.

"After around 1970, the decrease in poverty rates became so steep that the absolute number of people living in extreme poverty started falling as well. This trend of decreasing poverty—both in absolute numbers and as a share of the world population—has been a constant during the last three decades.

https://ourworldindata.org/extreme-poverty/

Independent Observer, you are looking at things totally the wrong way.
Turn your negativity into positive thinking otherwise you will end up bitter and twisted for the rest of your life.
LIFE goes quickly and quicker as the years go by!
Life is what you make it in most cases and if you continually moan and get pissed off by what other people are doing it will,achieve nothing at all for yourself.
We are fortunate that we are financially independent through investing but as I keep saying, it is up to you to act yourself as if you keep sitting on your hands, you will end up going further backwards.
We also aren't speculators but we do buy particularly well and that is how we are able to also receive positive returns.
Some of our loans are interest only and some are P & I.
We have been buying for a few years now and all the properties are valued at a lot more than we paid for them, but we don't sell as we are full time investors.
What I said was it is possible,to buy a 2 bedroom unit in Chch for around 300k interest only and rates and insurance would equate to approx $330 per week.
If you borrowed the whole lot with no deposit down thru parents equity you would easily be able to make principle payments as well.

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Thanks but no thanks TM2.

Do you understand the concept of interdependency? That we rely on each other and that your actions affect me, and mine to you? If we work together we both win - if we work against each other we both lose. Now what you guys/girls (landlords) is doing is you're playing a zero sum game against the rest of society - meaning that were all effectively working against each other - making ourselves financial and morally poorer in the process. Essentially you're playing a game of I win, you lose. But here's where it gets tricky (stay with me here...) You buying more houses puts me, your children, and your mates down the road, into more debt because you're elevating prices through your 'business practises'. So what you're doing is damaging to my future (and the only real winner is the bank and its shareholders as long as the market doesn't crash..no promises of that either). Now that's great for you because you think you're getting rich, but I know from your past comments that you haven't done that much research and haven't accurately assessed the risks. So now your risking my future job as well because your 'business practise' of buying and selling houses is a well documented way of causing a credit crisis, recession, bank trouble..,all that bad stuff.

Now I come on a site like this and try to convince you that you're wrong to do what you're doing, because we're beating each other up. But you've experienced some success which tricks you into thinking you'll experience future success doing the same thing. You become over confident and don't take advice.

It leaves us in a tricky situation. No one wins, yet the cause of the greatest risk, and the one causing suffering and pain for others, doesn't want to listen or change their ways. This is classic win/lose, zero-sum thinking. The outcomes usually aren't ideal as the loser decides to stop playing the game because there is no benefit to them to continue. This is happening at present on a big scale in NZ. So as the current
'winner' in this zero-sum situation I'd suggest it would be wise to be humble and to not be too greedy. You need society to keep playing your game in order to win, but they're waking up and realising the zero sum game isn't being played fairly.

Landlords think they are doing a service providing housing for people. If every landlord got out of the "business" then those houses would not disappear as we led to believe, but provide an opportunity for other genuine owner occupiers.

That's exactly it - I read that 40% of buyers in Auckland last year were darklords/investors. Now imaging what would happen to demand and prices if darklords decided to go and get a life, allowing young renters to start a life!

Independant Observer,
Imagine what you could achieve if you spent all that time complaining on this site, on something productive !

Yeah, he could use that time to become a parasitic property investor with delusions of grandeur!

Quit working, quit paying rent, go Bush.

Take a year off.

No point in working your ass off, for some others "Benefit."..is there?

Stop buying anything but necessities for "your" Survival.

Then see how many changes to immigration, will import your replacements...by a National Party, needing their "Fix."

The treadmill cannot stop.

If it grinds to a halt, someone will lose their shirt. (Made in China, of course).

If borrowing stops, Taxation stops, Benefits stop, and the Benefits start at the top and their inflated egos may have to get off their asses, and Houses may crumble, assets may fall, no pump and dump in cross country speculation and down will come Humpty Dumpty...and all.

A win win for some, We will have to conjure up money again.

It is called Banking on it.

Seriously, there are a few on here that just moan about how bad things are and how some have benefitted from this and that and how unfortunate they are!

Well the good news is that it is possible with the right mindset to get ahead in NZ and the bad news is that with the continued bad mindset you won't get ahead.

Not sure whether it this schooling that out many in this bad way but my kids certainly aren't so negative about everything, so it is not common to all.

Your choice!

Your kids have parents that own multiple properties. Of course they wouldn't be negative as you'll be gifting them hundreds of thousands of dollars in equity and houses.

Funny that he's on here moaning about other people moaning about other people and completely misses the irony...

Well, he has no job so I guess he has a lot of free time on his hands.

You're wasting your time TM2, you cannot help people who refuse to be helped, if anything they'll bring you down, move on

Lol, how is calling massive swaths of young Kiwis lazy helping? How is showing no empathy or sympathy for people worse off than you helping? How is blatantly ignoring the obvious advantages you have over others and pretending your wealth is 100% due to hard work helping? How is shafting future generations of Kiwis helping? How is blinding investing in one asset class in one location and refusing to diversify yet constantly spouting off about the benefits of said one investment helping?

I accept help, and I have learned heaps from various commenters on this site who are intelligent, articulate, respectful and can think critically. However, I do not accept help from someone who constantly sh1ts on me, calls me lazy and thinks I have a chip on my shoulder because I point out his incorrect gross generalisations and obvious advantages he received for being born at the right time.

Who's got the "Woe is me" attitude here?

Some of us simply lack sympathy for the attitude of "I did it all pulling myself up by my own bootstraps" that's patently incorrect and ignorant of New Zealand's history, and yet is also combined all too often with fatuous and erroneous rants at today's young people for eating smashed avocado and being spendthrifts, telling them all they really need is a "can do" attitude. How one can have lived in a country with NZ's history and think they did it all themselves is staggering...

Boomers received far more from the efforts of preceding generations than today's young Kiwis do, and saved less on average of their money than today's young Kiwis do.

That's why people don't hold much regard for these 'own bootstraps' and 'mindset' comments. Simply because they're too often not grounded in actual experience, and they're not reflective of reality.

Like yourself, I suggest young Kiwis don't just work hard, but work smart. One of the ways they can is by working for political change that will reduce property's attraction as an investment.

There's a religious saying coming to mind when dealing with landlords and property speculators and it's 'forgive them, for they know not what they do'.

I am constantly amused by the comments of some of the commentators on this site. They are generally born a generation or two earlier than many other commentators. They forget that when they got on the ladder they were borrowing 3 times income or so and when they got on top of such modest loans they were able to leverage against their equity and buy more homes or shares as those assets were still relatively cheap. Tertiary education was cheaper to achieve and they did not have the expensive lifestyle we currently have in New Zealand. Visitors to this currently are amazed how poorly paid we are and just how expensive it is to live food, power,internet,council rates, building materials and the general cost of housing wise. In 2004 a client of mine had a modest home. He was single and he had a reasonable income. From that he built up 37 rentals. I asked him what his goal was and he said he wanted to own 50 houses. That it was now just a game and he was still single with no dependents. He was caught out by the GFC but was saved by the same emergency mortgage rates we have today. The bank forced him to sell down his portfolio to a level where the bank was no longer worried. The question I ask is. Can anyone do that today? I doubt it. Wages have not increased accordingly but the cost of living sure has increased and people are not able to buy houses at 3 times income or thereabouts. It is all about timing and the boomers and early to mid X were lucky with their timing. That includes me. Of course the moaners will have the last laugh as generally they will live longer than the lucky ones.

I have come to the conclusion finally that this site has a few intelligent people who have investments whether it is houses or equities.

The rest are people with major chips on their shoulders, jeolous and not prepared to do anything about it!

It wouldn't matter what the intelligent ones say the moaners are always going to be such and will never never get ahead financially.

My financial success has got nothing at all to do with timing or inheritance but working hard, buying well and common sense.

End of storey and not worth carrying on any longer as most of you are tunnel visioned nillers!

TM2

I find it staggering that someone can get to your stage of life without realising that it is a combination of hard work AND LUCK that lead to success (however one defines that).

I also find it personally offensive that you imply that 7 years of illness, along with subsequent loss of savings and income, are somehow related to my (or anyone elses) attitude.

I am lucky that I was born with a brain that understands IT and have a mother who as a primary teacher was able to to support and develop a young enquiring mind. Due that AND hard work I have been able develop skills over the last 10 years that allowed me to study (take on student debt!) and move into an enjoyable, fulfilling and well paying job.

Your inability to acknowledge the role of luck in addition to hard work in peoples success or failures shows an incredible ignorance and blinkered attitude that would be laughable if it wasn't so common.

I really do hope it doesn't take a bad luck event of your own to learn a little compassion for those who haven't enjoyed the same kind of lucky life you have.

Its never luck for most people, its about making the right decisions. I could have spent all my money on drugs and alcohol and had a great time but still be living in a flat with three other 40 or even 50 year old losers. Its about making the most of the cards you are delt and sure I now feel "lucky" but perhaps I earned that luck.

bullshit! the house you bought ten years ago was 300k. it's now 1 million... it's only luck that you are where you are. You are not clever~! Arrogant, lucky, but certainly not clever!

Basically a law change that allowed foreign ownership gifted millions to a small percentage of the population. But the downside is that every future new Zealander has to bid against the world to buy a house in our own country. Was this the most significant change in NZ history?

Rubbish. Luck is the most overlooked factor in everyone's life. Lucky to be born, lucky to have great parents, lucky to have been educated, lucky not to have been run over, lucky not to have been born deaf and dumb.....and on it goes. Luck got you where you are..end of story.

I'm constantly amazed though at the conflicting stories of many folks born at the right time to benefit from cheap house prices. In one setting they'll be talking about their partying days of yore, and how young people just can't match up to the partying feats they managed. Then in the next breath they'll be insisting - against the evidence - that they worked hard and saved harder than young people do today, and it was nothing to do with the luck of being born at the right time to benefit from cheap house prices.

Ranting about smashed avocado and pretending against the evidence that young Kiwis are spendthrifts is little more than absolving one's generation of any need to consider measures to rebalance things and improve housing affordability. It's a way of pretending there's no obligation to pass on to the next generations a benefit that was handed down to them by the previous ones.

... I've heard of a guy who was in a McCains factory ... standing next to the potato fryer , when it overheated and blew up ...

He spent the rest of his life with a chip on his shoulder too ...

... lucky bastard ... the rest of us have to buy ours ...

TM2 - you say people aren't prepared to do anything about it and they aren't intelligent....but I think sometimes the best thing to do is nothing. I can't convince all of NZ that we're in a massive debt fueled housing bubble because that is too scary for them to comprehend. So they'll happily live in denial. In fact, they get a little bit nasty if you try to convince them of the problem we have, so you have to keep your mouth closed and say nothing - more often I end up having to be nice and say things like, 'congratulations on buying your third rental, what an achievement. I'm so pleased for you.' Knowing that these same people are at risk (there is a reasonable chance) of finding themselves in a negative equity situation in the coming years.

Right now I'm actively doing 'nothing'....waiting for the truth to reveal itself. When it does, I'm ready to go...Right now, too many people are 'all in' like this is a game of poker using the banks (other peoples) money.

... similarly , I cannot convince all those property investors who are " all in " to the current bubble , that when it bursts , if won't be something several times worse than they're expecting ...

Some pragmatic property bulls will point to previous " corrections " of a mild 5 or 10 % fall ... and assume that's all they'll have to bear at the next down-turn ...

... but , I say that records are to be broken , and as we've seen the biggest property boom in NZ history ... why should that not equally be followed by the biggest collapse ... a gut-wrenching drop of epic proportions ... a Bernard Hickeyian fall of 30 % ... or even a whole lot more ...

Not saying that it will happen ... just saying that the potential exists ...

Yes gummy bear. "I've never had a heart attack in the past, even though I eat a terrible diet, therefore I conclude that I'll never have one in the future"


I have come to the conclusion finally that this site has a few intelligent people who have investments whether it is houses or equities.The rest are people with major chips on their shoulders, jeolous and not prepared to do anything about it!

Your comment makes it sound as if you hold this opinion based on some sort of detailed study. You didn't, it's not a conclusion, it's just the opinion of someone, who is comfortable sorting everyone into just two loosely-defined groups.

What are the groups you define. The 'haves' and the 'havenots'? what is your point ? are you suggesting that New Zealand and life in general is inherently 'fair'?

You constantly play the false dichotomy fallacy card. You think that people expressing concern about the stupidly overpriced NZ houses, household debt levels or economy in general means they have no work ethic or intelligence or investments.

It's a bit rich you call others "tunnel visioned" when you constantly generalise, refuse to consider other points of view, don't diversify your investment portfolio, show no empathy towards others, blindly assume you're correct, ignore the massive amount of advantages you received for being born when you did and can't put together a coherent argument.

Quite revealing, what people choose to imagine and believe in the complete absence of evidence. From the dataset of his posts here, TM for some reason appears strangely eager to overreact to even the most inconsequential disagreement as if it's a criticism of his actions, thinks mindless bluster trumps facts, interprets statements that have nothing to do with him as personal attacks, and is desperate to invent disparaging fictions about anyone who disagrees so that he can delude himself he's superior.

Spot the case of raging insecurity.

Funny you mention raging insecurity. It seems that property investors/speculators have to give themselves grandiose names on sites like Interest or Stuff. "The Man," "Property King," "Property Leader...." Are they so insecure or have such low self esteem they have to constantly push it in the faces of others to feel good?

>"My financial success has got nothing at all to do with timing or"

Yeah, that's factually incorrect though if you bought your first house in the 1980s (or even 1990s) and have seen significant capital gains way above wage inflation. Simple as that.

I have stated many times on here that I also agree that the Auckland housing market is over inflated and that rental returns are negative which I don't agree with and therefore the buyers are speculative.
What I point out is that anyone inNZ can buy property in NZ unless they are not prepared to work for it and I am not talking Auckland.
If people don't want to listen to people who know what they are doing then that is their perogative.
Just do t show jealousy if you don't want to improve your own lot!

Rather than constantly throw out generalisations and strawman arguments, maybe you could offer some advice or wisdom as to how FHB or "anyone inNZ can buy property in NZ?"

Wildman. on may occasions I have given advice and yet all,we continue to get is this overpriced housing in NZ!
It is not,overpriced in NZ, it probably,is in Auckland.
Australian major cities are overpriced equally as Auckland.
There are many places in nZ that are affordable and living conditions superior to Auckland.
The Auckland market has made things more difficult for the rest of the country, but People I know who have invested in Chch in the past few years are hundreds of thousands and even millions of dollars better off on paper and receive positive returns from rents.
Get your head out of the clouds by believing that Auckland is all that exists in NZ.
I respect people that do grab opportunities to improve themselves and others that just moan and do nothing, not so much.

What? None of that is advice. You're just saying that:

A) NZ houses (apparently) aren't overpriced (5.5 times the median wage is unaffordable).
B) Auckland has high house prices (yes, we know that).
C) Australian cities have high house prices (yes, we know that).
D) There is "affordable" housing outside Auckland (could you give some examples, please?).
E) Christchurch is good to invest in (which doesn't help FHBs, not to mention all the shoddy Fletchers/EQC/cowboy builder repairs).
F) Mention people you know who have made a profit (not helpful for FHBs and far easier to do with equity or a large stack of cash).
G) Mention that I've talked about Auckland when I haven't said anything about it.
H) Moan about people moaning.

So, no advice or insight. Just a list of meaningless generalisations that didn't address the question I asked. What about investing apps for young Kiwis? What about the benefits of ETFs? What about fixed term versus revolving home loans? What about encouraging FHBs to ask for lower rates than the ones advertised?

I think (therefore I am) there needs to be more articles on how to build a house. How much it costs etc. With leaky homes being so expensive to buy, why not build?

a beginning ...... how to achieve that ....

1. Invite a couple of friendly Auckland based builders to press a button on their spread-sheets and submit to interest.co.nz on a monthly basis the cost of building a standard single level 150 square metre house excluding land and site-works - just the basics, and keep it in a database and publish it

2. Get a couple of friendly Auckland based valuers to each select a specific property and do an exact valuation at the beginning of the year followed by monthly updates ... it would be a specific property ... not subject to averages or means or medians ... they would be exact ... would not be a moving target as property reports are

While this was proposed 3 or 4 years ago I haven't pushed it since

Wildcard,not too sure what else you want me to say.
I have said buy in an affordable city like Chch.
Get to know the market and buy under value with potential.
Buy with a positive yield and be prepared to work and improve it sensibly.
It is harder now for people starting out with the new LVRs brought in by the RB but that is partly Aucklands fault.
Things like asking for interest rate reductions are a bit irrelevant as not too much between rates anyway. You are better off having a Bank Manager who you are able to work alongside with.
The best advice to you, is to change your mindset from all this negativity to how can I get to own my own property and investments!