Posts tagged realestateagent
How to build wealth through property
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Owning property is an excellent way to build wealth. Historically, property has been a less volatile investment with real estate values invariably tracking upwards over time. What’s more, you have the added benefit of being able to “leverage” your existing real estate investment to buy an investment property using borrowed money and grow your property portfolio even further.

Using equity to grow your investment portfolio

How much equity do you have in your home or investment property? Enough to fund your next property purchase and grow your investment portfolio?

If you’ve owned your property for some time and provided you have the means to service a mortgage, you may be able to access the equity in your property to fund the purchase of your next property. Equity is the difference between your property’s value and the amount you still owe on your mortgage. It’s essentially the bit you “own” of the property and it can be used as a deposit to buy another property.

If you’re buying a residential investment property or you’re using a residential investment property you already own as security for a new loan, you’ll generally need at least a 30 per cent deposit. Instead of having to save up the cash for the deposit though, you could use the equity in your existing property to purchase another property.

Calculating the equity in your property

To calculate how much equity you have, you’ll need to know the market value of your property. You can use the valuation on QV or get a registered valuation of the property to determine its market value. You’ll also need to know how much you still owe on any lending secured by the property, which you can obtain from your lender.

Lenders will determine how much you are able to borrow by looking at a combination of your equity and income. Different lenders will have different lending policies and the combination of equity and income may vary from lender to lender.

Your potential rental income from the investment property you’re planning to buy will be included in the lender’s servicing calculations when determining your borrowing capacity. Contact a Harcourts’ Property Manager to arrange a rental appraisal to help you determine the likely rental income from the property.

You’re required to have at least 20 per cent of equity in your existing property after new lending is taken out if you’re using the equity in your family home, or 30 per cent equity if using your existing investment property. That means you could borrow up to 80 per cent of the value of your family home and 70 per cent on any investment properties you own, based on current loan to value restrictions.

Favourable factors are geared for an active 2020 market
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So, how is the market?


It's been a terrific start to 2020 and a strong finish for 2019.

There's an insufficient number of homes on the market to satisfy the large number of actives currently. We are finding that buyers are being more decisive when it comes to purchasing and moving quickly on homes in areas with high demand. You can see this is the case with the decrease of the median number of days a home is taking to sell in Manukau.


Manukau’s statistics


December saw a significant upsurge in activity both in the Manukau market and across the country. When comparing against the same time the previous year.

The median sale price for Manukau sits at $900,000 for December 2019. If we compare that figure to December 2018 which was $832,000, that's a rise of 7.8%. The number of homes sold in Manukau in December 2019 were 314 compared to December 2018 which was 295 - a rise of 6.4%.


Market highlights


The highest number of residential properties sold in three years nationally has been recorded for the month of December. The property market had a solid end to the year with a 12.3% increase in the number of properties sold in December 2019 compared to December 2018.

In Auckland, the number of properties sold in December increased by 31.7% year-on-year – the highest number of properties sold in the month of December since December 2015.

Sales in Auckland were the highest for the month of December in four years with an increase of 3.5% to $890,000 – up from $860,000 at the same time last year. Auckland saw the median number of days to sell a property fall from 39 to 34 year-on-year – the lowest days to sell in 2 years.


In summary


The high sales volumes have reduced available listings and with multiple active buying segments, this is resulting in a strong demand for quality properties.
Favourable factors are geared for an active 2020 market with prices likely to increase again, combined with low interest rates fuelling the confidence in the market.

Thinking of developing your section? Here's what you need to know.
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What your responsibilities are

Obtaining the building consent from council and resource consent (if applicable)
Employing designers, builders and tradespeople
Ensuring that all required inspections are booked at the appropriate stages of the building project and that any issues identified in these inspections are addressed
Ensure easements and covenants on the title are compliant
Apply for a Code Compliance Certificate when the building work is done (within two years of the building consent being granted)
Note: have a contract in place signed by yourself and the building contractor outlining costings; time frame of the build and the design plans of the home

Develop a good working relationship with your builder

If you have any concerns about the work, discuss them right away
Keep changes to a minimum and instruct your builder in writing about all variations to the specified work and ensure you get a written quote
Be aware any changes you make may mean you have to amend your building consent.
If you are responsible for choosing the appliances and any other materials or fittings and fixtures, make sure they are already bought when the builder reaches that stage
Ensure your architect or architectural designer is involved throughout

If there are any issues with the building work

Report any urgent defects to your builder promptly and in writing
List any non-urgent defects for your builder to correct at an agreed time
Often some funds are retained until work is completed satisfactorily but only with the understanding and agreement of the project manager as agreed in the contract

Sources: buildingguide.co.nz and realestate.co.nz