Buyers Guide

10 Steps to Successful Buying

Your Ray White Property Consultant can help remove any stress and simplify the entire process for you.

The process of buying a home may seem complicated, but if you take things step by step, you will soon be holding the keys to your own home! Listed below are some ideas that may help make the process much more satisfying and enjoyable.

1. Figure out how much you can afford.
Talk to a mortgage broker or bank so you know how much you can afford to borrow. This depends on your income, current monthly expenses, deposit and the current interest rates. Use a mortgage calculator for a guideline, but don't forget to take extra expenses needed to cover moving, insurance, etc into account. It is also a good idea to do your homework and talk to several lenders to compare costs and interest rates and perhaps negotiate to get a better deal.  We recommend Loan Market.  http://www.loanmarket.co.nz/talk-to-a-broker/

2. Make a ‘wish list' of what you're looking for in your new home.
Break your list into "must have's" and "nice to have's". For example: Must have...three bedrooms and a study, and be close to good schools - and Nice to have...fully fenced, with a view.

3. Research areas and prices.
Use the internet, local papers and real estate publications to investigate prices and housing styles in different areas. The internet is particularly useful if you are moving between towns.

4. Decide where you wish to purchase.
This will be based on what you can afford, transport, schools and family lifestyle. It is important to be flexible with your area selection.

5. Property Title.
Once you find a home you like, check what type of title the property has: freehold, leasehold, unit title or cross lease. With leasehold properties, check how long the lease has to run and what the annual land rent is. With apartments or terraced complexes, check whether the property has a body corporate or other associated fees.

6. Specialist Inspections.
If you are serious about a property, but unsure of structural issues, you should arrange for a building inspection by a building inspector or qualified trades person.

7. Making an offer.
When you make an offer on a property, If the seller counters your offer, your  agent may need to negotiate until you both agree on the terms of the sale.

8. Deposit.
When you have reached an agreement with the seller of the property, then unless otherwise stated on the agreement, a deposit will be payable. This is usually around 10% of the purchase price. Deposits are held in Ray White, Lamberton's Realty Worlds Ltd trust account.

9. Final inspection.
You have right to make a final inspection of the property prior to settlement to ensure it is in the same condition as when you first inspected it. This can be arranged for you by your Ray White agent.

Planning To Invest

Buying real estate, whether you are buying the family home or an investment, is one of life's most important financial decisions. However, in buying an investment property, it is wise to remember that you are making a business decision. You are not buying from the heart but from the head. You are buying the property because you are either expecting it to appreciate in value or you will be be expecting a staisfactory return on your investment. Common mistakes made in investing are that people look for the same things they would want in a home or buy in their local area so they can 'keep an eye on it'.
In searching for a residential investment property it is important to consider three things:

Look for a consistent streetscape. A mixture of conflicting building styles lowers the desirability of the street.
The property should be located within easy walking distance of all amenities.
The street should have potential.
As a business and financial investment decision, it is important to make your purchase in a methodical way:

When investing, it is important to assess your current financial position. What are your cash reserves and what equity do you have in your present home? Look at your long term objectives, for example, will the property be part of your retirement financial plan?

Potential changes to your current situation should also be factored in such as the birth of a child or the loss of one income. It is wise to seek advice from an investment adviser or qualified financial planner to help determine goals and strategies.

Decide on your strategy

Some properties provide good rental returns but have little potential for capital growth; for some the reverse is true. It is more difficult to find the ideal of high yield and high appreciation potential.

It is important to decide on your strategy before you start you search.

Assess the financial capability of the investment

You should try to assess the soundness of your investment. Study the capital growth history and the potential rental income.

If you are familiar with computer spreadsheets, try to analyse the impact of an interest rate change or a potential vacancy period.


Shop around for finance
The choice of your loan can be just as important as the choice of property. Some lenders have a different (and higher) rate for investment; others have the same rate. Some lenders have a package where your entire borrowings are just one big mortgage but with different accounts with different features. In this competitive environment, it pays to shop around.

Obtain professional property management services

Professional property management, by the team at Ray White, frees you from dealing with tenant issues and gives you more time to concentrate on your portfolio. Your property manager is also up-to-date with changes to the Residential Tenancies Act and is better suited to negotiate on your behalf should the need arise. He/she is also in a position to obtain credit checks and references on potential tenants and has access to tradespeople. If you prefer not to meet to your tenants then a professional property management, by the team at Ray White is definitely recommended.

FAQs for Overseas Residents Buying Property in New Zealand

Is property in New Zealand a good investment?

Presently New Zealand properties are exhibiting both strong rental demand and returns (yield) and (capital growth) in both city and country areas. These are the characteristics of a sound investment. It must be remembered that there is a degree of risk associated with any investment and past performance of an investment does not guarantee future performance.

As an overseas resident, how do I purchase property in New Zealand?

It's easy. Once you have found a property on the website, you can contact the agent and negotiate a price. The next step is ensuring your finances are in order. Most New Zealand lenders, may be able to help you borrow against a New Zealand property, even as an overseas resident.

As an overseas resident, will I be charged stamp duty or other taxes on the purchase price of an investment property in New Zealand, and if so at what rate?

Unlike many other countries, there is no stamp duty or other taxes applicable on acquisitions or loans on investment property in New Zealand. There may. however, be an apportionment of property rates payable on settlement. Other than this, the agreed contract purchase price, is what you will pay.

If I sell my investment property, will there be capital gains tax payable on the profit?

Unlike investment property in many other countries, if you sell a New Zealand property the profit you make on the transaction will most likely not be subject to capital gains tax. In these circumstances, you may need to declare foreign source income or foreign assets or property on your tax return. We would recommend that you make your own enquiries with a taxation advisor or accountant about your own tax affairs.

Am I able to claim depreciation on investment properties?

Yes, the rate of depreciation in New Zealand is 4% per annum on buildings regardless of their age. You are also able to begin depreciation from the date of purchase.

How do I go about borrowing for a New Zealand property once I have found it?

Most New Zealand lenders will provide finance for oversaes residents with New Zealand property as the security. Ray White Tokoroa have access to lenders who can arrange finance under these circumstances. To contact us phone + 64 7 886 8229.

Are there any restrictions on Overseas investors buying New Zealand property?

The New Zealand Government is generally welcoming to overseas investment, but if you are unsure of what restrictions apply, the New Zealand Overseas Investment Office are responsible for administering the New Zealand Government's foreign investment policies.

NZ Overseas Investment Office Web Site:

http://www.oio.linz.govt.nz

NZ Overseas Investment OfficeGovernment Web Site FAQs:

http://www.oio.linz.govt.nz/faq.htm

Disclaimer:

Information provided here should be used as a guide only and Lamberton's Realty World Ltd do not guarantee its accuracy. This Information should not be regarded as a substitute for professional legal or financial advice and should not be relied upon in any way. Before proceeding with any investment, we recommend that you seek your own independent advice from a qualified accountant, tax advisor or financial advisor.