Firstly, many thanks for the newsletter. I find it very interesting and helpful in my work as a finance broker. Often I pass your details on to clients who are looking to invest for the first time. Some which have actually contacted you- or so they tell me. 

My query is about companies who pop up out of the blue trying to convince me that Property Options are the way to go.

All we have to do is give them an amount of money and they go looking for suitable properties and vendors who are willing to wait a year or 2 before selling, during which time this company will look at  improving the saleability of the property by gaining development approval or the like and then when the time is up they look to on-sell at a huge profit. In the meantime part of the money handed over to them is pooled and the return on this money (which is a restricted amount)is 3% per week! Lowest amount is $4,500 (with a $9,000 product fee) and the most at this time is $25,000 ($38,000 product fee) producing a healthy $750 weekly return! This goes on while they are looking to buy a property and is guaranteed for 5 years.

Is this one of those "Too good to be true" things or is it feasible.

They seem to be a hard sell group who pester you until you tell them where to go or do business.

A friend and colleague is considering this avenue and I'm concerned for his wellbeing.

Dennis & Sue

Thanks for your question and kind words about our newsletter. Go with your gut feeling and know that if it sounds too good to be true – it usually is!

You are right that there are always "interesting" people in the property industry and particularly people who make it sound easy.

Property investment is a long term business – not a way of making quick easy profits. It's very enticing to sell the concept of putting little or no money down and in a couple of years you'll make lots of money with minimal effort.

Of course that's not the way property works and that's not the way the world works. Be very cautious about giving your money to people unless you know their track record.

Think about it – why would a vendor want to sell a property today on an option for a couple of years? This is rarely something that happens to good properties – good properties get snapped up at market price and the vendors don't have to give an option to sell the property. I would advise to look at other areas to invest your money in.

Regards
Michael Yardney
Director – Metropole Property www.metropole.com.au

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Wallace, thanks for your question.

I would first ask what experience you have in property development? If you are not experienced one of the biggest dangers is you don't know what you don't know.

My understanding of the NZ property market is that it's still going to remain flat for a couple of years and I have found it very difficult to make development profits in a flat or falling market.

Don't believe what an estate agent or developer tells you, do your own due diligence carefully.

If you don't have the experience, ensure that a properly qualified independent source does your due diligence for you. In particular get a detailed pre-purchase feasibility study to ensure you've taken into account all the potential development costs.

Regards
Michael Yardney
Director – Metropole Property www.metropole.com.au

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Our family currently lives in a 4 bedroom house in Carindale, and we have recently bought an investment property out in Redcliff.The house that we are living in is to small for the family.What we plan on doing is to rent this house out and get another rental property to live in, as the houses in Carindale are expensive and we want to live closer to our kids school.The question is if we will still get the full tax benefit if we rent another property or should be rather buy another house again?

Regards
Chris and Emetia Grobler

Yes it' can be a lot more economical to rent somewhere yourself and claim the interest on the mortgage on your existing home (assuming it is geared up). I need more details to work out the numbers for you.

However if you wanted to buy somewhere to live in yourself and to have it all commercially viable and tax effective you need to discuss this with a Consultant from Chan & Naylor. We have an office in Brisbane. This can be done and is dependant on the numbers. 

Regards
Edward Chan
Chairman – Chan & Naylor Australia www.chan-naylor.com.au

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