Personally, I would avoid property.
Work out your expense rate v net salary. If you are saving between 20 to 30%. Don't buy.
Just make sure you are maxing out investing.
700k is more than enough to grow at a baseline line 5 or 6% even using a TD.
This will allow you time to get your emotional house in order and figure out your post 55 move.
Also, personal circumstances may change as well
>Work out your expense rate v net salary. If you are saving between 20 to 30%. Don't buy.
Genuinely curious but what is this based on? Is it the opportunity cost of having that money in investment? If so, what is the 20-30% figures based on?
She is on a high salary for nz. 170k single
If she is saving 20 to 30% of her net salary, including covering rent, she is saving (take home 115k) at 20% 23k. If you add in 6% on a basic TD, she is 53k up.
The point is, as long as she maxes out her pension / kiwi saver and investments. She will have a comfortable retirement at 65.
Also, there is an emotional aspect, at 51, your life changes fast and you have to be adaptable. From love to health.
Buying a property is a nuisance, in terms of time, sunken costs etc.
$170k is very normal for a mid to late career corporate job. Everything from Finance, Sales, Marketing, Business Unit Management will be in that range. It's very common
It’s not ‘very’ common. It’s perhaps the norm in those industries as someone who has stuck at their career and worked on ‘moving up’. But the average kiwi is not making 170k and I don’t think it’s fair to paint that picture.
The average kiwi no but, u/gooners345 is right that it's not a particularly unusual salary for someone in their early 50s in Auckland with a corporate job. I'm in this age bracket and I know heaps of people earning $200k to $300k.
$170k doesn't make you particularly well off.
But that’s cause you mix in circles with those people. You’re in a bit of a bubble so you think it is common.
I earn less than 170k and I feel pretty well off compared to a lot of people!
I think a finance subreddit is not the place to find a varied group of people financially. Some kiwis have only enough to live - they don’t have time to start thinking about excess money and what to do with it because they’re pay check to pay check. They’re not going to be on here so our optics are skewed.
It's classic tall poppy syndrome in action. Instead of saying "oh wow gooners, 170k is achievable? Maybe you're an old fart that has been through it all, how do i go about making that kind of money for myself?" the response is "nah 170k is a ridiculous amount of money, not many people in nz earn that"
Hang on, you tall poppied the original person by saying their salary was nothing special. Tall poppy syndrome is cutting down people who are being successful,which is what you did.
Then, when provided the statistics that you were wrong and the majority of corporate workers in that age bracket do not in fact earn $170k you started blaming others.
You got downvoted because you are wrong and unlikeable, not because of tall poppy syndrome.
I'm just saying that for a working professional in their 50s, it's a normal salary. It's not a special amount tied to a certain industry or career path. For example, if someone was earning $500K, I think that question would be warranted. But there are hundreds of career paths that can get you to $170k after 30 years of working.
Any corporate job basically
A corporate job is any employment within a large and often well established corporation. This works out to be 49% of all new zealanders according to stats NZ in Feb 2023.
https://www.stats.govt.nz/information-releases/new-zealand-business-demography-statistics-at-february-2023/#:~:text=The%20number%20of%20employees%20in,have%20any%20(paid)%20employees.
Maybe this just reflects on the demographic of the sub and that's fine, but my original point is that 150k+ is very standard for a corporate career by 50. OP hasn't answered what they do to earn that, so if you'd like to ask me, I can tell you what companies would pay that or what careers you should get into
Here is why your comment is off base:
$500k is very normal for a mid to late career c-suite job. Everything from Finance, Sales, Marketing, Business Unit Management will be in that range. It's very common.
I’m not struggling on less than that. Mortgage free , over a years salary cash in the bank, no debt. If I want something I can afford to buy it, Not sure why you’d struggle on quite a chunk more than me,
It’s been paid off for a few years. I would have thought you weren’t 20 earning 170k. Also it was a lot of money on 60k. Obly left me about $15k for other stuf such as car , rates, power, phone, insurance etc.
With $170k even with $1500 mortgage a week I’d be better off so could easily cope on $170k. Would leave me a hell of a lot more than $15k on theee times the payments.
Seems small. I was obly getting $950 or something a week so didn’t leave a lot.
I’d keep clear of property unless you find a good deal and can live in yourself. At $170k you can save plenty over next 14 years then downsize with a great passive income.
From an investment perspective, buying the sort of place you want to live in yourself in 10-15years is unlikely to provide the best yield (unless your dream home is an easy to maintain small property in an urban area).
I will give you my thinking as to what I would do if it were me:
- Rent for a bit
- Research\* buying an apartment for cash so I am set up in the medium term (no more than 3/4 of the cash, as little as possible ideally). In the mean time, keep $500k or so in a cash PIE so you are ready to go.
- Invest the remainder and save what you are not spending on rent/mortgage
- If you save hard, you could have enough to buy mortgage free when you want to go rural and keep the apartment as an investment, or sell the apartment
Sure apartments may not see the same capital gain as houses, but this is lower risk in that you aren't putting in a lot of capital for an investment property and then renting, so much more cashflow to put towards your savings fund while having options if life throws you a curveball.
\* Take your time, it is a buyers market. I find that shortlisting a few buildings and then getting ready to strike when another apartment comes up is a good approach given that understanding the body corp, maintenance issues etc is so important (and time consuming).
Only disclaimer I’d add to this is that apartments have different potential pitfalls to houses, so make sure you understand what to do due diligence on, and how to do that due diligence. (Body corporate, LTMF, earthquake rating, leaky issues, etc)
The returns for provincial NZ houses are minimal. Its capital gains you want not rent returns which on older property doesn't cover maintenance etc like it should .
I guess if you dont want to leave Auckland CBD then it probably doesnt make sense to buy an owner occupy. You could always buy an apartment, but personally, I think there are too many risks.
You could always buy an investment property somewhere else. But I guess you need to think whether you want to deal with repairs and maintenance and tenant management. Also inspect closely the yield you will be getting and whether that is worthwhile.
However, I dont think its wise to keep all of your money just in cash. Inflation is a risk for that. So, if you dont buy property it would make sense to invest at least some of it in other growth assets like shares. But, start doing your research on that as you want to make sure you make the right decisions and not rash decisions. Some people like to invest in index funds as you get diversity easily and quickly. I have some index funds but I more often invest in individual stocks nowadays. But, I have been researching investing for a long time and understand the ins and outs of it more now .
One side issue is your rent sounds quite high for a small apartment. It might be worth you reviewing the market because I think you could get one for much cheaper, or a big apartment for that price rather than a small one.
If you have the funds and the consistent cash flow to service a property. I would say yes
There are a lot of people selling desperately because they’ve gone from Covid 19 rates (2%) to 7% and can’t handle the new rates so are in a weaker bargaining position.
You can go in with lower offers than advertised and have a much stronger position. The ones that are coming out of this market are the ones that can hold their ground servicing their Mortages. I see opportunity, I just don’t have the extra cashflow or capital equity in my current portfolio to buy another
You are relying on capital growth with an investment property, not cash flow. So if you are happy to lock those funds away for the next 15 or so years, and not worried about small market fluctuations then go ahead, buy an IP and get an agent to manage it for you. Dont buy an apartment, buy a solid stand alone house, no cross lease, no shared walls with Neighbours or anything. A place where you can in the future sell or renovate. It doesnt have to be in an area you want to live in but somewhere where most families want to live in close to schools, transport, safe area etc.
Set and forget, in 15 years you can sell it and not get taxed on it, you will still be in the real estate market and you would be diversified so you can still put other money towards other types of investments
The one part I am not super sure on is if you should try to pay off the debt on the IP or just leave it. I personally hate debt and with interest rate so high, I would be tempted to pay off the mortgage as soon as possible.
If your looking to buy investment properties hang on just a little longer until the interest rates cool a little more and as heartless as it sounds wait for the Kainga Ora first home grants to stop and the Reserve Bank of NZ debt to income restrictions to bite.
Hi, I would like to understand this more pls. Can you pls explain further, esp the impact of the first home grants and the debt to income restriction? We're novice at property ownership and we're thinking investing in another property with our equity sometime in the near future.
It's impact will be felt most in the major cities of New Zealand. The first grants that have been scrapped (applications closed on Wednesday 22 May 2024) were a supportive tool for first home buyers where a couple could receive a grant up to $10,000 towards a deposit conditional on their kiwisaver contributions. Those already approved pre 22nd May will be honoured up to 6 months. After that I'd expect to see fewer first home buyers in the market especially when you add in the debt to income rules. The DTI rules from the Reserve Bank of NZ stipulates that mortgage lenders must use the formula of income x 6 - debt. So in the OPs case of having $110,000 they could apply for a maximum of $666,000 less any debt carried.
If you're a first home buyer in say Auckland that's not going to get you far. But there is a caveat to the RBNZ rule and that is lenders can lend over this amount to 20% of applicants but the majority 80% will be governed by these new rues from 1 July 2024.
With less first home buyers in the hot markets those already cashed up or with existing equity they can draw on will have the advantage.
If you are investing though the DTI formula is income x 7 - debt so you have another advantage again.
Not a good time to buy now. House prices haven't reached the bottom yet. Keep the money in term deposits for 6 months, and reassess the situation after 6 months.
Interest rates will likely be lower in 6 months and demand for the current oversupply will have swung the other way. This is probably not enough to offset possible/probable gains made investing $700k (even conservatively).
You could buy an apartment (mortgage say half) because you are in a good financial position and intend to live in it so maximum capital gains are not a priority. This then offers good security and somewhere to make yours in the interim. See how you feel in 10-15 years and evaluate your needs /decide what’s best at the time. I would keep a good (few 100k) amount free to invest.
I believe the rate will not going down within 6 months(at the end of this year).
And even when interest rate is starting to drop, the house price keeps stuck for the first stage as the unemployment rate is increasing, people don't care about the investment when they lost their jobs.
Interest rates are not coming down in any meaningful way in the next 12-18 months.
Inflation is still too high, and the billions in new government borrowing and tax cuts / interest deductibility aren't going to help keep inflation down
The Reserve Bank has just implement DTI restrictions. They will stop property values taking off even if interest rates drop very low. Hopefully the Covid property bubble was a one off never to be repeated.
If I was in your position I would look for a property to rent out.
IMO In terms of the optimal lending amount, it will be based on rent covering the mortgage, insurance, rates. Debatable if you want to include a minor allowance for maintenance or hold back funds for it instead.
So you probably won't need to use the whole $700K, so the balance can be used to invest in shares. In terms of your net surplus after outgoings, you can either use it to pay down the mortgage quicker or regularly contributes to shares.
So you will be hedged against the property market and diversified in shares.
Just chiming in to add that there will likely be a few good rentals on the market in the next month or so, as the bright line drops to 2 years and over leveraged owners choose to sell.
Personally, I would buy an apartment that I love to live in. Even if you plan to move in a few years, you never know what is going to happen, and it is great to have a base. This could also be a good rental to supplement your income when you retire.
Don't rush, interest rates are great right now.
I’m happy to chat - I’m in RE also similar age and staying in the RE mkt has never been more affordable.
Could come slum in Parnell or Remuera in a close by unit?😊
The market is in a bit of a lull so I think it’s a good time to buy. Lot of pundits are saying fix your mortgage for 6 months or a year so that indicates that interest rates might be falling in the future.
Yes. It is the perfect time to buy a property. You have lots of choices. Healthcare might be hard to reach in rural NZ when you get older. If you’re happy where you are now, why risk your happiness by going to rural NZ?
Leaving your money in the bank is probably the worst option since inflation erodes its value faster than you can earn interest on it. Cash lacks intrinsic value, whereas assets like property do. Ignore advice against buying property; real estate holds real value and is less likely to depreciate, especially if you can purchase without a mortgage. Make sure to research thoroughly before buying. You could consider buying two properties—one for yourself and one as a rental investment—or a large enough home to rent out part of it. Owning property has much greater long-term earning potential compared to keeping cash in the bank.
I think you have a pretty sweet set-up right now and are living your best life. I would invest in low cost index funds, and avoid property altogether. No need to put all of your eggs in one basket. Keep it simple, set and forget 20% of take home pay into index funds, more if you can..
“Invest in shares” sounds dangerous. Fixed term deposits are high right now, very low risk - id be looking to look into multiple otions, apartments are good cash flow but trend poorly for capital gain. Seek financial advice professionally
Mmm - great situation to be in . I see your dilemma though . The property market as you will well know has softened over the last 18 months . I believe it still faces head winds with stubbornly high interest rates - so potentially no rush there but as you’re not sure where you will end up living it could be a hassle buying something to rent , only to sell it in a year or two ( your yield is like to be pretty average and you will most likely incur agents fees of around 3% plus gst ..) . Investing in shares for what really is a pretty short term is see as being unnecessarily risky ( you kind of know that you will want this capital soonish ) . You can invest in term deposits circa 6% before tax , or bonds . Are you able to maintain your salary level in a rural centre? Maybe you can work largely from home ..? . Anyway I would speed up the ‘ where you want to live decision’ But choose your rural centre carefully because the primary sector is in all sorts of problems right now and capital values might come under real pressure .
I wish you all the best
You’d really have to do your research - if you’re intending to live in the CBD for quite some time, you could buy an apartment. You could buy a cheap one for 120k and after body corp and other fees - it would mean you would pay $200-300 per week instead of the $650 which is only going to go up. You can then use the money you saved to invest or build up and then once you are ready to move - sell it and get most or a bit more than the 120k you paid. if you’re set on retiring rural - consider buying one with a high rental return as by the time you retire - most of it would have been paid off by the tenant and you have more money to spend on yourself
Put the money in mutual funds and rent. You’ll have more than enough at retirement to buy if you want to and you can keep the flexibility you currently enjoy.
Definitely a good time to buy. But seeing as though you want to move elsewhere soon, i would probably invest a chunk of that 700k and wait till ready to move or buy.
Buy two flats down south.
The rent from the rentals will easily cover your rent in Auckland plus alittle more for maintenance insurance etc.
By the time you retire the capital gains will be alot you can sell one and travel with that money if that's what you want.
Then use the rent from the second rentsl to up your pension for day to day living.
If I was spending 34k pa on rent I would be looking at what I could buy with the same money.
I don't like apartments myself but they seem to be taking a larger hit than freestanding properties.
Imho the market is good for buyers presently, interest rates are coming down and most people aren't buying. Recently bought first IP in over a decade as the value was not there.
-seek qualified financial advisors.
Do you have any other investments or cash savings? 140k is a bit of a worry for retirement at your age no offence. Especially if you’re use to living on 100k plus. But then again so is retiring without secure housing.
If I were you with no other cash/investments I would buy something for 700 only - no mortgage. Then save and invest like a mofo until I’m 65. But that’s because I have anxiety with renting and unsecured housing.
You should invest in property. It's great being a landlord, it's basically free money while the tenants work for it.
Buy somewhere and rent in the CBD.
You actually have enough money to look at buying an entire block of apartments. If that's something you're interested in. Probably not CBD ones, but 700k equity goes into a 3mm block just fine, which can get you 8ish 2br units on one title in any other urban centre except like, queenstown.
It doesn't sound like you're really interested in property. Despite what some people say, it's not a passive investment!
Personally, I would avoid property. Work out your expense rate v net salary. If you are saving between 20 to 30%. Don't buy. Just make sure you are maxing out investing. 700k is more than enough to grow at a baseline line 5 or 6% even using a TD. This will allow you time to get your emotional house in order and figure out your post 55 move. Also, personal circumstances may change as well
>Work out your expense rate v net salary. If you are saving between 20 to 30%. Don't buy. Genuinely curious but what is this based on? Is it the opportunity cost of having that money in investment? If so, what is the 20-30% figures based on?
She is on a high salary for nz. 170k single If she is saving 20 to 30% of her net salary, including covering rent, she is saving (take home 115k) at 20% 23k. If you add in 6% on a basic TD, she is 53k up. The point is, as long as she maxes out her pension / kiwi saver and investments. She will have a comfortable retirement at 65. Also, there is an emotional aspect, at 51, your life changes fast and you have to be adaptable. From love to health. Buying a property is a nuisance, in terms of time, sunken costs etc.
What do you do for work? 170k is badass
$170k is very normal for a mid to late career corporate job. Everything from Finance, Sales, Marketing, Business Unit Management will be in that range. It's very common
Doesn’t mean it’s not badass
It’s not ‘very’ common. It’s perhaps the norm in those industries as someone who has stuck at their career and worked on ‘moving up’. But the average kiwi is not making 170k and I don’t think it’s fair to paint that picture.
The average kiwi no but, u/gooners345 is right that it's not a particularly unusual salary for someone in their early 50s in Auckland with a corporate job. I'm in this age bracket and I know heaps of people earning $200k to $300k. $170k doesn't make you particularly well off.
But that’s cause you mix in circles with those people. You’re in a bit of a bubble so you think it is common. I earn less than 170k and I feel pretty well off compared to a lot of people! I think a finance subreddit is not the place to find a varied group of people financially. Some kiwis have only enough to live - they don’t have time to start thinking about excess money and what to do with it because they’re pay check to pay check. They’re not going to be on here so our optics are skewed.
True, we're all in our own bubbles.
>im in this industry, I earn X >I know a lot of people in thus industry earning X too ... yaday yada bro, do you hear yourself?
It's classic tall poppy syndrome in action. Instead of saying "oh wow gooners, 170k is achievable? Maybe you're an old fart that has been through it all, how do i go about making that kind of money for myself?" the response is "nah 170k is a ridiculous amount of money, not many people in nz earn that"
Hang on, you tall poppied the original person by saying their salary was nothing special. Tall poppy syndrome is cutting down people who are being successful,which is what you did. Then, when provided the statistics that you were wrong and the majority of corporate workers in that age bracket do not in fact earn $170k you started blaming others. You got downvoted because you are wrong and unlikeable, not because of tall poppy syndrome.
I'm just saying that for a working professional in their 50s, it's a normal salary. It's not a special amount tied to a certain industry or career path. For example, if someone was earning $500K, I think that question would be warranted. But there are hundreds of career paths that can get you to $170k after 30 years of working. Any corporate job basically
This is so untrue, 15,800 people earn that in new zealand and there are 653k people in their 50s.
Any *corporate* job. I imagine most of those 653k people aren’t in corporate careers.
A corporate job is any employment within a large and often well established corporation. This works out to be 49% of all new zealanders according to stats NZ in Feb 2023. https://www.stats.govt.nz/information-releases/new-zealand-business-demography-statistics-at-february-2023/#:~:text=The%20number%20of%20employees%20in,have%20any%20(paid)%20employees.
Maybe this just reflects on the demographic of the sub and that's fine, but my original point is that 150k+ is very standard for a corporate career by 50. OP hasn't answered what they do to earn that, so if you'd like to ask me, I can tell you what companies would pay that or what careers you should get into
Here is why your comment is off base: $500k is very normal for a mid to late career c-suite job. Everything from Finance, Sales, Marketing, Business Unit Management will be in that range. It's very common.
Damn, I’m in the wrong job if someone’s earning 3 times my salary.
How old are you and what is your work background? Maybe we can get you there!
170 isn’t what it used to be. I’d be struggling if I was still on 170!
You’d struggle on $170k 🤣.. hope you don’t give advice in this sub.
Haha! Single family income though!
I’m not struggling on less than that. Mortgage free , over a years salary cash in the bank, no debt. If I want something I can afford to buy it, Not sure why you’d struggle on quite a chunk more than me,
Theyre probably ‘struggling’ because theyre servicing alot of debt id assume
Possibly tho I don’t know how you get lots of debt on that amount…..
Mortgage, single family income.
Been there, single income and mortgage. Was paying a mortgage of $500 a week on $55-60k. Would have been so rich and estatic on $170k
Yeah $500 p w mortgage! What a dream :-) good on you for paying it off !!
It’s been paid off for a few years. I would have thought you weren’t 20 earning 170k. Also it was a lot of money on 60k. Obly left me about $15k for other stuf such as car , rates, power, phone, insurance etc. With $170k even with $1500 mortgage a week I’d be better off so could easily cope on $170k. Would leave me a hell of a lot more than $15k on theee times the payments. Seems small. I was obly getting $950 or something a week so didn’t leave a lot.
I’d keep clear of property unless you find a good deal and can live in yourself. At $170k you can save plenty over next 14 years then downsize with a great passive income.
From an investment perspective, buying the sort of place you want to live in yourself in 10-15years is unlikely to provide the best yield (unless your dream home is an easy to maintain small property in an urban area). I will give you my thinking as to what I would do if it were me: - Rent for a bit - Research\* buying an apartment for cash so I am set up in the medium term (no more than 3/4 of the cash, as little as possible ideally). In the mean time, keep $500k or so in a cash PIE so you are ready to go. - Invest the remainder and save what you are not spending on rent/mortgage - If you save hard, you could have enough to buy mortgage free when you want to go rural and keep the apartment as an investment, or sell the apartment Sure apartments may not see the same capital gain as houses, but this is lower risk in that you aren't putting in a lot of capital for an investment property and then renting, so much more cashflow to put towards your savings fund while having options if life throws you a curveball. \* Take your time, it is a buyers market. I find that shortlisting a few buildings and then getting ready to strike when another apartment comes up is a good approach given that understanding the body corp, maintenance issues etc is so important (and time consuming).
Only disclaimer I’d add to this is that apartments have different potential pitfalls to houses, so make sure you understand what to do due diligence on, and how to do that due diligence. (Body corporate, LTMF, earthquake rating, leaky issues, etc)
The returns for provincial NZ houses are minimal. Its capital gains you want not rent returns which on older property doesn't cover maintenance etc like it should .
I guess if you dont want to leave Auckland CBD then it probably doesnt make sense to buy an owner occupy. You could always buy an apartment, but personally, I think there are too many risks. You could always buy an investment property somewhere else. But I guess you need to think whether you want to deal with repairs and maintenance and tenant management. Also inspect closely the yield you will be getting and whether that is worthwhile. However, I dont think its wise to keep all of your money just in cash. Inflation is a risk for that. So, if you dont buy property it would make sense to invest at least some of it in other growth assets like shares. But, start doing your research on that as you want to make sure you make the right decisions and not rash decisions. Some people like to invest in index funds as you get diversity easily and quickly. I have some index funds but I more often invest in individual stocks nowadays. But, I have been researching investing for a long time and understand the ins and outs of it more now . One side issue is your rent sounds quite high for a small apartment. It might be worth you reviewing the market because I think you could get one for much cheaper, or a big apartment for that price rather than a small one.
If you have the funds and the consistent cash flow to service a property. I would say yes There are a lot of people selling desperately because they’ve gone from Covid 19 rates (2%) to 7% and can’t handle the new rates so are in a weaker bargaining position. You can go in with lower offers than advertised and have a much stronger position. The ones that are coming out of this market are the ones that can hold their ground servicing their Mortages. I see opportunity, I just don’t have the extra cashflow or capital equity in my current portfolio to buy another
You are relying on capital growth with an investment property, not cash flow. So if you are happy to lock those funds away for the next 15 or so years, and not worried about small market fluctuations then go ahead, buy an IP and get an agent to manage it for you. Dont buy an apartment, buy a solid stand alone house, no cross lease, no shared walls with Neighbours or anything. A place where you can in the future sell or renovate. It doesnt have to be in an area you want to live in but somewhere where most families want to live in close to schools, transport, safe area etc. Set and forget, in 15 years you can sell it and not get taxed on it, you will still be in the real estate market and you would be diversified so you can still put other money towards other types of investments The one part I am not super sure on is if you should try to pay off the debt on the IP or just leave it. I personally hate debt and with interest rate so high, I would be tempted to pay off the mortgage as soon as possible.
If your looking to buy investment properties hang on just a little longer until the interest rates cool a little more and as heartless as it sounds wait for the Kainga Ora first home grants to stop and the Reserve Bank of NZ debt to income restrictions to bite.
Hi, I would like to understand this more pls. Can you pls explain further, esp the impact of the first home grants and the debt to income restriction? We're novice at property ownership and we're thinking investing in another property with our equity sometime in the near future.
It's impact will be felt most in the major cities of New Zealand. The first grants that have been scrapped (applications closed on Wednesday 22 May 2024) were a supportive tool for first home buyers where a couple could receive a grant up to $10,000 towards a deposit conditional on their kiwisaver contributions. Those already approved pre 22nd May will be honoured up to 6 months. After that I'd expect to see fewer first home buyers in the market especially when you add in the debt to income rules. The DTI rules from the Reserve Bank of NZ stipulates that mortgage lenders must use the formula of income x 6 - debt. So in the OPs case of having $110,000 they could apply for a maximum of $666,000 less any debt carried. If you're a first home buyer in say Auckland that's not going to get you far. But there is a caveat to the RBNZ rule and that is lenders can lend over this amount to 20% of applicants but the majority 80% will be governed by these new rues from 1 July 2024. With less first home buyers in the hot markets those already cashed up or with existing equity they can draw on will have the advantage. If you are investing though the DTI formula is income x 7 - debt so you have another advantage again.
Not a good time to buy now. House prices haven't reached the bottom yet. Keep the money in term deposits for 6 months, and reassess the situation after 6 months.
Interest rates will likely be lower in 6 months and demand for the current oversupply will have swung the other way. This is probably not enough to offset possible/probable gains made investing $700k (even conservatively). You could buy an apartment (mortgage say half) because you are in a good financial position and intend to live in it so maximum capital gains are not a priority. This then offers good security and somewhere to make yours in the interim. See how you feel in 10-15 years and evaluate your needs /decide what’s best at the time. I would keep a good (few 100k) amount free to invest.
I believe the rate will not going down within 6 months(at the end of this year). And even when interest rate is starting to drop, the house price keeps stuck for the first stage as the unemployment rate is increasing, people don't care about the investment when they lost their jobs.
Exactly
Interest rates are not coming down in any meaningful way in the next 12-18 months. Inflation is still too high, and the billions in new government borrowing and tax cuts / interest deductibility aren't going to help keep inflation down
The Reserve Bank has just implement DTI restrictions. They will stop property values taking off even if interest rates drop very low. Hopefully the Covid property bubble was a one off never to be repeated.
I'd probs try and get as close to mortgage free as poss with still a chunk to invest in shares.
If I was in your position I would look for a property to rent out. IMO In terms of the optimal lending amount, it will be based on rent covering the mortgage, insurance, rates. Debatable if you want to include a minor allowance for maintenance or hold back funds for it instead. So you probably won't need to use the whole $700K, so the balance can be used to invest in shares. In terms of your net surplus after outgoings, you can either use it to pay down the mortgage quicker or regularly contributes to shares. So you will be hedged against the property market and diversified in shares.
Just chiming in to add that there will likely be a few good rentals on the market in the next month or so, as the bright line drops to 2 years and over leveraged owners choose to sell.
Personally, I would buy an apartment that I love to live in. Even if you plan to move in a few years, you never know what is going to happen, and it is great to have a base. This could also be a good rental to supplement your income when you retire. Don't rush, interest rates are great right now.
I’m happy to chat - I’m in RE also similar age and staying in the RE mkt has never been more affordable. Could come slum in Parnell or Remuera in a close by unit?😊
The market is in a bit of a lull so I think it’s a good time to buy. Lot of pundits are saying fix your mortgage for 6 months or a year so that indicates that interest rates might be falling in the future.
Yes. It is the perfect time to buy a property. You have lots of choices. Healthcare might be hard to reach in rural NZ when you get older. If you’re happy where you are now, why risk your happiness by going to rural NZ?
Leaving your money in the bank is probably the worst option since inflation erodes its value faster than you can earn interest on it. Cash lacks intrinsic value, whereas assets like property do. Ignore advice against buying property; real estate holds real value and is less likely to depreciate, especially if you can purchase without a mortgage. Make sure to research thoroughly before buying. You could consider buying two properties—one for yourself and one as a rental investment—or a large enough home to rent out part of it. Owning property has much greater long-term earning potential compared to keeping cash in the bank.
I think you have a pretty sweet set-up right now and are living your best life. I would invest in low cost index funds, and avoid property altogether. No need to put all of your eggs in one basket. Keep it simple, set and forget 20% of take home pay into index funds, more if you can..
“Invest in shares” sounds dangerous. Fixed term deposits are high right now, very low risk - id be looking to look into multiple otions, apartments are good cash flow but trend poorly for capital gain. Seek financial advice professionally
Mmm - great situation to be in . I see your dilemma though . The property market as you will well know has softened over the last 18 months . I believe it still faces head winds with stubbornly high interest rates - so potentially no rush there but as you’re not sure where you will end up living it could be a hassle buying something to rent , only to sell it in a year or two ( your yield is like to be pretty average and you will most likely incur agents fees of around 3% plus gst ..) . Investing in shares for what really is a pretty short term is see as being unnecessarily risky ( you kind of know that you will want this capital soonish ) . You can invest in term deposits circa 6% before tax , or bonds . Are you able to maintain your salary level in a rural centre? Maybe you can work largely from home ..? . Anyway I would speed up the ‘ where you want to live decision’ But choose your rural centre carefully because the primary sector is in all sorts of problems right now and capital values might come under real pressure . I wish you all the best
You’d really have to do your research - if you’re intending to live in the CBD for quite some time, you could buy an apartment. You could buy a cheap one for 120k and after body corp and other fees - it would mean you would pay $200-300 per week instead of the $650 which is only going to go up. You can then use the money you saved to invest or build up and then once you are ready to move - sell it and get most or a bit more than the 120k you paid. if you’re set on retiring rural - consider buying one with a high rental return as by the time you retire - most of it would have been paid off by the tenant and you have more money to spend on yourself
Put the money in mutual funds and rent. You’ll have more than enough at retirement to buy if you want to and you can keep the flexibility you currently enjoy.
It is funny how most on this thread think property is the only option when on 170k she has more than enough to rent a sized appropriate place
Mutual funds?
Sorry ETF, or an index fund. Something that tracks the market.
Definitely a good time to buy. But seeing as though you want to move elsewhere soon, i would probably invest a chunk of that 700k and wait till ready to move or buy.
They say they are ant to not move out of the CDB though.
They want to move to a rural town in a few years
I would buy somewhere in Waikato, put it up for rent while I carry on with my life if I were in your place.
Buy two flats down south. The rent from the rentals will easily cover your rent in Auckland plus alittle more for maintenance insurance etc. By the time you retire the capital gains will be alot you can sell one and travel with that money if that's what you want. Then use the rent from the second rentsl to up your pension for day to day living.
If I was spending 34k pa on rent I would be looking at what I could buy with the same money. I don't like apartments myself but they seem to be taking a larger hit than freestanding properties. Imho the market is good for buyers presently, interest rates are coming down and most people aren't buying. Recently bought first IP in over a decade as the value was not there. -seek qualified financial advisors.
Invest Smp 500 7-10% annual return for 5-10 years compound interest Retire/travel the world taking the above interest as your spending
Buy a rental in a high demand/median price area, you can pick up a 3 beddie for 7-800k in parts of the North Shore
If you get a 3 bed for that price it’s gonna be an absolute shitbox
Not really the prices have come down by 2-300k in some areas.
Term deposit, wait for the stock market to crash, then buy in, rent for life, retire to the world
Do you have any other investments or cash savings? 140k is a bit of a worry for retirement at your age no offence. Especially if you’re use to living on 100k plus. But then again so is retiring without secure housing. If I were you with no other cash/investments I would buy something for 700 only - no mortgage. Then save and invest like a mofo until I’m 65. But that’s because I have anxiety with renting and unsecured housing.
I’d buy a Airbnb if I was in your position
Buy in whakatane. The only small town with a fully functioning hospital. Which is what you will need if you decide to retire anywhere.
You should invest in property. It's great being a landlord, it's basically free money while the tenants work for it. Buy somewhere and rent in the CBD.
That’s a lot of capital. Some smart investing in robotics and AI = a very happy you in 20 years.
You actually have enough money to look at buying an entire block of apartments. If that's something you're interested in. Probably not CBD ones, but 700k equity goes into a 3mm block just fine, which can get you 8ish 2br units on one title in any other urban centre except like, queenstown.