Should we sell before we buy? Should we sell before we buy?
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How do I prepare my home for bushfire season?

What is a timeshare property investment?

When you invest in a timeshare property, you purchase the rights to use a unit in that property, often a hotel or resort facility, for a set period of time each year.  You pay a set administration fee each year for this service. You can usually trade these rights with other timeshare owners, enabling you to purchase the rights to holiday at a different time of year, or to purchase accommodation in a different location or resort.

Note that you never actually own the property, just rights to use the facilities.  New Zealand timeshare sales are covered by law through the Securities Act. This requires the promoter of the timeshare to register a prospectus and distribute an investment statement to potential purchasers.  You are paying up front for the rights to use the property for many years to come, so it's important that the company which owns the actual property is financially stable.

Timeshare resorts and exchanges associated with the New Zealand Holiday Ownership Council will need to abide by that body’s code of ethics.

Will my superannuation be affected by living in a retirement village or retirement home?

Your basic NZ Superannuation entitlement is not affected by what assets you own or where you live. You can live in your own home, or elsewhere, with no penalty.

Work and Income New Zealand (WINZ) does offer a range of financial support measures which may be of interest if you are 65 or older. These include the Accommodation Supplement, Residential Care Subsidy and Residential Care Loan (to help you keep your home if you enter a rest home). Speak with WINZ or a financial advisor to find out if you are eligible for any of these support measures.

What else do I need to consider about Lifestyle Block farming?

When considering lifestyle block farming, make sure you understand all Council and local planning guidelines around zoning, permitted land uses, animal welfare and land care (including the control of noxious weeds & pests). Your local Council should be able to answer any specific questions.
You’ll also need to think about:
  • Lifestyle Block Infrastructure – Does the property have the fences, sheds, water pumps, dams, drains, bores, irrigation, water supply, tanks, house and general infrastructure that you’ll need? If not, how expensive will it be to add these, ensuring that each item is Council approval?
  • Soil and Water – Are recent soil and water quality test results available? If not, request these to ensure they meet your required standard - or hire a soil Engineer to undertake independent tests for you. If soil or water quality does not meet Council standards, you'll need to factor in the costs to rectify
  • Markets – Are you planning on transporting livestock or produce to local markets? Consider the distance and costs involved
  • Land Care – Weeds and pest infestations can be expensive to eradicate. Check neighbouring properties, access roads, adjoining state forests and water sources to assess conditions. Hire a land care or farming specialist to give you advice if you are in any doubt.  A little money spent up front can save a whole lot of money later on

I’m planning to buy. What rules should I follow to ensure I make a good investment?

When you're buying real estate for investment purposes, the location is really important.  It's often said that you should buy the "worst house in the best street", rather than the "best house in the worst street", because good (or up and coming) housing areas tend to hold their value better than neighbourhoods on the decline.
Buying your home in a well-connected and popular location that has the potential for further improvement is a logical approach.  When buying, look for:
  • Houses that are close to shops, parks, good schools and transport hubs.
  • Houses or apartments that can be renovated or freshened up relatively cheaply. If buying in an apartment block, be aware of the standard of other apartments in the block, tenancy profiles (and likely noise), and amenities.
  • Real estate that is close to recreational facilities, sports clubs or other amenities that are likely to be popular with the general public.
  • Housing that is positioned for energy efficiency (north facing).
  • Homes that are well insulated, in the floors, walls and ceilings.
  • Real estate in suburbs which are likely to see significant development.  
Real Estate New Zealand provides a helpful property inspection checklist

What sort of process is followed in a property settlement following a divorce or separation?

Dividing property or other assets following a divorce or separation can be achieved by a four step process with the Family Court.  The steps are as follows:
  • Application for Settlement: An application is made to the Family Court for a Property Division Settlement. You will be required to file information about the relationship, including the length of time you have been together, and your reasons for separation or divorce.  Your application should also include a proposal for dividing the property and other assets held (e.g. family home, other property, savings, superannuation, shares and investments).  Your personal debt and liabilities details will be requested, to assess your individual financial situation.
  • Judicial Conference: The Judge will call a meeting to discuss how the case will proceed, and to determine what items the partners already agree on.
  • Settlement Conference: The Judge will hold a conference to see if the partners can agree together on how best to divide their property. Lawyers for both sides are able to participate in this if desired.
  • Hearing: If the partners can’t agree, the Judge will hold a hearing and make a legal ruling as to how the property will be divided.

Can my parents help me buy my first home?

Parents or other family members may be able to help you to secure a loan that would otherwise be out of your financial reach.  There are a variety of options available for parents who wish to help, which are listed below:
  • If your parents or other family members are willing, they may be able to use the equity in their own property to help you buy your first home sooner. In this instance, they would take out a mortgage on their own property (and pay necessary interest), to provide you with the cash to make up your deposit.
  • If you don’t have a large enough deposit to meet the lender’s criteria for a loan, but you do have the ability to service that loan, lenders may allow your immediate family members to use the equity in their own home as security for your mortgage. In this instance, your family members do not take out a loan themselves, but their property is used as security on the loan (and can be sold if you default).  This is more palatable to some parents / family members.
  • Another option is to take out a “Family Equity Loan”.  This arrangement makes yourself and your family member joint borrowers on the mortgage. Both are responsible for repayments.  The debt servicing calculations are based on the incomes and expenses of all borrowers.
With all of these options there are risks involved for your family member. If you can’t keep up with your mortgage repayments, your parents may be required to pay off the remainder of your loan or, even worse, sell off their own home to cover your debt. 

What options do I have for financing my commercial property investment?

Most major New Zealand banks and specialist lending institutions are willing to provide loans for commercial real estate investment. Typically they will lend up to 75% of the purchase price, based on Loan to Asset Value ratios (and the debt servicing abilities of the buyer).

These lenders will consider a number of things when approving finance, including a review of the quality and length of existing (and upcoming) commercial leases.  This review will confirm the amount of rent you are likely to receive and local market factors such as property vacancy rates and property yields.  Lenders will also consider personal factors, such as other sources of income you might have to help you service the loan.

First National Real Estate has affiliations and relationships with many major New Zealand banks and lending institutions.  Contact your nearest First National branch for assistance with finding a commercial property, and the finance to buy it.

Can I negatively gear commercial property?

Negative gearing occurs when an investor borrows money and buys commercial property, but the rental income from the property does not cover the interest charged on the loan. Whilst this sounds a little crazy at first, there can be some positive tax benefits for the buyer due to the ability to claim losses against taxed income.

As the property is owned, it can benefit from the passive rental income generated, and any capital gains the property may make during the period of ownership.

Negative gearing is a risky investment strategy, because commercial property values are not guaranteed to increase. Unexpected interruptions in the flow of rental income, or interest rate increases, can put negatively geared investors under extreme financial pressure. For these reasons, negative gearing should only be undertaken by buyers who have the ability to absorb losses in the event of adverse financial conditions.

Consult your Accountant or financial advisor for more advice on whether negative gearing is a suitable investment strategy for you.

Can I use money in my KiwiSaver account to help buy a home?

If you’ve been in New Zealand's KiwiSaver superannuation scheme for at least three years, and are buying your first residential property (to live in), you may be eligible to withdraw money to put towards a home loan deposit. Where this is possible, you can withdraw your own contributions and your employer’s contributions, but not the $1000 New Zealand Government kick-start or any tax credits.

The KiwiSaver website provides further advice about this.

Is there a time limit on applying for a property division settlement?

In New Zealand, an application for property settlement must be made within 12 months of a divorce or the dissolution of a civil union.  For de facto relationships, the application must be made within a 3 year period from separation.
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