Investing Overseas

[Aceyducey]

Has anyone in the forum experience/stories/advice on investing outside of Australia?

So far we've confined our activities to the Mainland, but would be interested in anyone's experiences of pitfalls/successes particularly in New Zealand, Sout-East Asia & Eastern Europe.

Cheers,

Aveyducey

 

[tonyd]

Hi Aceyducey,

I control a property in NZ.

The good things about investing in NZ...
Great opportunities for positive cashflow properties (I'm happy with my 16% yield)
No stamp duty.
No CGT.
No GST on residential investments.
Wraps allowed.
The exchange rate.


The not so good things...
Low/zero/negative capital growth in all cities/towns except Akld, Wgtn, Chch, Hamilton and popular tourist spots.
It can be difficult to find a reliable property manager if you are not living there to check up on them.
If your property is negatively geared or has a paper loss, you can only offset the loss against future NZ profits.
Recent problems with poor building standards in Akld.
The exchange rate.

I'm a novice investor but I think that, regardless of where you choose to invest, nothing beats market knowledge!
Which means you need to go to these places and learn the market so you don't buy a dud... just like a Sydney investor looking to buy in Brisbane.
But you knew that.

Hope that helps!

cheers, Tony

 

[lawsjs]

Sometimes I dunno why I bother cos no one listens, but.... We are becoming a global village, if you cant work it out now, in years to come you will say 'why didnt I?'

When people say 'should I buy interstate?' I often think - for the pretty average returns interstate why not do the same thing and buy o/s? You would probably see the property just as much and the returns are so much better. BUT I am the only one who says this, and has actually done it, so I guess I am once again talking to the pot plant for all the convincing it will do......UNLESS I charged $15000 for a seminar (or a network of speakers ummmmm let me think of a name, HK enterprises or chargestlyer for example) in which case you would be jumping to pay...

 

[Jude H]

Hi lawsjs,

Last year I was trying to find out the ins and outs of investing o/s. Got stonewalled at every turn. Was speaking to REA's and Finance Brokers in England, Canada and U.S.A. Obviously I didn't speak to you. If you would be so kind, I am listening....

 

[yuch.]

Jude,

The property you bought in NZ, did you borrow from an NZ financial institute?

And does it affect your overall borrowing capacity here in Oz?

 

[silas]

Hi Acey Duecy

Hi I currently have one property in New Zealand and am currently revaluing and looking to get another couple in the next couple of months.

Feel free to email if you have specific questions or want any other information.

Mark

 

[Jude H]

Hi Yuch,

Tony D has property in NZ. I don't.

 

[Tony]

Hi Lawsjs,
I'm all ears on what you have done with regards to overseas property purchases & any other observations you may have.

Regards Tony.

Originally posted by lawsjs
Sometimes I dunno why I bother cos no one listens, but.... We are becoming a global village, if you cant work it out now, in years to come you will say 'why didnt I?'

When people say 'should I buy interstate?' I often think - for the pretty average returns interstate why not do the same thing and buy o/s? You would probably see the property just as much and the returns are so much better. BUT I am the only one who says this, and has actually done it, so I guess I am once again talking to the pot plant for all the convincing it will do......UNLESS I charged $15000 for a seminar (or a network of speakers ummmmm let me think of a name, HK enterprises or chargestlyer for example) in which case you would be jumping to pay...

 

[tonyd]

Originally posted by yuch.
Jude,

The property you bought in NZ, did you borrow from an NZ financial institute?

And does it affect your overall borrowing capacity here in Oz?

Hi Yuch,

I assume this question was intended for me.

Yes, I borrowed from a NZ bank - ANZ.

It hasn't affected my borrowing capacity because it is cashflow positive.
When I arranged a mortgage for my PPOR (in OZ) the banks wanted NZ bank statements and rental receipts to prove it wasn't affecting my OZ income.

I was living in NZ when I signed up the IP deal though (I told them I was going to OZ).

I just fired off an email to a mortgage broker in NZ get more info. I'll post it when I get a reply.

cheers, Tony

 

[simonjulie]

Tell us js
We might not have been ready for it last year but we are now.
Things like
Tax implications etc.
Kind regards
Simon

 

[tonyd]

As promised...

From a mortgage broker in NZ...

Yes we can arrange finance for Oz based investors buying NZ property. Most lenders are ok with this.

Non residents living overseas - proposals will be assessed on the strength of the application and on a case by case basis.

New Zealand citizens based overseas will be considered if they have good cash flow and meet the Bank's credit policy.


Hope that helps.

cheers, Tony

 

[Jas]

My understanding is that the LVRs are crap - 65%-75%.

Also tax credits are kept in the country, and can't be transferred...

But I never managed to get much further than that.

www.housemouse.co.nz is a place to start (he posts here sometimes)

Jas

 

[geoffw]

Also tax credits are kept in the country, and can't be transferred

Not my understanding, though could be wrong...

If you had two properties overseas, in two different countries, and one made a profit, and one did not, it's my understanding that the loss on one could be offset against the profits on the other property

However, you could not

1. Offset losses against Australian income
2. Offset losses against overseas income in a different class. So an IP loss in the UK could not be offset agaianst earned income in the US, UK, or anywhere.




Different subject- Jeremy, aren't you in Berowra? How did you fare with the fires?

 

[geoffw]

In response to the original question. I did have a property in England, which I bought while living there (in 1988), and renovated. Cost was GBP 50K - value two tears after (including reno) was GBP40K.

Needless to say, I did not sell then.

But the big problem I found at the time was that property managers did not keep me well informed. Inspections came up a treat- but when I went to visit 10 years later, the condition was really bad.

OK, I did not know that much about property at the time.

But it was "negatively geared" for the 9 years we rented it out- and I could not claim any of the losses against my income.

The losses could possibly be carried forward should I ever gain a profit OS again.

 

[Jude H]

Hi Tony,

Thanks for the info. Would you please supply contact details for Broker? Where is he based?

 

[tonyd]

Jude,

See PMs.

cheers, Tony

 

[Aceyducey]

Me too Tony!

Thanks,

Aceyducey

 

[lawsjs]

The L/V's I got in US were crap but with creative financing (10% down with a further 10% carried by owners) it wasn't too bad. I literally doubled my net worth in just over a year. My USA beachead is now self sufficient, and in fact the only positive geared property I own. It is now generating its own borrowings and building steadily. The USA is as I have said before is about 2-3 years behind us, UK 1-2. I want into the UK as the returns in CG terms are great. Rental returns are shocking, and it would be an alligator requiring feeding. That said, I am sure the returns in time would be great. Be aware housemouse is straight henry kaye, nothing more, nothing less. Wish her well, as an in for educated foreignors something I would entertain, but do so with your eyes open. Her investors WILL be burnt in time. I guess 1-2 years (which is completion date for most OTP properties currently being marketed) The argument that you buy at a 30% discount works only so long, sooner or later the valuers and banks lending will object to loaning 30% more for their other clients on the same property. Ipso facto 30% discount IS the market value!
The US is amazingly creative and huge. I would recommend going anywhere OS - at the very least you won't lose and it is FUN!

 

[Jude H]

With all due respect lawsjs you have not told us anything. Your first post and our subsequent replies indicated you had/we wanted knowledge. The ins and outs. As I replied earlier, I tried to invest o/s last year at was stonewalled at every turn. I even tried the famous Mr De Roos for advice with no luck. Question is simple. HOW do we, as non residents, buy/ get loans etc in an o/s country?
Who is housemouse?

 

[Mike]

Hi Jude,

As I am in the UK I can probably be of some help in finding some suitable property for you no charge. How positive geared will depend on your budget and therefore what area you can buy in to. Ripple effect at the moment has prices of top end property in London softening while best growth is outside London. Lending requirements in UK for IPs usually require rent to be 130% of mortgage repayment ie positive geared. That is not achievable in London with an 85% LVR loan because rental yields have fallen due to strong growth over the last five years. So securing a loan here will depend on the rental yield plus suitable deposit to ensure rent is 130% of mortgage payments. Bear in mind Landlords are not up for electricity, water, gas, telephone, internet or council tax. The tenant pays these costs so that improves cashflow substantially but doesn't figure in lending requirement which is based on rent as I mentioned.

When considering the importance of capital growth, bear in mind that London and S.E. England have best long term growth so investing outside that region may be good for short-term growth now but will eventually fall behind in the future.

Regards, Mike