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Ryan Smuts: I own a Kiwibuild, how do I make a start at investing in property?

Tuesday, September 22, 2020

IMAGE CREDIT: UNSPLASH

If you’ve bought yourself a Kiwibuild property you may find yourself in a position where you’re unable to get additional lending on the property, or rent it out for a certain period of time (often between 2-3 years depending on the development & agreements signed).

While things certainly seem rather restrictive, in reality you’ve just bought yourself ample time to get to a stronger financial position. The embargo period goes by quickly when you are focusing your energy on saving up for a bigger deposit, strategising and paying down your debts.

Once you are free to invest, you have two options (in general) to weigh up:

1. Keep living in the Kiwibuild and buy an IP: You could look at topping up the mortgage on your home with the help of a registered valuation to fund a deposit towards your IP. This is particularly the case for many properties in the current market where prices are appreciating quickly. Many homeowners are finding their homes worth more than what they had paid for. This coupled with any savings and debt reductions over time could put you in a strong equity position to continue borrowing. In terms of serviceability, some lending criteria has gotten slightly easier (depending on financial position) for certain clients, so your serviceability may also be in a stronger position too. It’s worth getting this part checked out by your mortgage adviser if you’re planning on purchasing IPs in the future.

2. Keep the Kiwibuild as an IP and buy yourself a new home to move into: By the end of the embargo period, your Kiwibuild building is likely to still be in very good nick saving you maintenance and repair cost in the long term. Lower operating costs can certainly alleviate the financial and emotional stress on first-time investors. Also, since May this year many banks (not all) are now willing to top up an investment mortgage to 80% instead of the 70% previously giving you a bigger buying power to get into your next home.

Both options have their own merits and drawbacks. I strongly recommend that you take some mortgage advice to determine which is best for you. In the meantime, keep on working and saving hard. Any extra dollar you can put away now will end up being a great help when it comes to borrowing for a second property later!

I’ve been really enjoying interacting and helping APIA investors achieve their goals. If you would like more information or arrange a consultation please do not hesitate to email me at ryan@krispedersen.co.nz.



ABOUT THE AUTHOR

Ryan Smuts 

Ryan is a Key Accounts Manager at Kris Pedersen Mortgages and Insurance as well as a property investor. 

 

 

 

 

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

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

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

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

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

Stella Shao

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

Stephen Weatherall

My APIA membership has become a total success.

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

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

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

Tim Duffett, Plan A Investments Limited