APIA Blog

RSS Feed

Ryan Smuts: What can you do if you bought at the top of the market?

Tuesday, January 15, 2019

IMAGE CREDIT: INSTAGRAM @MATIASCELIS

This is a question that often troubles people, as they are unsure about how to proceed from here in terms of maintaining and/or growing their property portfolio further. I think some key things need to be considered:

What did you actually buy?

This is important to know because it will help you determine whether to hold or sell. Did you buy something in a likely high-growth or low-growth area (speaking purely futuristically, of course)? In a high-growth area, you may ask - if you’ve got the ability to hold this, are you relatively certain that the asset will appreciate over time and outweigh any holding costs?

The other question would be whether the property is self-sufficient and doesn’t actually require any cash injection out of your own pocket for the foreseeable future. If it is, there isn’t really any harm in holding it, as the chances are this is the very reason you bought it (positively-geared) and therefore from a maintaining perspective there is no harm. If however, you’re trying to grow your portfolio further, you may look at other financing options who would take you to a higher LVR (if for example, you bought at 60% or 65% LVR through a bank) to allow you to continue with other investment activities.

If you’re answering no to some of these questions (high-growth, can’t afford to hold OR low-growth and costs me money) it might be worthwhile to consider selling to cut your losses before buying something more appropriate/strategic.

Can you add further value anywhere?

Right now, the market is not as forgiving as it was in the last appreciating phase. This is when you want to be vigilant about adding value. You want to be aiming for doubling the value of your renovation cost. For ever $1 you put into the renovation you should be extracting at least $2 in added-value otherwise you may as well put that money aside for a new deposit.

Is it a good time to focus on debt reduction?

If you can't afford to wait on the market or do renovations then consider building equity by reducing your debt. While this may seem less than glamorous, a concerted debt reduction effort will end up future-proofing your risk and put you in a better position come the next phase of the market. Speak to your financial advisor about how to make the most of the low rates on offer right now.

 


ABOUT THE AUTHOR

Ryan Smuts 

Ryan is a Key Accounts Manager at Kris Pedersen Mortgages and Insurance. Ryan can be reached on 021 193 9333 or ryan@krispedersen.co.nz

 

 

 

 

 

Recent Posts


Tags

gluckman report Property (Relationships) Act property value television tenant interest only Landlording legal rta government renovation wealth creation bad tenant tenancy services Guest blog housing bubble Must know development data security banking structure debt enforcement extractor fan worksafe mortgage partners wins cash-flow Standards New Zealand equity rental wof first home buying rent increase relationship LIM buying Jeff Bezos beginner investor smoke alarm Market report market auckland council Investor story advice Kris Pedersen Mortgages and Insurance rental market TCIT water bill damage unitary plan anz inspection HSWA finance property maintenance Investment tip trust business Holler tax tenancy tribunal DTI HHGA meth contamination short-term rental fixed-term tenancy ocr letting bond form CCC personal growth education house prices letting fee interest rates management ask an expert productivity twg report shower dome tenancy issues reserve bank p lab skill shortage nzpif bond auckland ird privacy Must knows property clnz buying rules Question and answer CoreLogic housing affordability rent arrears cat speculator lvr off the plan insurance RTAA 2019 return minor dwelling HHS subdivision Editor's Choice airbnb Tribunal case study robert kiyosaki Sponsored post winz sale and purchase negotiation asbestos parry v inglis meth capital gain sale and purchas landlord rent trademe insulation scotney williams trespass heater sublease market rent property cycle Q&A positive cash flow ventilation warren buffett initio investment strategy cgt principal and interest holiday house watercare How to ring-fencing property management heating building financial advisers act warm up new zealand election 2017 boarding house rta reform maintenance buyer's agent income investor

Archive

Introducing Our Partners
Principal Sponsor - Kris Pedersen Mortgages & Insurance logo Gold Sponsor - Barfoot & Thompson logo Gold Sponsor - CoreLogic logo Property Apprentice logo The Insulation Warehouse logo The Renovation Team logo The New Zealand Property Investors' Federation logo
09 360 2376
info@apia.org.nz

The Tenancy Practice Service and TPS Credit Control work closely with the Auckland Property Investors' Association. Our vision of bringing helpful resources, documents and high quality services to Auckland Property Investors and Property Managers is shared by APIA, so its a partnership that works well. 

The Auckland Property Investors' Association is a great organisation for those who want access to advice and information from a range of industry experts and partners. 



Mathieu Holt- Managing Director, The Tenancy Practice Service & TPS Credit Control
Through the Association I found the channels and methods to fund the purchase of property I never dreamed about. Grant Brown

All round it has been one of those things Neil and I felt was really worthwhile belonging to. We have learned so much it has just built our confidence in what we are doing.

Janice Bieleski
I read two articles in the monthly magazine that saved me over $5,000. That is my membership fee for the next 26 years and I am sure I will learn a whole lot more! John Duncan
Fantastic organisation. The networking opportunities are brilliant and provide us with information and opportunities that cannot be obtained anywhere else. We learn something new at every meeting and we've been in this game for nearly 20 years. Pauline and Gyanen Kumar

I find the information obtained from various APIA meetings very useful in guiding my own property investment and rental management.  I also enjoy the networking opportunities with like-minded investors.  I am inspired by other investors’ success and find the more experiences and knowledge that I share with others, the more confident I become.  

Thanks to all APIA event organizers and administrators for your brilliant work. 

Stella Shao

I like talking to people and learning from their experience because it gives me the confidence to invest well. I think it is a knowledge thing. I now know I am doing things the right way.

Stephen Weatherall

My APIA membership has become a total success.

Every time I attend a monthly or regional meeting I come away with so many useful and positive tips that have added value to my property investments and management.

Not only that, the website is a great place for practical advice and useful information. It has now evolved into an important resource for my business.

Talk about value for money! The discounts I have been getting at Bunnings when I present my APIA membership card have more than paid for my annual subscription!

Tim Duffett, Plan A Investments Limited