June 22, 2024 • 41 mins
The average price of a house in Rotorua has risen to $746,000 after the city’s average residential property values increased by 0.4 per cent in three months.
With that in mind, where and how should you find your first investment property? Expert Ed Mcknight joins the Weekend Collective to discuss.
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Speaker 1 (00:05):
You're listening to the Weekend Collective podcast from news Talks
at B.
Speaker 2 (00:28):
News Talk said B this is the one roof radio
show on the Weekend Collective. I'm Tim Beverage. We want
your calls on eight hundred and eighty ten eighty. You
can text on nine two nine two. By the way,
if you miss any of the hours, you can go
to wherever you podcast look for the Weekend Collective. iHeartRadio
is a great starting point and probably end point as well.
(00:48):
But joining me today he is Will He's from OPA's
partners in Now regular on the show. I think we
say ed McKnight, good afternoon. How are you going?
Speaker 3 (00:56):
Great to be here? Tim?
Speaker 2 (00:57):
Hey, by the way, just before you get into it,
you are as I am musical theater sort of buff
and I think you're telling me asked last time when
we saw you that we're going to head over to
Melbourne to see Sunset Boulevard, which had Sarah Brightman in it,
big show in Melbourne. How was it?
Speaker 1 (01:13):
Well?
Speaker 3 (01:13):
I must I loved the show, but I don't think
Sarah really lived up to the hype. So for anybody
who doesn't know, Sarah Brightman was the original Christine Day
in the Phantom of the Opera and that role was
actually written for her. Now as a young boy growing
up on South Tartanaki, I listened to all of her
songs and I was so excited to go see it.
(01:34):
But I think she's probably lost it a little bit.
If I can and say that, it.
Speaker 2 (01:39):
Sounds like you're being polite. Did Mark's out of ten
for Sarah?
Speaker 1 (01:42):
Oh?
Speaker 3 (01:43):
So ten?
Speaker 1 (01:46):
Oh?
Speaker 2 (01:47):
That is the actually, by the way, fun fact, I
don't know if you remember the Kenny Everett Show. She was
actually also a member in Hot Gossip. Did you know
that she was a dancer in Hot Gossip? Kenny Everett?
Now it's time for a little hot gossip. Anyway. Look,
let's talk about property, shall we? Onto other things? Did
you have a nice trip to Melbourne?
Speaker 3 (02:03):
Oh it was beautiful, said to go to Yes.
Speaker 2 (02:06):
Do you actually do you take your real estate sort
of brain with you as well and sort of find
yourself fishing around the real estate pages and properties and go.
Speaker 3 (02:14):
Well, do you know what you kind of do? I
recently interviewed someone in Australia just to understand the differences
between the Australian real estate market and New Zealand, and
it is amazing how different it is. So I just
tell you one little hot fact. If you wanted to
buy a property in Melbourne, and let's say it's an
eight hundred thousand dollar property in Melbourne and you're buying
(02:35):
it as a Kiwi property investor, you would have to
pay stamp duty of one hundred and nine thousand dollars
on how much of a property and eight hundred thousand
dollar property, So you're talking about kidding me. You're talking
about well over twelve percent, right, And so I was like, oh, wow,
Australia is quite different to New Zealand. The other thing
(02:56):
that's quite interesting difference between the two countries interest rates.
Interest rates are quite substantially higher over here by around
about a percentage point.
Speaker 2 (03:05):
Say again, say that again, what the interest rate?
Speaker 3 (03:07):
Interest rates are quite higher over here. So it was
quite interesting. I was telling an Australian that the average
floating rate or variable rate in New Zealand is about
eight point five to five percent. He almost fell off
his seat because he was saying, well, we're our floating
rate in Australia has a six in front of it.
Speaker 2 (03:24):
Wow, that is a big that does make a difference. Well,
hopefully we'll get on top of that soon. I don't
know how the GDP well actually might touch on that.
But the first thing I wanted to have a chat
about was in the course of property ours, we get
often we're talking about the macro sort of side of things.
Everything's big picture. What are the interest rates doing, what's
the cost of money, what are your you know, what
(03:46):
markets are doing. What is the market going to be
soft for a little while, our interest rate's going to
go down? And also about getting an investment property. But
I was just thinking about the for people who are
listening to information about the market, and so they're listening
to the show and they go and they and they've decided,
you know, the market is soft right now, but maybe
I should really be thinking about getting in because I'm
(04:09):
sure in a year's time or whenever the market starts
to move, we'll have people saying, oh, yeah, I got
stuck in back then. But investors are holding back. But
there's going to be a time when people and first
time buyers are looking. Even though it's still never an
easy equation, how do you go about finding your first property,
whether it be for you as a home and look,
(04:30):
there are different considerations, and we want to hear from you, actually,
how did you go about finding your first property once
you decided I've got to get someone, and also finding
an investment property when it gets down to finding that house.
I mean, in a way I can imagine your answer
might be, well, don't treat your first investment property is
too special. Just do the numbers and find the right house.
But how do you what's your experience in your memory
(04:53):
about finding your first investment property in your first home.
Speaker 3 (04:56):
Look, if it's your first time. Generally, what people do
is they purchase what they can afford. So typically what
a first home buyer would do, and then we'll come
to the investment side. A first time buyer would go
to a mortgage broker or potentially their bank and say,
what can I actually afford? And let's say that it's
six hundred thousand dollars. Depending on where you live in
New Zealand, in Auckland you need a bit higher than that.
(05:17):
But let's say it's six hundred thousand dollars. Then you'd
probably start heading trade men saying well what can I
actually get from that? And what I encourage a lot
of first home buyers to do is sit down with
your partner or yourself if you're doing it by yourself,
and write down the two or three things that you
really care about. Because what tends to happen as people
go out and they start looking at properties with no
(05:39):
real concept of what they really care about, and then
they get themselves all confused because they're trying to weigh
up what should I buy this property? Should I buy
that property? So if it's I need it to be
fifteen minutes drive from work, or I need it to
have two bedrooms or three bedrooms because we're thinking of
starting a family, I would with my partner sit down
and say what are the two or three things we
(06:00):
both really care about, and then we go from there.
And I know that sounds really simple, but it gives
you so much clarity because what people often message me
on my show about the property Canopy podcasts. They'll say,
I could either do this or I could do that.
And as soon as you come back to well, what
are we trying to achieve here? What are we actually
after the decision obvious generally becomes quite obvious.
Speaker 2 (06:23):
It's just recalling when we found even just finding a
pless place to rent, but actually, what's easier finding a
home to live in or finding an investment property, because
I could give you my cold take on this, a
hot take based on less information than you have, is
that I reckon it in a way. It's easier to
find a home from the point of view of choice
(06:44):
because you know what you want to live in. I
think you do that sort of thing that looks like
a nice area. I've seen some properties that are affordable.
I need about three bedrooms, and you get an idea
about and you know that you but where's an investment property.
It's not for you to live in, It's for someone else.
And I think that that would be divorcing yourself from
(07:04):
the idea of what you want to live in versus
what's a good investment property. Oh, I don't know what
do you reckon?
Speaker 3 (07:08):
That's so fascinating because I would have said it the opposite.
But that's probably only because I've hosted a property podcast
for the last five years and think about it. Possibly,
But you are right that if you are looking for
a home to live in, you can have an instinctual
feel about what works for you and what doesn't. And
who is anybody to tell you your rights were wrong? Because
(07:28):
you're buying it for your own use. With an investment property,
I often encourage people to get out of that home
buyer mindset and get into the investor mindset because it
as soon as you are looking for an investment property,
it doesn't actually matter what you personally like. What matters
is what is a tenant looking for, what is a
tenant willing to pay for, which is actually sometimes different
(07:52):
from what they're looking for. And on top of that,
when you eventually come to sell that property, who's going
to be the buyer for that? But one thing that
I'd just say as well, even before you start looking
for investment properties, we've got to get really clear on
the strategy we are going for. So me myself, Ed McKnight,
the economist, I like a long term buy and hold
(08:12):
or build and hold strategy, right, So I want to
buy a house and hold it for the next fifteen,
twenty to thirty years. So the types of properties that
I'm going to be looking for are very different from
someone who takes a flipping strategy where they buy a property,
do it up, and then immediately sell it because a
flipper doesn't care one iota about the rental return because
(08:33):
they're going to be buying a house, doing it up,
and they might well sell it to an owner occupier.
I as a long term property investor, I care much
more about the rental return because I'm going to be
holding this for the next ten to fifteen twenty thirty
plus odd years. But once you've got your strategy, that's
when you can start to dig down a little more.
Speaker 2 (08:50):
Okay, Actually the flipp flipping such an emotive term, isn't it,
Because to me, there's two different types of flippers. There
are people who buy a property and they just think
I'm going to sell this in a few weeks time
and mark it up and some fall or pay for it.
And then there's the flippers who buy a property and
actually add some value to it, which seems from most
kiwi's point of view, that feels like more of at
least you've done something to the place you Also, the
(09:12):
people who buy a property to flip it also got
the weather ones that got burnt when the market turned.
I guess they bought properties and suddenly the market's bottom
drops out, and what are you going to do?
Speaker 3 (09:23):
Yeah, I've always thought that people who just buy a
property give it a good clean and then sell it
on in a couple of weeks. I've always thought of
that as property trading, and it's not something that I'm
particularly not heart fan.
Speaker 2 (09:34):
It's not heartwarming, is it.
Speaker 3 (09:36):
Well, I can understand the viewpoint that that doesn't really
add a lot to society. But if you think about
traditional flipping, where you take a property, you do it up,
you sell it, you could make the argument, well, that
person is actually adding or improving the New Zealand housing stock.
Speaker 2 (09:53):
That to me is quite a legitimate and you're creating
it's part of productivity. You're creating employment as well with
builders and trades and stuff like that. Absolutely, those are
almost I wish we had a different word for the
to me flippings buying and just you know, managing to
read the market better than others and then flipping it
on and making a profit and being happy to pay
the tax on it, whereas the other one you are
(10:18):
making more of an investment of time and labor and
materials and everything, and you're improving a property.
Speaker 1 (10:23):
Yeah.
Speaker 3 (10:23):
And the other thing I think about that is if
you are doing that to a lot of properties, for
want of a better word, we'll call it flipping. Right now,
you actually gain some expertise. So somebody who's flipped ten
houses or twenty houses will have a lot more expertise
and know what's going on when it comes to renovating properties.
So I would probably not decide to go and renovate
(10:45):
a house myself. I'd rather buy something that's already renovated,
especially if I'm buying it for my own purposes to
live in, simply because that person is going to do
a much better job at the renovation and managing it
compared to I would.
Speaker 2 (10:57):
Well, and I think that's I mean a lot of
people who actually trades people themselves, probably you have a
bit of a head start on their first property that
they're going to do up and flip on because they
can look at it and go, well, okay, I can
see that needs some new clouting here, some new jib
might need to redo the wiring, and in their minds
they've already probably done the sums. Whereas for the first
time investor, that's probably well, you learn as you go
(11:19):
at Yes, don't.
Speaker 3 (11:19):
You A lot of keywis do that.
Speaker 2 (11:21):
So how did you find your first investment property? Oh?
Speaker 3 (11:23):
Well, I use a company called Opu's Partners, which are
now by now partially car Oh yes, so that's maybe
a bit of a cheat answer. But for people who
are out there thinking about how am I going to
buy my first investment property, I kind of try and
just bring it down to three things to look at.
First of all, we've got to think about which part
of the country are we looking in. And I encourage
(11:45):
a lot of investors not to just buy the house
down the road, or not to just buy in the
place that or the town or the city that you
happen to live in, because just because you live in
Auckland or Tokuawa or Todong, it doesn't automatically mean that
that place is a good area for investment right now.
Because what a lot of key weis don't realize is
that each and the region, each individual city, it's kind
(12:07):
of in its own property cycle. So sometimes Auckland house
prices will be going up while Wellington is flat. Other
times Wellington house prices are going off like a frog
in a sock while christ Church is pretty flat. So
I always try and find what I call undervalued markets,
right and so these are places where house prices might
not have gone up so much over the last couple
of years, but I'm thinking, oh, Auckland's looking pretty cheap
(12:31):
for where i'd expect Auckland to be. So at the moment,
the big undervalued areas. I'm interested in a Wellington City,
I think that's about eleven or twelve percent undervalued. Auckland
I think that's about nine percent undervalued. So I'd be
looking at some of the big cities right now. I'm
less interested in a lot of the middle of the
North Island. So places like Wanganui, places like Tokuoa, these
(12:54):
are the ones where I'm like, oh, they look a
bit overvalued to me. And it's because house prices had
boomed in a place like Wanganui from about twenty sixteen
right throughout to twenty twenty one. Effect, house prices tripled
in some of these areas like Gisbone over a very
very short period, So to me, that looks a bit overvalued.
Speaker 2 (13:12):
When you say Wellington City or Auckland City, are you
meaning right the downtown You're just mentioning you meaning the
sort of broader area.
Speaker 3 (13:19):
So when I say Wellington City, I'm talking about the
actual council area, because that's the way that a lot
of the data is reported. So Wellington City is different
from Lower Heart, Upper Hart Potty Doer. When I talk
about Auckland, I'm talking about the whole region.
Speaker 2 (13:33):
Okay, look, we'd love to hear from you on Look.
There are two sides of the question. First is which
is what's the difference between buying a house for an
investment and buying a house to live in? And how
did you make your decisions on it? I can probably
have shared how we found our place is that we were.
The question for me was really where we were rent
(13:54):
where I wanted to rent, and I because my brothers
had lived in Saint Heleias and I wanted to live nearby,
I think, and I found a place where rented, and
I tracked down the landlord after two three years and
made him a cheeky offer, which was sort of in
the way, the easiest way to go because I knew
I liked the property, and then yeah, that's how I
did it. But I found it, and I would find it.
(14:17):
I think that the enemy for me would be perfection,
especially if I was looking for investment property. It's the
idea that you just have to find the one property
there's one perfect one, as opposed to you'd probably say, well,
there's actually dozens or hundreds of perfect properties, and that
would be that would be the enemy for me. But hey,
look we'll take a break now. We want to hear
from you. I wait, one hundred eighty ten and eighty
(14:38):
tell us about your journey and how you made your
decision on either your first home or your first investment property.
How did you go from looking at the market to going,
you know what, this is where I'm going to look for.
This is what I'm looking for. And there we go.
There's a couple of options and I'm I'm honing and
on it. Give us a call. I waite hundred eighty
ten and eighty. It is twenty one past four New
sooks 'b and welcome to the Weekend Collective. Welcome back,
(15:21):
should I say this is the one Ruth Radio show.
My guest is Ed mcnighty is the director of o
Peas Partners, and I you sort of shied away from
telling us that story about how you found your first
investment property, but look, you can tell the story even
that you did it through ops partner. He was he
was feeling he was being a bit too much. Well,
I'm just you know, pushing the ops partner's thing. But
tell us the story. It's your first part, first property.
(15:42):
How did you do it? Well, it's how did they
help you do it?
Speaker 3 (15:44):
Well. I was actually out for dinner with a friend
the night before and we were hunting around, you know,
just talking talking smack about property, really talking smack. We were.
Speaker 2 (15:55):
We were just sounds there.
Speaker 3 (15:59):
Now listens can't see me, but you can't tell. You
can tell by the look of me.
Speaker 2 (16:03):
I'm no kingst Well, you know, you're looking like you've
been at the gym and there's a bit of a
muscle t shirt going on there. But carry on, carry on.
Speaker 3 (16:10):
So we're out for dinner and he said, how much
is in your kiwisaver? And I told him and he said, right,
that's enough. Let's go out and look at properties tomorrow.
So he picked me up and his car we went
and we looked to a property.
Speaker 2 (16:24):
I'm glad she said in his car as opposed to
on his bike.
Speaker 3 (16:28):
I could see bars off his bike.
Speaker 2 (16:32):
Okay, carry on.
Speaker 3 (16:33):
So we go and look at this house. It was
actually an apartment building, right, And we went into one
of the apartments and it wasn't even the one I
ended up buying. And I looked at Andrew, who's now
I'm a business partner, and I said to him, is
this the right thing to do? And he said absolutely,
and he stormed down the hall. He's quite short with me.
(16:55):
So I got bundled back into the car, went inside
the conditional contract that day. Had a couple of months later,
I ended up buying this property that I've ever seen.
Now this is would have heard that. I just said
that I used a Kei saver for it, which you
can only use for your first time. So I ended
up living in it for a bit. Then I turned
it into an investment property, just so that I could
make that key we saver withdrawal a closure.
Speaker 2 (17:16):
Oh that's right. Of course I had a mental fate
about what was the key saving to do with it?
But of course you can use it for your first.
Speaker 3 (17:22):
For your first time if you're living it, but you've
got to live in it for six months that does take well.
Speaker 2 (17:27):
Obviously you had a high level of trust in him,
and now you're part of the business anyway, But what
was the emotional emotional Was it just you making the decision?
Speaker 3 (17:35):
Yeah, that's right. So the funny thing is they handed
me the contract and the contract was on somebody's phone. Yeah,
and you signed it with your finger. Oh my god,
of course I'm thinking you didn't.
Speaker 2 (17:46):
Think you needed a night to sleep think about it.
By his remorse and all that.
Speaker 3 (17:49):
Well, to be honest him, if I had thought of it,
thought about it overnight, maybe I wouldn't have done it.
But I signed what's called a conditional contract. This is
really important, so that there was like ten days due diligence.
So if I changed my mind within ten days, I
would have been able to pull out of it anyway.
So it probably wasn't quite as risky subject to finance
(18:09):
or subject of finance lawyer's approval, So there were all
of these checks that would have happened. So I could
have canceled it the next day and paid nothing. It
would have been okay.
Speaker 2 (18:17):
Actually, to be fair, a subject of finance clause. I
don't know what the law's got to and I think that,
But it used to be pretty much a get out
of jail free card because it's easy to say, well,
I couldn't find the finance that I was happy with.
So yeah, these days, days it's a bit trickier to
play that card.
Speaker 3 (18:32):
Yeah, these days it's could you get finance or not.
In the back in the day, it was basically could
you could you get financed? You were that you were
happy with, which could have been anything. But these days
you really need a due diligence clause to really have
that get out of jail free card.
Speaker 2 (18:48):
Yeah, get out of jail free card. I think these
days are subject to purchase a solicitor's approval, which in
no real estate really agent is particularly impressed by. It's like,
come on, you just want a clause to get out
if you don't like it because you say, my solicitor
told me it was a bad idea, I'm out there was,
So did you feel. I'm curious to know about the
emotional journey in a way as well, because I think
(19:11):
that that probably is an inhibitor for people. It's the
big there's the finance, there's the there's it makes sense,
and probably that would be something I struggle with, is
just getting myselfaself over that emotional hurdle of buying something
for you. How did you How did you feel about
it at the time, A mixture of probably quite excited, I imagine.
Speaker 1 (19:33):
Yeah.
Speaker 3 (19:33):
The interesting thing is I used to think that investment
was purely logical and that it was all about the numbers.
And now having worked with hundreds of investors through our company,
I know that it is entirely emotional. So that day
when I was signing the contract, I was scared out
of my mind, you know, shaky fingerism signing this contract.
(19:53):
I didn't know whether it was a good idea or not.
You know, I'm in the early twenties. I don't know
anything about anything.
Speaker 2 (20:00):
You see. There is Look, I don't think we're going
to say this is a good way to do business
or anything, but I would say that a lot of
people who have had a successful first investment or any business.
I think there is a lot of people you talk
to and say, I'm glad I didn't know too much
when I did it, because essentially the most important part
is the big picture. Nuts and belts. Can you hang
(20:21):
in there and you make a commitment and then the
rest you just have to deal with. It's like anything.
It's like with producing concerts. I'm glad I didn't know
how difficult. You know, the stumbling blocks you would have
because you'd never get out of bed in the morning.
Is there a bit did you was ignorance and I
don't say we want to tell people just go ahead
and do things out of ignorance, but you know what
(20:42):
I mean, there's a sort of naivete which, thank goodness,
you didn't know everything.
Speaker 3 (20:46):
Is it right? I think that had had a lot
of things. But once you get that experience of buying
a property renting it out, you know you've got all
of these concerns upfront. Am I going to be able
to find a tenant? Am I going to be able
to find a good tenant? What happens if my tenant
damages my property? What happens if I don't have a
tenant for a long time. There are all of these concerns,
and once you actually get into it rented out, you
(21:08):
realize some of those concerns, Oh, they didn't actually happen,
and so that makes you more confident to go and
do your next week.
Speaker 2 (21:13):
It's a bit like what if the sky falls on
my head tomorrow? But tomorrow never comes hopefully for most people. Hey, look,
well you want to hear your experiences about the journey
you took to finding your first investment property. Give us
a call one hundred and eighty ten to eighty. We've
got some fascinating texts. We're going to get into it
as well, which we'll do actually right now. High Ed
love listening to your podcast. What do you make of
Chris Bishop's recent comments around this government wanting house prices
(21:38):
to continue to fall? What do you think the government
would do in order for that to happen? Thanks Charlene Well.
Speaker 3 (21:43):
First of all, Charleline, thanks for listening to the show.
We really appreciate it. And just for anybody who didn't
hear Chris Bishop's comments, he was talking about that. First
he said I'd love to see house prices fall, and
then with the journalists dig into what does that really mean?
Do we mean falling what you and I would call
full ie the average house price goes from say eight
(22:04):
hundred thousand to seven fifty or seven hundred, or does
he mean compared to incomes? Once the journalists really started
to affordability, it was more around the affordability. So when
politicians often talk about falling house prices, they really mean
that they want house prices to not change for a
long period of time while incomes go up. Now, in
(22:24):
terms of what the national government or national lead government
is going to do, their focus is really around supply side.
So if I compare that to the Labor government that
we had for around six years, they were really focused
on demand side measures. That's why they broadened the interest
deductibility rules, that's why they tightened up the bright line test,
and they were trying to say, how can we get
(22:46):
investors to stop buying so house prices don't go up
so fast. National's taking quite a different track. Thus, how
do we increase the supply of properties. We'll let investors
continue to buy, but how do we increase the number
of houses, and if we can get more supply going,
then actually house prices won't go up so fast. Big
thing that I think they're doing, and I don't think
(23:07):
anybody has picked up that the National government doing this.
It's quite clever.
Speaker 2 (23:10):
There we go. Brace yourselves.
Speaker 3 (23:11):
Is the change of the bright line test. So bringing
it back from ten years down to two years. That
is going to seriously increase the number of listings on
the market come the first of July, because there will
be a number of property investors out there who bought
in twenty twenty. They bore at a time where there
was a five year bright line test. Property prices have
now gone up, but so have interest rates, so they
(23:33):
could probably sell it for a tidy profit. And I
think there are a number of investors, number of investors
out there just waiting for the bright line tests to change,
because then they can sell their property, avoid the high
interest rates, and not have to write an eighty thousand
dollars check to the ID. So that is going to
increase supply, but not in the way that a lot
of people typically think.
Speaker 2 (23:53):
Well, and it won't. The irony is they might avoid
paying tax on the on the period of the bright
line test, But because there will be a a blip
in the graph of the number of properties coming on sale,
more demand means, sorry, more supply means that they might
get a slightly softer price. I guess yeah.
Speaker 3 (24:15):
And I think that we're going to see house prices
continue to kind of sometimes go up, sometimes go down
for probably another year or so. The number of listings
on the market has rocketed up over the last six
ish months. We are seeing a lot of properties out
there on the market, and so the total number of
listings that you would see on one roof or similar
(24:38):
websites has certainly been increasing quite a bit of the
last six months.
Speaker 2 (24:42):
Okay, let's get on some more texts, so you can
give us a call any time if you want to
chip in with your story on how you found your
first home or your first investment property, and what would
the hurdles you to overcome is we've talked about. In
the end, you can do the numbers and everything, but
there's this massive emotional side of things where I sometimes
think that if you're not one of these people who
gets emotionally hit up, you might be have a slight advantage.
(25:05):
This is from I think it's from Lee. My thing
about selling a house at the moment is this is interesting.
Don't insult the seller, but the seller may need to
not expect higher than the RV, but can work a
fifteen percent negotiating. I don't know what he's written here,
some strange things. Anyways, say Jone insault the seller. I
(25:29):
have to say, I don't think you want to insult anyone,
But if you want to make a cheeky offer, make
a cheeky offer. Who cares if somebody emotionally doesn't like
your offer.
Speaker 3 (25:38):
I'll give you a really good example of that. Tim.
I'm not sure if I could share this story, but
I'm going to do it either you're going to go
for it anywhere. So I was looking to buy a
house in christ Chuch, and this was for my partner
and I to live in. And so we were looking
to buy a house off the appearance of a guy
that I knew, right, and so I got this guy
to show me around the house, and I knew what
(25:58):
they wanted for.
Speaker 2 (25:59):
So there is a personal connection, which does make it tricky.
Speaker 3 (26:03):
That's why the story gets good. It's good.
Speaker 2 (26:06):
I'm clinching.
Speaker 3 (26:07):
So what it's up henic is I think they wanted
something like one seven five for it really nice house.
Speaker 2 (26:16):
Not last year obviously, well, and I.
Speaker 3 (26:18):
Was like, it's not worth that, So I win. I
looked at the comparables I want to and in fact,
you can go on one Roof's website and see what
what properties are selling in the area. It's really cool
where you can get this information for free about what
has actually sold and what were the prices of similar
properties in the area. So I go and look at that.
I look at the one roof comparables and I say, no,
(26:38):
it's not worth that. So I go in quite a
bit lower.
Speaker 2 (26:42):
Anyway, Okay, what did you go in at? I think
I reckon, I'm going to take a guess. I think
you went in at one thirty.
Speaker 3 (26:48):
No, no, no, no, no, I wasn't that bad. I
winned it. I went in at one five to five.
Speaker 2 (26:54):
Oh that's all right, that's not that's just that's a
change what I said.
Speaker 3 (26:58):
Anyway, I got some very nasty texts. We've made up now,
but we were just saying before that emotions sometimes get
the better of people in property and we need to
manage them. That's a good example of that.
Speaker 2 (27:12):
But the expectation was one seventy five and you off
at one fifty five. Yeah, that doesn't seem to me
to be if you'd said I'll give you one twenty
five or one thirty, then you can imagine them being
a bit upset. But that doesn't sound like you were
frightening the horses too much. But of course, feelings, feelings, feelings, feelings.
Speaker 3 (27:30):
But do you know the terrible thing as well, Tim,
is that I think I'd just written a column for
One Roof about how much discount is the average person
able to negotiate off the asking price. So if the
asking price is a million bucks of a house, how
much are people negotiating off that, and I think it
was something like seven to ten percent at the time,
(27:51):
and so I kind of thought, actually, my offers within
the realm of possibility, and I think maybe.
Speaker 2 (27:58):
That's you made the offer. Did they accept it?
Speaker 3 (28:02):
No, they didn't. But here's the good part of the
story here.
Speaker 2 (28:05):
So I am clenching a little bit.
Speaker 3 (28:06):
They ended up selling it so many months later for one.
Speaker 2 (28:10):
Six three so eight thousand dollars different.
Speaker 3 (28:14):
No, no, no, sorry, seventy grand seventy grand more one point
sixty three million.
Speaker 2 (28:18):
Oh oh my god, I feel so silly. Can I
just say, you know what I was thinking. I think
you were talking about years and years ago, back when
you could buy a property for seventy thousand. Okay, sorry,
I wish it was seventy thousand. Okay, So it was
one point one point seventy five million, and you off
and you wanted one, you are offered one point five
(28:38):
to five.
Speaker 3 (28:39):
I still I think it was reasonable.
Speaker 2 (28:42):
That is a real that's a lot of money too.
It's not like you went in and said, I'll offer
you a thirty percent discount. So they sold it for
seventy thousand dollars more than your offer.
Speaker 3 (28:50):
Yeah, But the funny thing is they really should have
counted and we probably would have done a deal that day.
Speaker 2 (28:54):
Yeah, you would have, and they would have had that
money for a bit longer and a bit Yeah.
Speaker 3 (28:58):
But the reason I bring it.
Speaker 2 (28:59):
Up asting now, is this going to create difficulties for you?
Speaker 3 (29:03):
I think we should be okay, I mean, who knows?
Speaker 2 (29:07):
Actually that does raise the question. I've got a whole
lot of questions have come out of that because the
other thing you talked about an asking price. Buyers love
an asking price. Anyone who's looking to buy who wants
to go no buyer? Does any buyer want to go
to auction? They want an asking price. They want something,
(29:27):
they want to know whereabouts to cast their rod in
the water. And is that part of you? Is that
the part of the decision making when you come into
looking for an investment property or a property is okay,
I'm only going to look at ones that are going
to give me a price.
Speaker 3 (29:42):
Yeah, I personally don't worry too much about that. But
first home buyers love an asking price. First home buyers
hate auctions because if you've got to go and bid
at an auction, you've got to do so much leg
work before you're able to actually stick up your hand
because any bids an auction are full unconditional. So it's
not like you can say, Okay, I'm going to put
(30:03):
my hand up at an auction and then I'm going
to go get the building inspector to go through. No, no, no,
You've got to get the building inspector to go through
before you put you up your hand at the auction. Now,
first home buyers hate that because then they've got to
write a check to a whole heap, not that there
are checks anymore. Do a bank transfer to a whole
heap of building inspectors first, because then you've got to
get a building inspeech and done for every house. Then
you've got to go get a prey approval for the
(30:24):
specific house at your bank. So first home buyers hate auctions.
They love a buyer's inquiry over a price, by negotiation
and asking price, those kinds of things.
Speaker 2 (30:34):
It's fascinating, isn't it. Will take a break. We'll come
back with more with Ed McKnight from OPS Partners. You
can go and check out there. There are website on
OPS Partners dot co dot nz. That's OPS. By the way,
I look at it as being OPS so it's like
Hopes without the HPES partners dot co dot and said,
I think you'll find it. Twenty minutes to five, new
(30:56):
Stork said, b I don't want turn them, I don't
want to give you mine, and I don't want to
need you no end of no one, none of your
time and no one stuff. Welcome back to the One
(31:16):
Roof radio show. I'm Tim Beverage. My guest is Ed
McKnight from Ope's Partners. We're talking about where and how
should you find your first investment property or your first
time Well, of course there's As the conversation goes on,
we diversify a little bit in some of the questions
we're looking at. If you're looking for a property now, Ed,
I mean, I guess you know the market. You don't
care whether it's auction or by private treaty or sort
(31:37):
of a declared price or price on application tender is
the one. I don't think you could ever get me
on a tender? What do you reckon?
Speaker 3 (31:44):
I just don't like those kinds of ones because I
don't like losing. I would have known what it takes
to win. Look, these days, I'm buying a lot of
new builds from developers that are kind of advertised price anyway,
which is what I prefer. I want to know what
the price is before you actually look at the property,
because did you either know, yes, it's going to be
doable for me, or actually, no, it's not.
Speaker 2 (32:04):
And you're taking a long term view as well, so
you like to know the numbers up front, and I
guess you're taking a long term view of everything you buy.
Speaker 3 (32:12):
Yeah, such just of fear we were talking about that.
I'm currently thirty one, and I don't think that I'll
sell any of my investment properties till I'm sixty one, right,
And I just think even if house prices only go
up by about four percent a year, which is roughly
what incomes go up by, right, So that'd be quite
a bit slower than what it's been in the past.
But even if I just hold those properties for thirty
(32:34):
years at four percent a year, they'll triple in value
over that time, potentially even more.
Speaker 2 (32:39):
It just makes it funny that I thought you were
talking about years and years ago that you could buy
a property in Christis one hundred and seventy thousand. Of course,
you would have had to be about twelve years old,
so bad.
Speaker 3 (32:49):
I wish I was purchasing property and crush yet to
it last twelve years old?
Speaker 2 (32:54):
Okay, right, let's take some We've got quite a lot
of texts here on the investment side of things, just
a simple mechanics. One from Shane says, do you only
pay a capital gains tax on the profit of you
that your investment property makes? Does your proper profit equal
price increase minus interest payments regards Shane, Well, there's a
(33:14):
whole lot of changes that have happened, Shane, or let
Ed explain all that.
Speaker 3 (33:18):
Yeah, so when it comes to brightline, you're only soon
going to pay it if you owned a property for
less than two years. But here's how the calculation under works.
It's what you paid for it, and then the increase
on that. But then you get to take off some
things like your real estate agent fees and any renovation,
any renovation costs that you actually put on there. In
(33:39):
terms of interest costs, those are specifically based on your
cash flow. So if you're a rental, if you're an
investor renting out of property, every year you'll file a
tax return with the ID right because you're going to
be getting some rent You're going to be paying out
some interest costs. You're going to be paying out your acts, insurance,
and maintenance, and you'll either pay tax or if you're
making a loss on your property, then you're not going
(34:01):
to pay tax, but you can carry those losses forward
sell it.
Speaker 2 (34:05):
Yeah.
Speaker 3 (34:05):
Yeah, So let's say I lost ten thousand dollars on
my investment property one year. If I then go and
sell my property and I make a ten thousand dollar
profit and am caught under the bright line test, then
those would offset each other, so I wouldn't pay any tax.
Speaker 2 (34:19):
Okay, good, good stuff. Here's another one. Hi, guys, our
latest property. We put in a bid for nine to
fifty k. Got a call from the only other bidder
he was pulling out, so we dropped the offer. That's
weird call from the other bidder anyway, So we dropped
the offer at eight fifty k and and got the property.
That doesn't happen very often. That sounds like an unusual
(34:39):
That was that was an interesting move from the other bidder,
isn't it like? Hey, by the way, I'm out go lower.
Speaker 3 (34:45):
Well, I'm assuming they mean they might mean the real
estate agent rather than the better they might they might
have thought the better.
Speaker 2 (34:51):
That's the way it's expressed. Says got a call from
the only other bidder he was pulling out.
Speaker 3 (34:55):
Unless they knew each other, which might have been quite nice.
So in that case, what must have happened as they
went to an auction the property got passed in, so
it didn't get sold. That's when you move into that
negotiation phase. Obviously, the person who had the highest bid,
they've got the first chance to negotiate. That must have
fallen through, and so they decided to negotiate with the
second bit. And it turns out if you actually got
(35:16):
that with one hundred k less than what you were
prepared to pay for it, that sounds pretty good.
Speaker 2 (35:21):
Yeah. Another one I think a lot of people struggle
with actually understanding what the bright line test is. It says,
we are wanting to rent out our only house. We
have owned it for twelve years, so okay, they've been
living living in it. We're going traveling when we return.
How long do we have to live in it before
the bright line comes in? Well, the bright line doesn't
come in, does it.
Speaker 3 (35:41):
Yeah? No, not in that case, because they will have
owned it for fourteen years. So I think what that
person might just have their wires crossed on is it's
not how long you've rented the property out for, it's
how long have you owned it? And there's a really
important distinction with these new changes team with the brightline test.
Previously it was all about when did you buy the property,
(36:02):
So it would be five years from when you bought
the property or ten years from when you bought the property,
depending on what type of property you bought and when
you bought it. That's all getting scrapped when the rules change.
Now it's going to be when did you sell the property?
So the new rule is at the time you sold
the property, have you owned it for two years? Yes?
Or no? If the answer you've owned it for more
(36:22):
than two years? Sweet, no tax to pay?
Speaker 2 (36:25):
Okay, good stuff. Hey, look we'll take a break and
come back and just a moment. The one the Property
of the week is next, and of course it's a
doozy and as I say, it's always like taking a
two minute holiday just going and looking at property and imagining,
wouldn't that be nice? It is now eleven minutes to
five news talk z B.
Speaker 3 (36:41):
She says, come on, I'd like to get to know you,
but I just don't think I can.
Speaker 2 (36:49):
You would one.
Speaker 3 (36:54):
See the plant down? That shot gone.
Speaker 2 (36:59):
I'll need a god down from and what come back
to the One Roof radio show. I'm Tim Beverage. My
guest is Ed McKnight from Ops Partners and right now
it is seven and a half minutes to five.
Speaker 1 (37:15):
The one roof property of the week on the Weekend Collective. Oh.
Speaker 2 (37:19):
Actually, speaking of Wellington, this is the one roof property
of the week. It's fifty three Palace A Road Rose
neath Wellington. It's a three bedroom, two bathroom. I'll give
the price in just a moment. It's a Californian style home,
one of the few houses with a prime location directly
above Oriental Bay. Much of the surrounding hill is dedicated
to council reserves, parks, walkways and cycle tracks. Yet it's
(37:39):
actually a great area around there, and as the blurb says,
properties isn't in this area rarely become available. As of course,
owners typically hold onto them long term and because well
they are a great spot. They enjoy the daily pleasure
of waking up to a world class harbor view and
city view and soaking up the evening sun. And I'm
having a trawl through it right now, and it does.
(38:02):
I mean they've presented it beautifully, lovely table outdoors for
having your friends around for a barbecue, fantastics, space to
store your bikes. And the views, I mean, goodness, the views.
And here's the price one point five nine mil so
one five nine five with three zeros after it ed McKnight.
(38:26):
You're probably having a look at it right now, are you?
What you reckon looks like it's like quite a nice property.
Speaker 3 (38:30):
It's just amazing the views that we get here in
New Zealand. The fact that you can live up up
on the hills above Wellington, look back at the city,
look at Orienttial Bay. You just think, gosh, that's wonderful.
Speaker 2 (38:42):
Actually, I know, you know, for many people, one point
six let's just round it up. One point six million
is a lot of money. But when you consider what
you are getting for your money in Wellington, that is
quite spectacular, isn't it.
Speaker 3 (38:54):
And the one thing that will point out is the
capital value on that. The CV on that is just
over two point two million dollars and in some parts
of the country, I know, r vcv all of that.
I mean, that's just a council value from years ago,
but people still look at it. Some parts of the
country are selling quite substantially under RV and CV at
the moment.
Speaker 2 (39:13):
Should I say, they say, quite, well, that's an interesting point.
We can finish off inquiries over one point five nine
to five hmm, so that's obviously sort of an asking price.
But inquiries over So what does that mean? What does
Ed mcknighto If he's interested, what does he bid?
Speaker 3 (39:29):
I'd still go under?
Speaker 2 (39:31):
Yeah, what do you do one point four seventy five?
Speaker 3 (39:34):
Well, the first thing I'd do is I'd look at
the comparables to see what's actually selling, but I'd tend
to go under it. Now you might miss out on
a couple of properties doing it that way. Obviously they
probably want something a bit more than that. But I
always think there's always going to be another house.
Speaker 2 (39:47):
So the other one that's tricky. I think we've got
about what have we got a minute and a half
to cover, so we're just for conciseness. But I always
think that if you're a people person you like to please,
you really have to resist being too friendly with real
estate agent because they are working for the other side,
and you have to remind yourself that you can't and go, wow,
we've probably got another hundred thousand, just quietly.
Speaker 3 (40:08):
No, you'd never do that. I think. Be nice to them,
but you don't want to tell them everything.
Speaker 2 (40:13):
What I mean is, don't forget that they're not working
for you. And if you indicate that you maybe have
a bit more room to move on the price, and
you don't want them to know that, then do not
tell them that.
Speaker 3 (40:23):
No, you'd have to say, oh them on the real
estate agent, Oh you know, the bank really it's getting
a bit tight for us. Can't go that high.
Speaker 2 (40:31):
Ah. Good line. Good line. If you take nothing from
this show apart from that line from Ed McKnight, just say, look,
the bank's really tough. You know how things are. Money's tight. Look,
we don't really have any room to move on that,
So come back to me. I sound like I've got
more of a bit more participation in the market than
I actually have. But anyway, hey, Ed, thanks so much
(40:52):
for your time, mate, and we'll look forward to having
you in again. See you again and go to Ops Partners.
Dott Cutter in Zed and don't forget to check out
that fifty three palace the Road rosneath Wellington City on
the one Roof site. We will be back with the Parents' Squad.
Sarah Chapman joins us, talking about what if your kids
are choosing a career which is going to make them poor?
Do you japan backcone a minute?
Speaker 3 (41:12):
Thanks my man.
Speaker 2 (41:13):
Every time I related.
Speaker 1 (41:16):
For more from the Weekend Collective, listen live to news
Talks it'd be weekends from three pm, or follow the
podcast on iHeartRadio.
You're listening to the Weekend Collective podcast from news Talks
at B.
Speaker 2 (00:28):
News Talk said B this is the one roof radio
show on the Weekend Collective. I'm Tim Beverage. We want
your calls on eight hundred and eighty ten eighty. You
can text on nine two nine two. By the way,
if you miss any of the hours, you can go
to wherever you podcast look for the Weekend Collective. iHeartRadio
is a great starting point and probably end point as well.
(00:48):
But joining me today he is Will He's from OPA's
partners in Now regular on the show. I think we
say ed McKnight, good afternoon. How are you going?
Speaker 3 (00:56):
Great to be here? Tim?
Speaker 2 (00:57):
Hey, by the way, just before you get into it,
you are as I am musical theater sort of buff
and I think you're telling me asked last time when
we saw you that we're going to head over to
Melbourne to see Sunset Boulevard, which had Sarah Brightman in it,
big show in Melbourne. How was it?
Speaker 1 (01:13):
Well?
Speaker 3 (01:13):
I must I loved the show, but I don't think
Sarah really lived up to the hype. So for anybody
who doesn't know, Sarah Brightman was the original Christine Day
in the Phantom of the Opera and that role was
actually written for her. Now as a young boy growing
up on South Tartanaki, I listened to all of her
songs and I was so excited to go see it.
(01:34):
But I think she's probably lost it a little bit.
If I can and say that, it.
Speaker 2 (01:39):
Sounds like you're being polite. Did Mark's out of ten
for Sarah?
Speaker 1 (01:42):
Oh?
Speaker 3 (01:43):
So ten?
Speaker 1 (01:46):
Oh?
Speaker 2 (01:47):
That is the actually, by the way, fun fact, I
don't know if you remember the Kenny Everett Show. She was
actually also a member in Hot Gossip. Did you know
that she was a dancer in Hot Gossip? Kenny Everett?
Now it's time for a little hot gossip. Anyway. Look,
let's talk about property, shall we? Onto other things? Did
you have a nice trip to Melbourne?
Speaker 3 (02:03):
Oh it was beautiful, said to go to Yes.
Speaker 2 (02:06):
Do you actually do you take your real estate sort
of brain with you as well and sort of find
yourself fishing around the real estate pages and properties and go.
Speaker 3 (02:14):
Well, do you know what you kind of do? I
recently interviewed someone in Australia just to understand the differences
between the Australian real estate market and New Zealand, and
it is amazing how different it is. So I just
tell you one little hot fact. If you wanted to
buy a property in Melbourne, and let's say it's an
eight hundred thousand dollar property in Melbourne and you're buying
(02:35):
it as a Kiwi property investor, you would have to
pay stamp duty of one hundred and nine thousand dollars
on how much of a property and eight hundred thousand
dollar property, So you're talking about kidding me. You're talking
about well over twelve percent, right, And so I was like, oh, wow,
Australia is quite different to New Zealand. The other thing
(02:56):
that's quite interesting difference between the two countries interest rates.
Interest rates are quite substantially higher over here by around
about a percentage point.
Speaker 2 (03:05):
Say again, say that again, what the interest rate?
Speaker 3 (03:07):
Interest rates are quite higher over here. So it was
quite interesting. I was telling an Australian that the average
floating rate or variable rate in New Zealand is about
eight point five to five percent. He almost fell off
his seat because he was saying, well, we're our floating
rate in Australia has a six in front of it.
Speaker 2 (03:24):
Wow, that is a big that does make a difference. Well,
hopefully we'll get on top of that soon. I don't
know how the GDP well actually might touch on that.
But the first thing I wanted to have a chat
about was in the course of property ours, we get
often we're talking about the macro sort of side of things.
Everything's big picture. What are the interest rates doing, what's
the cost of money, what are your you know, what
(03:46):
markets are doing. What is the market going to be
soft for a little while, our interest rate's going to
go down? And also about getting an investment property. But
I was just thinking about the for people who are
listening to information about the market, and so they're listening
to the show and they go and they and they've decided,
you know, the market is soft right now, but maybe
I should really be thinking about getting in because I'm
(04:09):
sure in a year's time or whenever the market starts
to move, we'll have people saying, oh, yeah, I got
stuck in back then. But investors are holding back. But
there's going to be a time when people and first
time buyers are looking. Even though it's still never an
easy equation, how do you go about finding your first property,
whether it be for you as a home and look,
(04:30):
there are different considerations, and we want to hear from you, actually,
how did you go about finding your first property once
you decided I've got to get someone, and also finding
an investment property when it gets down to finding that house.
I mean, in a way I can imagine your answer
might be, well, don't treat your first investment property is
too special. Just do the numbers and find the right house.
But how do you what's your experience in your memory
(04:53):
about finding your first investment property in your first home.
Speaker 3 (04:56):
Look, if it's your first time. Generally, what people do
is they purchase what they can afford. So typically what
a first home buyer would do, and then we'll come
to the investment side. A first time buyer would go
to a mortgage broker or potentially their bank and say,
what can I actually afford? And let's say that it's
six hundred thousand dollars. Depending on where you live in
New Zealand, in Auckland you need a bit higher than that.
(05:17):
But let's say it's six hundred thousand dollars. Then you'd
probably start heading trade men saying well what can I
actually get from that? And what I encourage a lot
of first home buyers to do is sit down with
your partner or yourself if you're doing it by yourself,
and write down the two or three things that you
really care about. Because what tends to happen as people
go out and they start looking at properties with no
(05:39):
real concept of what they really care about, and then
they get themselves all confused because they're trying to weigh
up what should I buy this property? Should I buy
that property? So if it's I need it to be
fifteen minutes drive from work, or I need it to
have two bedrooms or three bedrooms because we're thinking of
starting a family, I would with my partner sit down
and say what are the two or three things we
(06:00):
both really care about, and then we go from there.
And I know that sounds really simple, but it gives
you so much clarity because what people often message me
on my show about the property Canopy podcasts. They'll say,
I could either do this or I could do that.
And as soon as you come back to well, what
are we trying to achieve here? What are we actually
after the decision obvious generally becomes quite obvious.
Speaker 2 (06:23):
It's just recalling when we found even just finding a
pless place to rent, but actually, what's easier finding a
home to live in or finding an investment property, because
I could give you my cold take on this, a
hot take based on less information than you have, is
that I reckon it in a way. It's easier to
find a home from the point of view of choice
(06:44):
because you know what you want to live in. I
think you do that sort of thing that looks like
a nice area. I've seen some properties that are affordable.
I need about three bedrooms, and you get an idea
about and you know that you but where's an investment property.
It's not for you to live in, It's for someone else.
And I think that that would be divorcing yourself from
(07:04):
the idea of what you want to live in versus
what's a good investment property. Oh, I don't know what
do you reckon?
Speaker 3 (07:08):
That's so fascinating because I would have said it the opposite.
But that's probably only because I've hosted a property podcast
for the last five years and think about it. Possibly,
But you are right that if you are looking for
a home to live in, you can have an instinctual
feel about what works for you and what doesn't. And
who is anybody to tell you your rights were wrong? Because
(07:28):
you're buying it for your own use. With an investment property,
I often encourage people to get out of that home
buyer mindset and get into the investor mindset because it
as soon as you are looking for an investment property,
it doesn't actually matter what you personally like. What matters
is what is a tenant looking for, what is a
tenant willing to pay for, which is actually sometimes different
(07:52):
from what they're looking for. And on top of that,
when you eventually come to sell that property, who's going
to be the buyer for that? But one thing that
I'd just say as well, even before you start looking
for investment properties, we've got to get really clear on
the strategy we are going for. So me myself, Ed McKnight,
the economist, I like a long term buy and hold
(08:12):
or build and hold strategy, right, So I want to
buy a house and hold it for the next fifteen,
twenty to thirty years. So the types of properties that
I'm going to be looking for are very different from
someone who takes a flipping strategy where they buy a property,
do it up, and then immediately sell it because a
flipper doesn't care one iota about the rental return because
(08:33):
they're going to be buying a house, doing it up,
and they might well sell it to an owner occupier.
I as a long term property investor, I care much
more about the rental return because I'm going to be
holding this for the next ten to fifteen twenty thirty
plus odd years. But once you've got your strategy, that's
when you can start to dig down a little more.
Speaker 2 (08:50):
Okay, Actually the flipp flipping such an emotive term, isn't it,
Because to me, there's two different types of flippers. There
are people who buy a property and they just think
I'm going to sell this in a few weeks time
and mark it up and some fall or pay for it.
And then there's the flippers who buy a property and
actually add some value to it, which seems from most
kiwi's point of view, that feels like more of at
least you've done something to the place you Also, the
(09:12):
people who buy a property to flip it also got
the weather ones that got burnt when the market turned.
I guess they bought properties and suddenly the market's bottom
drops out, and what are you going to do?
Speaker 3 (09:23):
Yeah, I've always thought that people who just buy a
property give it a good clean and then sell it
on in a couple of weeks. I've always thought of
that as property trading, and it's not something that I'm
particularly not heart fan.
Speaker 2 (09:34):
It's not heartwarming, is it.
Speaker 3 (09:36):
Well, I can understand the viewpoint that that doesn't really
add a lot to society. But if you think about
traditional flipping, where you take a property, you do it up,
you sell it, you could make the argument, well, that
person is actually adding or improving the New Zealand housing stock.
Speaker 2 (09:53):
That to me is quite a legitimate and you're creating
it's part of productivity. You're creating employment as well with
builders and trades and stuff like that. Absolutely, those are
almost I wish we had a different word for the
to me flippings buying and just you know, managing to
read the market better than others and then flipping it
on and making a profit and being happy to pay
the tax on it, whereas the other one you are
(10:18):
making more of an investment of time and labor and
materials and everything, and you're improving a property.
Speaker 1 (10:23):
Yeah.
Speaker 3 (10:23):
And the other thing I think about that is if
you are doing that to a lot of properties, for
want of a better word, we'll call it flipping. Right now,
you actually gain some expertise. So somebody who's flipped ten
houses or twenty houses will have a lot more expertise
and know what's going on when it comes to renovating properties.
So I would probably not decide to go and renovate
(10:45):
a house myself. I'd rather buy something that's already renovated,
especially if I'm buying it for my own purposes to
live in, simply because that person is going to do
a much better job at the renovation and managing it
compared to I would.
Speaker 2 (10:57):
Well, and I think that's I mean a lot of
people who actually trades people themselves, probably you have a
bit of a head start on their first property that
they're going to do up and flip on because they
can look at it and go, well, okay, I can
see that needs some new clouting here, some new jib
might need to redo the wiring, and in their minds
they've already probably done the sums. Whereas for the first
time investor, that's probably well, you learn as you go
(11:19):
at Yes, don't.
Speaker 3 (11:19):
You A lot of keywis do that.
Speaker 2 (11:21):
So how did you find your first investment property? Oh?
Speaker 3 (11:23):
Well, I use a company called Opu's Partners, which are
now by now partially car Oh yes, so that's maybe
a bit of a cheat answer. But for people who
are out there thinking about how am I going to
buy my first investment property, I kind of try and
just bring it down to three things to look at.
First of all, we've got to think about which part
of the country are we looking in. And I encourage
(11:45):
a lot of investors not to just buy the house
down the road, or not to just buy in the
place that or the town or the city that you
happen to live in, because just because you live in
Auckland or Tokuawa or Todong, it doesn't automatically mean that
that place is a good area for investment right now.
Because what a lot of key weis don't realize is
that each and the region, each individual city, it's kind
(12:07):
of in its own property cycle. So sometimes Auckland house
prices will be going up while Wellington is flat. Other
times Wellington house prices are going off like a frog
in a sock while christ Church is pretty flat. So
I always try and find what I call undervalued markets,
right and so these are places where house prices might
not have gone up so much over the last couple
of years, but I'm thinking, oh, Auckland's looking pretty cheap
(12:31):
for where i'd expect Auckland to be. So at the moment,
the big undervalued areas. I'm interested in a Wellington City,
I think that's about eleven or twelve percent undervalued. Auckland
I think that's about nine percent undervalued. So I'd be
looking at some of the big cities right now. I'm
less interested in a lot of the middle of the
North Island. So places like Wanganui, places like Tokuoa, these
(12:54):
are the ones where I'm like, oh, they look a
bit overvalued to me. And it's because house prices had
boomed in a place like Wanganui from about twenty sixteen
right throughout to twenty twenty one. Effect, house prices tripled
in some of these areas like Gisbone over a very
very short period, So to me, that looks a bit overvalued.
Speaker 2 (13:12):
When you say Wellington City or Auckland City, are you
meaning right the downtown You're just mentioning you meaning the
sort of broader area.
Speaker 3 (13:19):
So when I say Wellington City, I'm talking about the
actual council area, because that's the way that a lot
of the data is reported. So Wellington City is different
from Lower Heart, Upper Hart Potty Doer. When I talk
about Auckland, I'm talking about the whole region.
Speaker 2 (13:33):
Okay, look, we'd love to hear from you on Look.
There are two sides of the question. First is which
is what's the difference between buying a house for an
investment and buying a house to live in? And how
did you make your decisions on it? I can probably
have shared how we found our place is that we were.
The question for me was really where we were rent
(13:54):
where I wanted to rent, and I because my brothers
had lived in Saint Heleias and I wanted to live nearby,
I think, and I found a place where rented, and
I tracked down the landlord after two three years and
made him a cheeky offer, which was sort of in
the way, the easiest way to go because I knew
I liked the property, and then yeah, that's how I
did it. But I found it, and I would find it.
(14:17):
I think that the enemy for me would be perfection,
especially if I was looking for investment property. It's the
idea that you just have to find the one property
there's one perfect one, as opposed to you'd probably say, well,
there's actually dozens or hundreds of perfect properties, and that
would be that would be the enemy for me. But hey,
look we'll take a break now. We want to hear
from you. I wait, one hundred eighty ten and eighty
(14:38):
tell us about your journey and how you made your
decision on either your first home or your first investment property.
How did you go from looking at the market to going,
you know what, this is where I'm going to look for.
This is what I'm looking for. And there we go.
There's a couple of options and I'm I'm honing and
on it. Give us a call. I waite hundred eighty
ten and eighty. It is twenty one past four New
sooks 'b and welcome to the Weekend Collective. Welcome back,
(15:21):
should I say this is the one Ruth Radio show.
My guest is Ed mcnighty is the director of o
Peas Partners, and I you sort of shied away from
telling us that story about how you found your first
investment property, but look, you can tell the story even
that you did it through ops partner. He was he
was feeling he was being a bit too much. Well,
I'm just you know, pushing the ops partner's thing. But
tell us the story. It's your first part, first property.
(15:42):
How did you do it? Well, it's how did they
help you do it?
Speaker 3 (15:44):
Well. I was actually out for dinner with a friend
the night before and we were hunting around, you know,
just talking talking smack about property, really talking smack. We were.
Speaker 2 (15:55):
We were just sounds there.
Speaker 3 (15:59):
Now listens can't see me, but you can't tell. You
can tell by the look of me.
Speaker 2 (16:03):
I'm no kingst Well, you know, you're looking like you've
been at the gym and there's a bit of a
muscle t shirt going on there. But carry on, carry on.
Speaker 3 (16:10):
So we're out for dinner and he said, how much
is in your kiwisaver? And I told him and he said, right,
that's enough. Let's go out and look at properties tomorrow.
So he picked me up and his car we went
and we looked to a property.
Speaker 2 (16:24):
I'm glad she said in his car as opposed to
on his bike.
Speaker 3 (16:28):
I could see bars off his bike.
Speaker 2 (16:32):
Okay, carry on.
Speaker 3 (16:33):
So we go and look at this house. It was
actually an apartment building, right, And we went into one
of the apartments and it wasn't even the one I
ended up buying. And I looked at Andrew, who's now
I'm a business partner, and I said to him, is
this the right thing to do? And he said absolutely,
and he stormed down the hall. He's quite short with me.
(16:55):
So I got bundled back into the car, went inside
the conditional contract that day. Had a couple of months later,
I ended up buying this property that I've ever seen.
Now this is would have heard that. I just said
that I used a Kei saver for it, which you
can only use for your first time. So I ended
up living in it for a bit. Then I turned
it into an investment property, just so that I could
make that key we saver withdrawal a closure.
Speaker 2 (17:16):
Oh that's right. Of course I had a mental fate
about what was the key saving to do with it?
But of course you can use it for your first.
Speaker 3 (17:22):
For your first time if you're living it, but you've
got to live in it for six months that does take well.
Speaker 2 (17:27):
Obviously you had a high level of trust in him,
and now you're part of the business anyway, But what
was the emotional emotional Was it just you making the decision?
Speaker 3 (17:35):
Yeah, that's right. So the funny thing is they handed
me the contract and the contract was on somebody's phone. Yeah,
and you signed it with your finger. Oh my god,
of course I'm thinking you didn't.
Speaker 2 (17:46):
Think you needed a night to sleep think about it.
By his remorse and all that.
Speaker 3 (17:49):
Well, to be honest him, if I had thought of it,
thought about it overnight, maybe I wouldn't have done it.
But I signed what's called a conditional contract. This is
really important, so that there was like ten days due diligence.
So if I changed my mind within ten days, I
would have been able to pull out of it anyway.
So it probably wasn't quite as risky subject to finance
(18:09):
or subject of finance lawyer's approval, So there were all
of these checks that would have happened. So I could
have canceled it the next day and paid nothing. It
would have been okay.
Speaker 2 (18:17):
Actually, to be fair, a subject of finance clause. I
don't know what the law's got to and I think that,
But it used to be pretty much a get out
of jail free card because it's easy to say, well,
I couldn't find the finance that I was happy with.
So yeah, these days, days it's a bit trickier to
play that card.
Speaker 3 (18:32):
Yeah, these days it's could you get finance or not.
In the back in the day, it was basically could
you could you get financed? You were that you were
happy with, which could have been anything. But these days
you really need a due diligence clause to really have
that get out of jail free card.
Speaker 2 (18:48):
Yeah, get out of jail free card. I think these
days are subject to purchase a solicitor's approval, which in
no real estate really agent is particularly impressed by. It's like,
come on, you just want a clause to get out
if you don't like it because you say, my solicitor
told me it was a bad idea, I'm out there was,
So did you feel. I'm curious to know about the
emotional journey in a way as well, because I think
(19:11):
that that probably is an inhibitor for people. It's the
big there's the finance, there's the there's it makes sense,
and probably that would be something I struggle with, is
just getting myselfaself over that emotional hurdle of buying something
for you. How did you How did you feel about
it at the time, A mixture of probably quite excited, I imagine.
Speaker 1 (19:33):
Yeah.
Speaker 3 (19:33):
The interesting thing is I used to think that investment
was purely logical and that it was all about the numbers.
And now having worked with hundreds of investors through our company,
I know that it is entirely emotional. So that day
when I was signing the contract, I was scared out
of my mind, you know, shaky fingerism signing this contract.
(19:53):
I didn't know whether it was a good idea or not.
You know, I'm in the early twenties. I don't know
anything about anything.
Speaker 2 (20:00):
You see. There is Look, I don't think we're going
to say this is a good way to do business
or anything, but I would say that a lot of
people who have had a successful first investment or any business.
I think there is a lot of people you talk
to and say, I'm glad I didn't know too much
when I did it, because essentially the most important part
is the big picture. Nuts and belts. Can you hang
(20:21):
in there and you make a commitment and then the
rest you just have to deal with. It's like anything.
It's like with producing concerts. I'm glad I didn't know
how difficult. You know, the stumbling blocks you would have
because you'd never get out of bed in the morning.
Is there a bit did you was ignorance and I
don't say we want to tell people just go ahead
and do things out of ignorance, but you know what
(20:42):
I mean, there's a sort of naivete which, thank goodness,
you didn't know everything.
Speaker 3 (20:46):
Is it right? I think that had had a lot
of things. But once you get that experience of buying
a property renting it out, you know you've got all
of these concerns upfront. Am I going to be able
to find a tenant? Am I going to be able
to find a good tenant? What happens if my tenant
damages my property? What happens if I don't have a
tenant for a long time. There are all of these concerns,
and once you actually get into it rented out, you
(21:08):
realize some of those concerns, Oh, they didn't actually happen,
and so that makes you more confident to go and
do your next week.
Speaker 2 (21:13):
It's a bit like what if the sky falls on
my head tomorrow? But tomorrow never comes hopefully for most people. Hey, look,
well you want to hear your experiences about the journey
you took to finding your first investment property. Give us
a call one hundred and eighty ten to eighty. We've
got some fascinating texts. We're going to get into it
as well, which we'll do actually right now. High Ed
love listening to your podcast. What do you make of
Chris Bishop's recent comments around this government wanting house prices
(21:38):
to continue to fall? What do you think the government
would do in order for that to happen? Thanks Charlene Well.
Speaker 3 (21:43):
First of all, Charleline, thanks for listening to the show.
We really appreciate it. And just for anybody who didn't
hear Chris Bishop's comments, he was talking about that. First
he said I'd love to see house prices fall, and
then with the journalists dig into what does that really mean?
Do we mean falling what you and I would call
full ie the average house price goes from say eight
(22:04):
hundred thousand to seven fifty or seven hundred, or does
he mean compared to incomes? Once the journalists really started
to affordability, it was more around the affordability. So when
politicians often talk about falling house prices, they really mean
that they want house prices to not change for a
long period of time while incomes go up. Now, in
(22:24):
terms of what the national government or national lead government
is going to do, their focus is really around supply side.
So if I compare that to the Labor government that
we had for around six years, they were really focused
on demand side measures. That's why they broadened the interest
deductibility rules, that's why they tightened up the bright line test,
and they were trying to say, how can we get
(22:46):
investors to stop buying so house prices don't go up
so fast. National's taking quite a different track. Thus, how
do we increase the supply of properties. We'll let investors
continue to buy, but how do we increase the number
of houses, and if we can get more supply going,
then actually house prices won't go up so fast. Big
thing that I think they're doing, and I don't think
(23:07):
anybody has picked up that the National government doing this.
It's quite clever.
Speaker 2 (23:10):
There we go. Brace yourselves.
Speaker 3 (23:11):
Is the change of the bright line test. So bringing
it back from ten years down to two years. That
is going to seriously increase the number of listings on
the market come the first of July, because there will
be a number of property investors out there who bought
in twenty twenty. They bore at a time where there
was a five year bright line test. Property prices have
now gone up, but so have interest rates, so they
(23:33):
could probably sell it for a tidy profit. And I
think there are a number of investors, number of investors
out there just waiting for the bright line tests to change,
because then they can sell their property, avoid the high
interest rates, and not have to write an eighty thousand
dollars check to the ID. So that is going to
increase supply, but not in the way that a lot
of people typically think.
Speaker 2 (23:53):
Well, and it won't. The irony is they might avoid
paying tax on the on the period of the bright
line test, But because there will be a a blip
in the graph of the number of properties coming on sale,
more demand means, sorry, more supply means that they might
get a slightly softer price. I guess yeah.
Speaker 3 (24:15):
And I think that we're going to see house prices
continue to kind of sometimes go up, sometimes go down
for probably another year or so. The number of listings
on the market has rocketed up over the last six
ish months. We are seeing a lot of properties out
there on the market, and so the total number of
listings that you would see on one roof or similar
(24:38):
websites has certainly been increasing quite a bit of the
last six months.
Speaker 2 (24:42):
Okay, let's get on some more texts, so you can
give us a call any time if you want to
chip in with your story on how you found your
first home or your first investment property, and what would
the hurdles you to overcome is we've talked about. In
the end, you can do the numbers and everything, but
there's this massive emotional side of things where I sometimes
think that if you're not one of these people who
gets emotionally hit up, you might be have a slight advantage.
(25:05):
This is from I think it's from Lee. My thing
about selling a house at the moment is this is interesting.
Don't insult the seller, but the seller may need to
not expect higher than the RV, but can work a
fifteen percent negotiating. I don't know what he's written here,
some strange things. Anyways, say Jone insault the seller. I
(25:29):
have to say, I don't think you want to insult anyone,
But if you want to make a cheeky offer, make
a cheeky offer. Who cares if somebody emotionally doesn't like
your offer.
Speaker 3 (25:38):
I'll give you a really good example of that. Tim.
I'm not sure if I could share this story, but
I'm going to do it either you're going to go
for it anywhere. So I was looking to buy a
house in christ Chuch, and this was for my partner
and I to live in. And so we were looking
to buy a house off the appearance of a guy
that I knew, right, and so I got this guy
to show me around the house, and I knew what
(25:58):
they wanted for.
Speaker 2 (25:59):
So there is a personal connection, which does make it tricky.
Speaker 3 (26:03):
That's why the story gets good. It's good.
Speaker 2 (26:06):
I'm clinching.
Speaker 3 (26:07):
So what it's up henic is I think they wanted
something like one seven five for it really nice house.
Speaker 2 (26:16):
Not last year obviously, well, and I.
Speaker 3 (26:18):
Was like, it's not worth that, So I win. I
looked at the comparables I want to and in fact,
you can go on one Roof's website and see what
what properties are selling in the area. It's really cool
where you can get this information for free about what
has actually sold and what were the prices of similar
properties in the area. So I go and look at that.
I look at the one roof comparables and I say, no,
(26:38):
it's not worth that. So I go in quite a
bit lower.
Speaker 2 (26:42):
Anyway, Okay, what did you go in at? I think
I reckon, I'm going to take a guess. I think
you went in at one thirty.
Speaker 3 (26:48):
No, no, no, no, no, I wasn't that bad. I
winned it. I went in at one five to five.
Speaker 2 (26:54):
Oh that's all right, that's not that's just that's a
change what I said.
Speaker 3 (26:58):
Anyway, I got some very nasty texts. We've made up now,
but we were just saying before that emotions sometimes get
the better of people in property and we need to
manage them. That's a good example of that.
Speaker 2 (27:12):
But the expectation was one seventy five and you off
at one fifty five. Yeah, that doesn't seem to me
to be if you'd said I'll give you one twenty
five or one thirty, then you can imagine them being
a bit upset. But that doesn't sound like you were
frightening the horses too much. But of course, feelings, feelings, feelings, feelings.
Speaker 3 (27:30):
But do you know the terrible thing as well, Tim,
is that I think I'd just written a column for
One Roof about how much discount is the average person
able to negotiate off the asking price. So if the
asking price is a million bucks of a house, how
much are people negotiating off that, and I think it
was something like seven to ten percent at the time,
(27:51):
and so I kind of thought, actually, my offers within
the realm of possibility, and I think maybe.
Speaker 2 (27:58):
That's you made the offer. Did they accept it?
Speaker 3 (28:02):
No, they didn't. But here's the good part of the
story here.
Speaker 2 (28:05):
So I am clenching a little bit.
Speaker 3 (28:06):
They ended up selling it so many months later for one.
Speaker 2 (28:10):
Six three so eight thousand dollars different.
Speaker 3 (28:14):
No, no, no, sorry, seventy grand seventy grand more one point
sixty three million.
Speaker 2 (28:18):
Oh oh my god, I feel so silly. Can I
just say, you know what I was thinking. I think
you were talking about years and years ago, back when
you could buy a property for seventy thousand. Okay, sorry,
I wish it was seventy thousand. Okay, So it was
one point one point seventy five million, and you off
and you wanted one, you are offered one point five
(28:38):
to five.
Speaker 3 (28:39):
I still I think it was reasonable.
Speaker 2 (28:42):
That is a real that's a lot of money too.
It's not like you went in and said, I'll offer
you a thirty percent discount. So they sold it for
seventy thousand dollars more than your offer.
Speaker 3 (28:50):
Yeah, But the funny thing is they really should have
counted and we probably would have done a deal that day.
Speaker 2 (28:54):
Yeah, you would have, and they would have had that
money for a bit longer and a bit Yeah.
Speaker 3 (28:58):
But the reason I bring it.
Speaker 2 (28:59):
Up asting now, is this going to create difficulties for you?
Speaker 3 (29:03):
I think we should be okay, I mean, who knows?
Speaker 2 (29:07):
Actually that does raise the question. I've got a whole
lot of questions have come out of that because the
other thing you talked about an asking price. Buyers love
an asking price. Anyone who's looking to buy who wants
to go no buyer? Does any buyer want to go
to auction? They want an asking price. They want something,
(29:27):
they want to know whereabouts to cast their rod in
the water. And is that part of you? Is that
the part of the decision making when you come into
looking for an investment property or a property is okay,
I'm only going to look at ones that are going
to give me a price.
Speaker 3 (29:42):
Yeah, I personally don't worry too much about that. But
first home buyers love an asking price. First home buyers
hate auctions because if you've got to go and bid
at an auction, you've got to do so much leg
work before you're able to actually stick up your hand
because any bids an auction are full unconditional. So it's
not like you can say, Okay, I'm going to put
(30:03):
my hand up at an auction and then I'm going
to go get the building inspector to go through. No, no, no,
You've got to get the building inspector to go through
before you put you up your hand at the auction. Now,
first home buyers hate that because then they've got to
write a check to a whole heap, not that there
are checks anymore. Do a bank transfer to a whole
heap of building inspectors first, because then you've got to
get a building inspeech and done for every house. Then
you've got to go get a prey approval for the
(30:24):
specific house at your bank. So first home buyers hate auctions.
They love a buyer's inquiry over a price, by negotiation
and asking price, those kinds of things.
Speaker 2 (30:34):
It's fascinating, isn't it. Will take a break. We'll come
back with more with Ed McKnight from OPS Partners. You
can go and check out there. There are website on
OPS Partners dot co dot nz. That's OPS. By the way,
I look at it as being OPS so it's like
Hopes without the HPES partners dot co dot and said,
I think you'll find it. Twenty minutes to five, new
(30:56):
Stork said, b I don't want turn them, I don't
want to give you mine, and I don't want to
need you no end of no one, none of your
time and no one stuff. Welcome back to the One
(31:16):
Roof radio show. I'm Tim Beverage. My guest is Ed
McKnight from Ope's Partners. We're talking about where and how
should you find your first investment property or your first
time Well, of course there's As the conversation goes on,
we diversify a little bit in some of the questions
we're looking at. If you're looking for a property now, Ed,
I mean, I guess you know the market. You don't
care whether it's auction or by private treaty or sort
(31:37):
of a declared price or price on application tender is
the one. I don't think you could ever get me
on a tender? What do you reckon?
Speaker 3 (31:44):
I just don't like those kinds of ones because I
don't like losing. I would have known what it takes
to win. Look, these days, I'm buying a lot of
new builds from developers that are kind of advertised price anyway,
which is what I prefer. I want to know what
the price is before you actually look at the property,
because did you either know, yes, it's going to be
doable for me, or actually, no, it's not.
Speaker 2 (32:04):
And you're taking a long term view as well, so
you like to know the numbers up front, and I
guess you're taking a long term view of everything you buy.
Speaker 3 (32:12):
Yeah, such just of fear we were talking about that.
I'm currently thirty one, and I don't think that I'll
sell any of my investment properties till I'm sixty one, right,
And I just think even if house prices only go
up by about four percent a year, which is roughly
what incomes go up by, right, So that'd be quite
a bit slower than what it's been in the past.
But even if I just hold those properties for thirty
(32:34):
years at four percent a year, they'll triple in value
over that time, potentially even more.
Speaker 2 (32:39):
It just makes it funny that I thought you were
talking about years and years ago that you could buy
a property in Christis one hundred and seventy thousand. Of course,
you would have had to be about twelve years old,
so bad.
Speaker 3 (32:49):
I wish I was purchasing property and crush yet to
it last twelve years old?
Speaker 2 (32:54):
Okay, right, let's take some We've got quite a lot
of texts here on the investment side of things, just
a simple mechanics. One from Shane says, do you only
pay a capital gains tax on the profit of you
that your investment property makes? Does your proper profit equal
price increase minus interest payments regards Shane, Well, there's a
(33:14):
whole lot of changes that have happened, Shane, or let
Ed explain all that.
Speaker 3 (33:18):
Yeah, so when it comes to brightline, you're only soon
going to pay it if you owned a property for
less than two years. But here's how the calculation under works.
It's what you paid for it, and then the increase
on that. But then you get to take off some
things like your real estate agent fees and any renovation,
any renovation costs that you actually put on there. In
(33:39):
terms of interest costs, those are specifically based on your
cash flow. So if you're a rental, if you're an
investor renting out of property, every year you'll file a
tax return with the ID right because you're going to
be getting some rent You're going to be paying out
some interest costs. You're going to be paying out your acts, insurance,
and maintenance, and you'll either pay tax or if you're
making a loss on your property, then you're not going
(34:01):
to pay tax, but you can carry those losses forward
sell it.
Speaker 2 (34:05):
Yeah.
Speaker 3 (34:05):
Yeah, So let's say I lost ten thousand dollars on
my investment property one year. If I then go and
sell my property and I make a ten thousand dollar
profit and am caught under the bright line test, then
those would offset each other, so I wouldn't pay any tax.
Speaker 2 (34:19):
Okay, good, good stuff. Here's another one. Hi, guys, our
latest property. We put in a bid for nine to
fifty k. Got a call from the only other bidder
he was pulling out, so we dropped the offer. That's
weird call from the other bidder anyway, So we dropped
the offer at eight fifty k and and got the property.
That doesn't happen very often. That sounds like an unusual
(34:39):
That was that was an interesting move from the other bidder,
isn't it like? Hey, by the way, I'm out go lower.
Speaker 3 (34:45):
Well, I'm assuming they mean they might mean the real
estate agent rather than the better they might they might
have thought the better.
Speaker 2 (34:51):
That's the way it's expressed. Says got a call from
the only other bidder he was pulling out.
Speaker 3 (34:55):
Unless they knew each other, which might have been quite nice.
So in that case, what must have happened as they
went to an auction the property got passed in, so
it didn't get sold. That's when you move into that
negotiation phase. Obviously, the person who had the highest bid,
they've got the first chance to negotiate. That must have
fallen through, and so they decided to negotiate with the
second bit. And it turns out if you actually got
(35:16):
that with one hundred k less than what you were
prepared to pay for it, that sounds pretty good.
Speaker 2 (35:21):
Yeah. Another one I think a lot of people struggle
with actually understanding what the bright line test is. It says,
we are wanting to rent out our only house. We
have owned it for twelve years, so okay, they've been
living living in it. We're going traveling when we return.
How long do we have to live in it before
the bright line comes in? Well, the bright line doesn't
come in, does it.
Speaker 3 (35:41):
Yeah? No, not in that case, because they will have
owned it for fourteen years. So I think what that
person might just have their wires crossed on is it's
not how long you've rented the property out for, it's
how long have you owned it? And there's a really
important distinction with these new changes team with the brightline test.
Previously it was all about when did you buy the property,
(36:02):
So it would be five years from when you bought
the property or ten years from when you bought the property,
depending on what type of property you bought and when
you bought it. That's all getting scrapped when the rules change.
Now it's going to be when did you sell the property?
So the new rule is at the time you sold
the property, have you owned it for two years? Yes?
Or no? If the answer you've owned it for more
(36:22):
than two years? Sweet, no tax to pay?
Speaker 2 (36:25):
Okay, good stuff. Hey, look we'll take a break and
come back and just a moment. The one the Property
of the week is next, and of course it's a
doozy and as I say, it's always like taking a
two minute holiday just going and looking at property and imagining,
wouldn't that be nice? It is now eleven minutes to
five news talk z B.
Speaker 3 (36:41):
She says, come on, I'd like to get to know you,
but I just don't think I can.
Speaker 2 (36:49):
You would one.
Speaker 3 (36:54):
See the plant down? That shot gone.
Speaker 2 (36:59):
I'll need a god down from and what come back
to the One Roof radio show. I'm Tim Beverage. My
guest is Ed McKnight from Ops Partners and right now
it is seven and a half minutes to five.
Speaker 1 (37:15):
The one roof property of the week on the Weekend Collective. Oh.
Speaker 2 (37:19):
Actually, speaking of Wellington, this is the one roof property
of the week. It's fifty three Palace A Road Rose
neath Wellington. It's a three bedroom, two bathroom. I'll give
the price in just a moment. It's a Californian style home,
one of the few houses with a prime location directly
above Oriental Bay. Much of the surrounding hill is dedicated
to council reserves, parks, walkways and cycle tracks. Yet it's
(37:39):
actually a great area around there, and as the blurb says,
properties isn't in this area rarely become available. As of course,
owners typically hold onto them long term and because well
they are a great spot. They enjoy the daily pleasure
of waking up to a world class harbor view and
city view and soaking up the evening sun. And I'm
having a trawl through it right now, and it does.
(38:02):
I mean they've presented it beautifully, lovely table outdoors for
having your friends around for a barbecue, fantastics, space to
store your bikes. And the views, I mean, goodness, the views.
And here's the price one point five nine mil so
one five nine five with three zeros after it ed McKnight.
(38:26):
You're probably having a look at it right now, are you?
What you reckon looks like it's like quite a nice property.
Speaker 3 (38:30):
It's just amazing the views that we get here in
New Zealand. The fact that you can live up up
on the hills above Wellington, look back at the city,
look at Orienttial Bay. You just think, gosh, that's wonderful.
Speaker 2 (38:42):
Actually, I know, you know, for many people, one point
six let's just round it up. One point six million
is a lot of money. But when you consider what
you are getting for your money in Wellington, that is
quite spectacular, isn't it.
Speaker 3 (38:54):
And the one thing that will point out is the
capital value on that. The CV on that is just
over two point two million dollars and in some parts
of the country, I know, r vcv all of that.
I mean, that's just a council value from years ago,
but people still look at it. Some parts of the
country are selling quite substantially under RV and CV at
the moment.
Speaker 2 (39:13):
Should I say, they say, quite, well, that's an interesting point.
We can finish off inquiries over one point five nine
to five hmm, so that's obviously sort of an asking price.
But inquiries over So what does that mean? What does
Ed mcknighto If he's interested, what does he bid?
Speaker 3 (39:29):
I'd still go under?
Speaker 2 (39:31):
Yeah, what do you do one point four seventy five?
Speaker 3 (39:34):
Well, the first thing I'd do is I'd look at
the comparables to see what's actually selling, but I'd tend
to go under it. Now you might miss out on
a couple of properties doing it that way. Obviously they
probably want something a bit more than that. But I
always think there's always going to be another house.
Speaker 2 (39:47):
So the other one that's tricky. I think we've got
about what have we got a minute and a half
to cover, so we're just for conciseness. But I always
think that if you're a people person you like to please,
you really have to resist being too friendly with real
estate agent because they are working for the other side,
and you have to remind yourself that you can't and go, wow,
we've probably got another hundred thousand, just quietly.
Speaker 3 (40:08):
No, you'd never do that. I think. Be nice to them,
but you don't want to tell them everything.
Speaker 2 (40:13):
What I mean is, don't forget that they're not working
for you. And if you indicate that you maybe have
a bit more room to move on the price, and
you don't want them to know that, then do not
tell them that.
Speaker 3 (40:23):
No, you'd have to say, oh them on the real
estate agent, Oh you know, the bank really it's getting
a bit tight for us. Can't go that high.
Speaker 2 (40:31):
Ah. Good line. Good line. If you take nothing from
this show apart from that line from Ed McKnight, just say, look,
the bank's really tough. You know how things are. Money's tight. Look,
we don't really have any room to move on that,
So come back to me. I sound like I've got
more of a bit more participation in the market than
I actually have. But anyway, hey, Ed, thanks so much
(40:52):
for your time, mate, and we'll look forward to having
you in again. See you again and go to Ops Partners.
Dott Cutter in Zed and don't forget to check out
that fifty three palace the Road rosneath Wellington City on
the one Roof site. We will be back with the Parents' Squad.
Sarah Chapman joins us, talking about what if your kids
are choosing a career which is going to make them poor?
Do you japan backcone a minute?
Speaker 3 (41:12):
Thanks my man.
Speaker 2 (41:13):
Every time I related.
Speaker 1 (41:16):
For more from the Weekend Collective, listen live to news
Talks it'd be weekends from three pm, or follow the
podcast on iHeartRadio.
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