Investor confidence bounces with rental property most popular and Auckland investors especially optimistic about capital gains opportunities, ASB says

Investor confidence bounces with rental property most popular and Auckland investors especially optimistic about capital gains opportunities, ASB says

By Gareth Vaughan

Investor confidence is at its highest level since late 2010 with more investors backing rental property to offer the best returns than any other investment class, ASB says.

The bank's latest Investor Confidence Survey has its Investor Confidence Index up 5 points to a net 13 points over the three months to the end of September, its highest level since reaching 19% in the fourth quarter of 2010.

Jonathan Beale, ASB's head of wealth advisory, says the survey shows rental property back at high confidence levels in New Zealand with a 5% rise in confidence outside of Auckland especially notable. And in Auckland, investment property's popularity has continued its upwards trajectory with a quarter of respondents considering property likely to offer the best returns over the next 12 months.

“Confidence in investment property among Aucklanders is now at levels not seen since 2009,” says Beale. “Auckland investors appear to be particularly optimistic regarding the opportunity for capital gains on property and are adjusting their investment strategies accordingly."

This comes with the average price of a house in Auckland topping NZ$600,000 for the first time in October, according to the city's biggest real estate agent Barfoot & Thompson. The latest data from government valuer Quotable Value shows national residential property values in October were 1.1% above the late 2007 peak with the average current value at NZ$420,048. National values rose 5.7% in the year to October and 10.7% in the old Auckland City, QV says.

And the Real Estate Institute of New Zealand said last week national house sales volumes rose 32.6% in October year-on-year and the median house price increased NZ$9,000, or 2.4%, from September to a record high of NZ$380,000.

Property first, shares last

Rental property came in first with those ASB surveyed with 18% believing it gives the best return. This was up from 17% from the second quarter. Second were term deposits at 17%, down from 20% and first place last quarter. Managed investments/superannuation was third with 12%, KiwiSaver fourth with 11%, bank savings accounts were fifth with 9%, and shares last of the big six categories at 7%.

Beale says the continuing strength in investment property and lift in managed investments seems to have come at the expense of less risky investment classes such as terms deposits.

“There are early indications that previously defensive investors are gaining more of a risk appetite and are starting to focus on higher potential yields instead of defaulting to the more secure options for their money,” says Beale.

However, the survey results show investors wary of the sharemarket with just 7% of respondents expecting the sharemarket to offer the best returns over the next 12 months.

“New Zealand investors are continuing to look at the sharemarket as a whole as the least attractive investment option, which is at odds with the broad public interest shown towards some recent blue-chip investment offerings. Investors’ cautious view of the sharemarket may largely be due to a historical perception of relatively high risk levels. Investors still appear to prefer the security of managed funds over a self-managed share portfolio, even in an environment where risk is becoming more palatable," Beale says.

Investors 'less risk adverse' with global economy 'settling'

Overall Beale says investors are feeling more confident and less risk adverse against a backdrop of a "settling" global economy and the on-going post earthquake Christchurch rebuild.

“The European Central Bank’s actions and the stable outcome from the second Greek election have reduced the number of bad news stories that were dominating the media earlier in the year and this appears to have improved the attitude and outlook for New Zealand investors,” says Beale.

“The return of investor confidence to its highest levels since the end of 2010 indicates that investors are taking a less defensive stance and considering the benefits of higher risk and higher yield investment classes.”

The survey results are based on 786 online interviews with people aged 18 years and older across New Zealand.


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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That looks like a good transitionary plan prior to completely banning foreign investors. You've mentioned a few other things there that I hadn't thought of as well.
Frankly, I think we need to give some thought to the situation we have now what with working for families and housing top ups, that money, especially in Auckland is heading directly into private investor pockets, many of them foreign.
I believe this needs addressing urgently and the results should be manifold - housing prices should come down, and large chunks of our public money will no longer be vanishing overseas, never to be seen again.

ASB Investor Confidence Survey, AKA The Shoeshine Boy Index.
Will these geniuses be so kind as to let us know when to get the hell out of property? No I don't think so either. 

 The other day my cab driver was all about property

It's fun to come over to this site now and again and listen to the idiots spouting off about how property is such a bad investment etc.
Factboy, well change your name mate.  For one thing, there are no tax breaks on property compared to other forms of investment and for another, you do pay tax on any capital gains you make if you are in that business.
The thing is, where are people supposed to put their money? In the sharemarket?  It's still below 4000 and has been for years.  No growth here.  And it's bascially a game for those in the know, it's not somewhere mum and dad investors can really make money.  The money is made by the players in that industry.
Or gold? No return and can drop in value at any time, hugely.
Finance companies.  Enough said.
The bank? Fine if you're interested in like 4 to 5% with no capital gain of any kind.
Managed funds? Well once again, you don't make money by investing in these. You make money by selling them and charging your clients a wide variety of fees.
Investors choose houses because they are in control.  Perhaps they're sick and tired of people ripping them off?

Now, now, Davo, enough of the "idiots" insults, makes you sound .. er.. stupid.

Couldn't agree more, Davo. 
I challenge anyone posting on here to state a better form of investment than residential property. 
As for affordable housing, I live in south east Auckland and there are plenty of town houses, flats and apartments that are under 350K.  I friend just bought 10,000sqm section just out side of Hamilton for $230K. 
Kiwis simply need to change thier expectations when buying in Auckland, if you cant afford a 1/4 acre section in Parnell just buy a apartment.  It happens in most cities in the world but the difference in Auckland is apartments are still very affordable. 

Challenge accepted!
Fidelity Life, Gold Medal Super plan taken out in 1992 yes 1992! (Dollar cost averaging over 20 years) Current Return 0% including loyalty bonuses. Oops not a good example. Apparently Fidelity Life make great returns for their shareholders and salesforce.
GMK growth fund 3 years 0% return over this period, oops another not a good example . GMK sells to kiwibank pockets $45m, apparently great returns for shareholders.
Property for 10 years 92% return banked.
Property for 12 years, unbanked 100% return.
Yes some share and some financial investments make money, but the huge volatitly, you need insider knowledge or luck for gains.
Yes I have made some money on shares (and lost some) but more by luck in timing than analysis and research. Ditto for Fidelity and GMK both well diversified.

We have been mortgage free for going on 25yrs thing we ever did was not pay interest for 25yrs. Never had a big flash house, just nice and secure in the knowledge we own it.
As for investing well......we have done very well over the years in a variety of things. Working and earning, stocks, gold (one of the best ever returns) bank deposits during the 80's.
You get the picture. Housing is very expensive at the moment and risky as the numbers are huge. Prices are what banks are willing to lend against it. Supply and demand, poppycock. Just noise to stop folks thinking about the price value equation.
Think about 30 yrs of interest on huge bank loans for paper gain.........

Are you joking? A share in Apple on 02/01/2004 was $10, it is now around $550. So If I bought 1000 shares in 2004 for $10000 I would now have $550000. Get a clue, the wealthiest people in the world own mostly companies, not properties, and the wealthiest .01% of Americans own 50% of the American stockmarkets.

Yet huge amounts, trillions are in Fed Im not so sure that the wealthy are that much in shares....Hedge funds maybe....its an interesting Q just where they are at.

Kiwis are in love with owning rental property.  So what.
But if you really want to change that, then what needs to be fixed is the rapacious financial services sector.  Thats a minefield that you venture into only if you really have too.  If the financial services industry was set up reasonably, Kiwi's would be more inclined to use it, and less inclined to be in property.

Davo36, your comments are not correct. The NZX is up 22% this year. Abano Healthcare has gone from $3.60 to $5.86 this year and paid near to a 7% dividend and this is just one example of what investors have missed out on who do not have a diversified portfolio. The advantage of shares. No tenants, no expenses and for long term holders no tax on capital gains. New Zealanders who just focus on property are missing out on a lot of opportunities in the area of equities. Do your own research and buy the shares on line or through a broker. You do not need to use a financial adviser. Watch the dividends hit your account and try to spend them.

.... and with all costs tax-deductible, but a tax-free capital gain at the end - mmmmm!!  With our unique tax structure, no wonder people can't look past rentals.
This is the way to building a truly sustainable wealthy & vibrant export-based NZ economy - thru rental property!  No wonder Key is so optimistic about our future!

not quite so rosy as you paint it, when you sell a rental property, you have to pay back all the tax deductions from the whole term the property was held. A friend of mine sold a small commercial property recently which was held for 9 years, a big junk of the sale price (which was not rosy either) had to go to IRD,  in the end  after allowing for inflation over the years he was left with less value than initital purchase price.  

It is just the depreciation on the building that can get clawed back Gertrude. All other expenses deductions stand. 

Not correct of course. 
However, in a way it would be fair - why should you get tax deductions for a business, but not pay tax on the resulting wealth created? 
The UK taxes the gain.  Oz does. Japan does. Germany does.  Even the US does!
Why do we have to be the single country with this ultra-distortionary system?

All well and good if you picked Abano, this year.  If you picked Abano in Jan 2009 you would have paid $5.20 and by January 2011 it was trading below $4.00
What was the percentage change in the value of the NZX in 2008? 
Don't get me wrong, I love stocks and there is potentially huge gains to be made but it takes a lot of time, research and knowledge that most Kiwis don't have.  Combine that with the risk involved and the fact you can't leverage as much as with property it just doesn't stack up. 
Interesting that there's no complaints on these blogs about speculation in the stock market but plenty of complaints about property speculation?

just preaching diversification Happy 123. what happened to property in 2008? it would not have kept up with inflation alone if I recall correctly.

Property in Auckland in 2008 dipped 10%, total gains from Auckland property between 2002 - 2009, 120%. 
So I ask my question again what did the NZX drop in that time?

Happy 123 your wording " it just doesn't stack up ' is not logical. People who bought Abano earlier this year have made 60% tax free gain excluding dividends. People who bought Xero earlier this year have made even more fabulous returns without expenses and tax free. And no tenants to deal with either. People need to diversify. Have some property investments and some equities.  Both have their days in the sun and their bad days. When shares dip buy more. When property prices stand still or go backwards with inflation do not panic. Wait for the sun to come up.

Diligent also had great returns this year, Infratril and Ryman also performing well both without the volatility.  NZ's software companies have a great future and would be my bet for the next 12 months.  Healthcare stocks (Abano, Ryman, Ebos, etc) may be over-inflated at this stage but probably still a good long term hold.  If you want to get a bit more adventurous try AWC, PAN, ERA or some of the other ASX mining stocks, potentially huge short term gains but a very rocky ride.  I would buy these leading up to USA's fiscal cliff where uncertainty is pushing the values down. 
Don't get me wrong, diversification is good and the stock market can make fortunes.  It's just when all things are considered my preference is Auckland residential property. 
What are you betting on in the next 12 months?

Happy 123 again your argument is flawed.  Not everyone has investment property in Auckland for a start. The NZX is only an index. No one probably holds all the  shares in the NZX at one time. You cannot just compare Auckalnd with the NZX. Personally I hold only two shares and I have large holdings in them. My gains in them easily beat 120% and no expenses. If you accumulated Trustpower, Ports of Tauranga, Mainfreight, Abano and a few others over the years 2002 to 2009 you would not need to work anymore.

"If you accumulated Trustpower, Ports of Tauranga, Mainfreight, Abano and a few others over the years 2002 to 2009 you would not need to work anymore."
Said with the benefit of hindsight.  If you had of bought Lehman Brothers or Enron after 2002 you would not be happy. 
"No one probably holds all the  shares in the NZX at one time"
In a word, Index Funds, when you buy into a managed fund you are usually buying index funds.  Most literature advises that when buying shares you spread your risk as much as possible by buying as many shares as possible in as many different sectors.  Your strategy of buying only 2 is risky, Your 2 companies may go bankrupt and you lose 100% of your investment. 
Your arguement is flawed because you are simply, with the benefit of hindsight, picking the select few winning shares of the recent past and ignoring the majority. 
Not sure what your point is when you say "Not everyone has investment property in Auckland for a start"
In summary, stocks are a good investment if you pick well and get a bit of luck. 
Interesting that your not stating what stocks you've bought into...

This headline states the obviuos .... and becasue there are NO ALTERNATIVES . what must the Average Kiwi do with his or her money ?
Lets see......
1) Unregulated Finance Companies where you are gaurenteed to lose the lot
2) The  NZX a  rouges gallery  with counters like FELTEX and  ALLIED FARMERS, where you are gaurenteed to lose the lot . Packed with Companies run by dishonest directors who never get prosecuted and jailed for serious breaches of ethics and honesty
3)  ASX which is hopelessly tax inefficient for KIWI'S
4) Bank deposits paying less than the  inflation  rate ... then less tax.... this is only for losers
5 )Goverment Bonds also paying  less than inflation and subject to tax .... only for losers.
6) Commerical property requires big depoisits and is fraught with risks.
It leaves only residential Property , you can gear it , PLUS it gives a weekly positive cash yield , PLUS you can see it touch it and drive past it , PLUS there are tax incentoves, PLUS there is tax free capital gain.
Its actually a no-brainer  

In terms of capital gain and income, there are only the following:
- rental property
- commercial property
- shares
- index-linked bonds
I would take shares over property any day due to the diversity available, divisibility and low entry and exit costs. There are many shares available globally that will provide steady growth and income. Yes, you lose a bit of the dividend to tax but the capital gains are tax free in NZ.
As an example, I bought Unilever shares in the UK 2002 and in ten years they have grown 209% with dividends re-invested. Much better than Auckland property. I have no intention to sell these as they currently yield 10.5% of my original purchase price (or 3.4% if you buy now).

What stocks would you buy today?

Unilever is by no meets my best buy or a particularly high growth share just using it as I have owned it since 2002 so can compare with 10-year performance of the property comments above.
Currently not buying financial or commodity (mining or processing) stocks as there is too much downside risk. Would consider any reputable company with a good history of dividends and a reasonable PER. My favourites are utilities, communications, healthcare and supermarkets.
Yields for my portfolio based on current prices is 4.64% - as good as a 3 year term deposit rate but with capital growth and can be sold anytime.

I would go personally with Commercial property (right ones) before Residential.
I own two small commercial properties (Retail shop in very good location in a CBD) and self storage units.
But are at lower price end (<$300k each) but have had far less issues than pepole I know who have residential proporties:
Some benefits over Resdential are:

  • Rates and Insurance risk can be pasted onto tenents  as lease is rent + rates + Insurance.
  • Less R & M as tenents tend not to trash place.
  • Less compliants form nieghbours in regards to parties, noisey tenents etc.
  • Can drive past or walk into propertyand see property compared to issues surronding residential iinspections.
  • Bank may lend to lower levels that residential property but ensures gearing at a sustainable level.
  • Self storage units have next to no maintainance and a high spread of tenants (rents can be individually set and moved up as tenents change).
  • Reailers can end up as very long term tenants (20 years plus)

Yes there are some very good residential investments stories but also there are commercial ones as well. Its all about doing your research and managing properties well.

Of course the ASB are going to say:
 "Investor confidence bounces with rental property most popular and Auckland investors especially optimistic about capital gains opportunities, ASB says"
They want you to sign up for a mortgage or a further mortgage ! ...that is how they make their money !!
Believe this, you will believe anything,  "sheeple" ......
I start to wonder, does any property investor actually sit down and work out the gross and net returns of their property investment the sums "Ya can't lose with property" maaaaates....

Boatman you are just another property spruiker generalising and sensationalising.  Shares unlike houses have no expenses and certainly no tenants to cope with. Not all shares are like Feltex. If you do your homework you can retire like my ex broker who retired at 50. He has no rentals as he would not put money into such investments that have limited growth. His portfolio was heavily into Port of Tauranga, Trustpower, Mainfreight and alike. As I said earlier people should diversify and enjoy the ups and downs of all asset classes.

I am not a property spruiker , residential property makes up only 20% of my investments ( excl my home ) , but I cannot suggest a suitable ALTERNATIVE investment for an ordinary unsophisticated  investor  right now. 
I have almost no debt , and cash in the bank ( which is a problem for me as its idle money not working )
The current stockmarket rally is false and driven by foreigners with their very cheap money
You suggest POT , but this share is overpriced , the yield too low , and the Port volumes that grew last year were at Auckland's expense
I dont like Mainfreight personally as its a Capital intensive business which is only doing well due to low interest rates .
I dont know much about Trustpower
I have held Ozzie Miners for years now and the gain seems to good to be true , but its not tax efficient for Kiwis becsue the PIE regime does not extend to Oz , and the entry dividend   yields are terrible  
I am waiting  for the sale of SOE's which could be the place to be with reasonble yields and good assets .
But for now there is no place like a house , unfortunately

I am not recommending them. I have never owned them. Just that a few people I know who accumulated them retired early including my ex broker.

" monetarists don't need economics degrees these days but, rather, psychology degrees as it is all about tricking investors and consumers into self destructive behavior."


why would I tell you what stocks I own. Are you going to tell us where you properties are and when you bought them and for how much. I am sure you are not. Not all investors have their portfolio in Auckland. Most have them are out of Auckland and a lot will wish they did not have them. I do not know anyone who invests in an index fund. That would be like taking a lucky dip in lotto. You are not putting any thought or effort in. I have two shares only, one in NZ and one in the States. When the prices dip I buy more as the dividends beat bank deposits by a mile.

I have a FTSE100 tracker bought in 2004 which is up 90% in that time. It's a good low fee (0.3%) diversified investment. I would consider selling if the FTSE goes above 6000 again.
If I was buying now, I would buy an ETF to get the fees even lower (currently 0.1% for Vanguard FTSE100).
Shares are easy - do a little research (warning: may involve thought!) then buy low, hold and reap benefits then sell high.

Did you buy these through a NZ company or foreign?
Did you consider managing it yourself?

I buy the shares/ETFs through a broker in the UK that holds them in a nominee account so I don't have to deal with certificates. Costs GBP12.50 per trade.
I have dud shares (banking shares purchased prior to 2008) but due to diversification, they have little impact on overall performance. The portfolio as a whole has performed well - I have 21 individual companies and the tracker.

I suspect you don't want to name your shares because you have none, or thier duds. 

If only you hadn't sold all that property in 2008 ex agent. You must be kicking yourself... 

Pump and Dump.  When articles are written like this, it is because the smart money is selling, and need suckers to buy their dross, before the bottom really falls out.  It rarely works out well for the little guy.

No regrets 28_29 year old. I wanted to be really retired. Am not missing tenants and the expense of owning investment properties both residential and commercial. If you are not looking after your properties  (many landlords don't ) then you are not looking after your tenants who are very important as they pay the bank. Many landlords let their rentals go to rack and ruin as the terrible returns on them do not justify the maintenance and repair costs. I would rather have a true passive income anyday such as interest and dividends. The only stress is how to spend it.

No regrets 28_29 year old. I wanted to be really retired. Am not missing tenants and the expense of owning investment properties both residential and commercial. If you are not looking after your properties  (many landlords don't ) then you are not looking after your tenants who are very important as they pay the bank. Many landlords let their rentals go to rack and ruin as the terrible returns on them do not justify the maintenance and repair costs. I would rather have a true passive income anyday such as interest and dividends. The only stress is how to spend it.

No regrets 28_29 year old. I wanted to be really retired. Am not missing tenants and the expense of owning investment properties both residential and commercial. If you are not looking after your properties  (many landlords don't ) then you are not looking after your tenants who are very important as they pay the bank. Many landlords let their rentals go to rack and ruin as the terrible returns on them do not justify the maintenance and repair costs. I would rather have a true passive income anyday such as interest and dividends. The only stress is how to spend it.

the rents on some of these properties are inflated due to govt handouts eg wff tax credits etc.
take these away and watch rents and property prices dive.

Article is a classic 'talking their book' deal.  Cui bono?
And another leetle thought to toss inter the pot.
S'posin' a Labour/Green ticket sweeps the board in 2014 (23 months away....), and fuelled as this crew always are by Good Intentions, Idealism, the Ideas of Dead Philosophers,  and Lack of Experience, does the following:

  • implements a swingeing CGT
  • raises tax rates on 'the rich'  (just like BHO is likely to try real soon now)
  • extends WFF to bene-fisheries and other moochers
  • undoes the fully-funded ACC model and returns to an ACC=benefit-in-disguise mode
  • applies the Horizons decision by regulatory fiat to all Regional Councils
  • returns Local Gubmint to the Four Well-beings (and maybe adds another one or two for good measure)
  • has a good ol' play around with Trusts and Other Shields
  • implements rent controls to 'help out the poor and indigent'

Then what will that rental return?
And how long would it take to sell it?
Common Taters are invited to estimate a Probability on all this.....

A labour/greens/mana/maori party government would be disastrous for NZ as a whole, not just for the property market. 

I do not want to name the NZ one because if I told you the NZ company I would be easily identified as I am a major shareholder in it. The other share is Apple which is now paying a dividend. Its growth has been nothing short of amazing especially since early last year. It only has 130 billion US $ in investments and no debt to speak of. I hope it doesn't crash.

Apple, good pick.  Can't see a reason Apple would crash any time soon but it's under a lot of pressure from Samsung; no Steve J is a downside too. 
Any thoughts on the Mighty Rover Power IPO?  If it ever goes ahead. 

Was there any truth to the story that Apple was bailed out by BIll Gates as it was bust?.

Grandiose delusions
Owning some rentals in Auckland doesn't quite cut it, SK.

Like property Might River would be too boring for me. I prefer investments these days that are a bit riskier than that. Apple should have a very good quarter which will report in January 2013. Go to any of their shops anywhere in the world and you will soon see how much people want their products which are so much more easy to use and reliable than Android products. I have an iphone 5 and it is great to use. Had an android pad which I gave away and got an Ipad 3 which is also great to use in comparison. If I left the android on standby overnight the wi fi just seemed to drop off. Open the ipad and away it goes everytime. Quality versus average.

I don't know if thats entirely true. I'm the opposite, I have an iPad which I think is a childish toy and an android phone which actually lets me do things I want. Earlier Android versions were rough around the edges, but Jelly Bean is stellar.
Lack of software updates from manufacturers is a very large issue for the Android ecosystem however.

Ex agent,
"I prefer investments these days that are a bit riskier" .. you could have invested in those thousands and thousands of vacant properties in the Waikato that you stated while ago.  You could be even richer now...

Tempting CM but not exciting enough for me. I would rather watch paint dry. I have had a lot of experience with property investors. They are generally people who have to borrow money for their investments as they only have average incomes. They have neither the money nor the mental capacity to get into equities for example. Such a move requires a lot of due diligence and the ability to take on more risk than a property investor. Hence the returns from equities are larger than property. Anyone can borrow money and buy a rental if they hold equity in the house they live in. The returns from rentals are average at best which reflects the  low risk and the ease that people can  get into them. Warren Buffett is wealthy from buying equities and the alike, not from rental properties.

Hence the returns from equities are larger than property.
What are you basing this comment on EA? The last year? Yes the NZX is up 20 odd%. Lets say you invested $100,000. Congrats you made $20,000.
On the other hand lets say I invested $100,000 in Auckland property over the last year. Property has risen 8-10% in the wider Auckland area and 20 odd% in central Auckland.
My $100,000 (10% deposit) bought me $1 million in property and so I now have $80,000-$200,000 in gains......
In nominal terms I blasted your $20K away with the beauty of leverage in a rising market. Glad I picked an upswing in 2008.

Nice try but as typical of property spruikers you create your own scenario and time span when you do not know my circumstances. I dabbled before the crash,got out before it happened on the advice of my broker who retired at 50 years old and have now accumulated some serious dividend income to live off. No need for pathetic rentals which involve hoping strangers will pay the rent and look after my assets. Have a good look at Apple and see what it has done in the last two years.the dividend is a bonus.

Spruiker lol a little touchy
Nope was only challenging your claim that shares are better than property.
I have some NZ share parcels and also do kiwi saver. Hands down my Auckland rentals have done the best since I started investing in 2008 (once the mortgage was paid off).
I remember back in 2009 you saying there were 1000s of vacant Hamilton houses and to get out....wondering now if you think the upswing in Auckland will continue?
I'm young. I have my plan. Buy and hold in Auckland is for me. Plan to retire aged 49 ;)
You've got you applle shares good for you....we are both are doing well, I just don't agree with your claim that shares are better than property...different strokes for different folks
enjoy your retirement..., good on you 

I have to laugh how you and others recall what I said about Hamilton rentals. No wonder people get off court charges as our memories are sure limited. If I recall correctly I heard that there were a substantial number of empty rentals when times were tough way back for landlords.  The same occured in New Plymouth. For the first time there were "to let signs " on properties. I can guarantee there are very few if any "to let signs ' around anywhere anymore as a lot of rentals have been sold by disgruntled landlords who found such an investment was not for them. You of course are blinded by your recent success in buying rentals. Just remember that you need to book a profit and bank it before you can say you have actually made any money. If John Key loses the next election you will have a bunch of politicians running the country who will look seriously at capital gains tax and any other measure to check the current housing price rises in Auckland ,Christchurch and alike. And one day interest rates will increase which always forces down prices. If I have learnt anything over the last thirty years it is that markets are not predictable and are volitile. You should buy some overseas shares and put some money offshore as the dollar will drop and buying such shares is a good hedge against our overvalued dollar.

I have made some pretty good gains and just buy more on dips. Only up 30 per cent this year now so a bit disappointed. My NZ stock is up 60 per cent this year excluding dividends so not too bad either. The advantage is no costs and none of those risky things called tenants. I certainly do not miss them. I am amazed how quickly people hand over valuable assets to strangers and trust them to look after them and pay the rent regularly. 

hope you bought some Apple 28-29 yr old before this morning as they are up 6% overnight. They should have an amazing quarter and the result which will be reported in January 13 might even contain an increase in dividend. Diversification is the word. Don't put all your eggs in one basket. I hope you are maintaining your rentals and looking after all your tenants needs. A lot of landlords don't look after their properties as the pathetic returns do not allow sufficent funds to do so.

Thanks for your genuine concern Ex Agent :)
Nope my rentals are all in good Auckland locations with great tenants and  in 4 years the non-vacancy time has totalled less than a month for all of them. The cause me no stress and the money comes in every 2 weeks without fail. All the rents are up 10-15% since this time last year.
Don't worry I'm diversified my main investment is my business, just employed another staff member today :)
Two stocks (apple and an unnamed NZ stock)- do you call that diversification?
Did you apply for the Fonterra fund?

Who bought MOA? Geoff Ross the boss

Pathetic returns - he must be an ex-agent due to failing.
A 500k property in Auckland has been putting on 50k pa for the last 2 years - 2013 will be the same.

The definition appears to be 'land owners who could live entirely off rental income'
Hence 'owning some rentals in Auckland' may well 'cut it'!

Of all the landlords I've had, very few were actually treating their rentals as businesses. Rather they were mum n pop or retired types who had another few properties on the side. Capital gains was the was simple reason for them to retain a rental. My current landlord shelters their income through a trust.
I've come to consider the term 'property investor' as a bit of an oxymoron. In my experience theres been no 'investing' rather more biding time and waiting for an eventual capital gain. It seems that retirement is no diminisher of a sense of entitlement.
Anyone know what percentage of rentals are actually owned and treated as a business?

Noponies: It goes to the intent. Are you suggesting their intention is more for the purpose of making a "gain" and not the altruisitc version of doing a service by providing rental accomodation for the deserving? If the primary purpose is to make a (capital) gain, then it's taxable, eventually.

If i judge their alturism by their charging of market rents and lack of maintenance then I can only conclude that the eventual pot of capital gains gold is what keeps them chasing the rental rainbow.

Good stories about owning properties are reported, while bad experiences are mostly swept under the carpet. Plenty got smoked despite this boom, an example courtesy of Bob Dey's faithful reporting today. Owning a lemon like this requires stellar performance from other investments in your portfolio, just to achieve zero again.

you havent heard enough stories about people getting conned into buying apartments off plans?
lease hold rents being jacked to the sky?
bluechip etc?
leaky etc?
you want more of that?

Just wanted to point out the math really; If your investment goes down 50%, then from that point it needs to go up 100%, to get back. Quite a big ask from any investment.

If rental property was such a good investment, then you would see many companies setting up to buy and manage rental properties (like they do for commercial properties). The reason they don't is that there is not enough profit in it. Note that commercial property is always subject to capital gains taxation and the companies still return a profit.
Residential property is not investing, it is speculating on capital gains. Commercial property is all about the yield (as it is for any true investment). What yield are residential landlords getting after tax/maintenance/cost of their time?

Holding just one overseas stock is a pretty risky strategy ex agent. Apple has been a stellar performer but it has lost 24%  since it peaked in September. Its PE is lower than the market overall. Fabulous company but not without threats. Like you say, you haven't made a profit until you've banked the dough. Wasn't that long ago that Nokia looked unassailable as the leading mobile device maker, now fighting off bankruptcy. The Steve Jobs biography is a great read.

thanks for the response Vera.  I have bought two more lots of shares in Apple since it peaked and now with the drop in the NZ dollar this morning  I am comfortable with the strategy. Early last year I thought I had better buy some US dollars when we were around 84c or so and then thought it might be a good idea to buy more Apple shares when I bought the us dollars. It was not a good feeling when Steve died but the opposite happened and the share has continued to prosper. Go to any Apple shop in the world and people are all over them like ants. This quarter should be a good one as a lot of people will buy iphone 5 and ipads for themselves and for christmas presents. Like property buy quality and reduce the risk.

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