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Property Investment

Real Estate Together is a unique realtor set up specifically to act for purchasers, not sellers. Extremely sensitive to the prospect of a new class of New Zealanders - Generation Rent - coupled with a retiring ‘Boomer’ Generation who haven’t been taught how to build a nest egg (it’s NOT through saving!) Real Estate Together is on your side. And we think it’s easy for most.

Why housing is a popular investment

To invest in shares, fixed interest, debentures or KiwiSaver you need CASH. Most of our investors have no cash, have never had any cash, and unless they foolishly embark on ‘saving’, never will. Yet spectacular wealth is made decade after decade on property. None of us were taught financial literacy and at Real Estate Together we are not financial advisers but we will illustrate how this all works.

Property investment in Auckland has always been a strong investment choice for Kiwis, and for the first time ever it’s cheaper to buy property in Auckland than rent it, making now the ideal time to invest.

There is a huge demand for affordable housing in Auckland due to immigration, more Kiwis moving to Auckland from elsewhere in New Zealand, and our strong economy. Statistics New Zealand forecasts that Auckland will need 400,000 new homes over the next 30 years to cope with demand.

Yet there has been a huge drop off in the number of affordable homes being built in Auckland due to a reduction in government spending in this area. The number of affordable homes that have been built since 1990 is 70% lower than in the 30 years previous, according to 2018 data from the Institute for Economic Research.

The huge drop in supply coupled with increasing demand makes Auckland housing a popular investment choice. However it also means that house prices have increased to the point where the average Kiwi is struggling to save enough to afford their first home, or to buy a house as an investment for later in life.

This is why we’ve created Real Estate Together, to help more Kiwis get onto the property ladder.

How Group Investing Works

As well as working with individuals, we also bring together small groups of likeminded Kiwis to buy properties together. Around $200,000 (which may be borrowed… be nice to your parents…) will get you a quarter of a brilliant brick and tile unit in an upcoming locale – and this is a fantastic start that has not been available before.

Group Together

We bring together a group of four likeminded investors, or you can invest on your own.

Group Contract

For groups, we provide a Group Investment Contract for investors and their lawyers to approve before investing.

Property Management

We rent out and manage your investment property providing regular relevant updates.

Arrange Funds

We organise the funds required for the purchase, which could include savings, a mortgage, or money borrowed from family. Our independent finance brokers ensure you receive the most competitive rates available.

Property Selection

We source a property for investment using our expert knowledge of Auckland's market trends.

Property Purchase

We manage the buying process, negotiating with the property vendor or bidding at auction.

Your New Investment Property

Available Now

You could own a quarter share in this property for $200,000.

Total buy price: $750,000

Historical increase in value of say 10% per year: $75,000

Net rental income approximately: $25,000 (after rates, insurance, management etc)

At 4% borrowing rates this pays a $600,000 mortgage

Simple and transparent

Our Fees for Groups

Our fees are simple and transparent. A fee of 4% of the property purchase price + GST is shared equally between investors. Additionally, for group investors there is a flat fee of $2000 + GST each for the legal documentation to bind each investor to his/her obligations (your solicitor will ok this).

Once the purchase is complete, we charge an ongoing fee for managing the property, which is 8.5% + GST of the rental price. This is the standard fee charged for an audited REINZ-controlled service within our highly regulated industry. If we need to find a new tenant at any point, a fee of one week’s rent will apply.

When the time comes to sell your property, we charge the standard professional market rate at the time.

Our Fees for Individuals

1)  Usually a flat fee of $20,000 + GST.

2)  If a property presents as a classic Real Estate Together (RT) target and at an advantageous price it will sell immediately and we miss out. RT has now set aside funds to buy for its clients “on the spot” and in our own name. Given the costs involved in this with financiers and lawyers our fee for these transactions is 3.5% + GST. Of course as always, these transactions are ASSIGNED to you at the original price, no matter how “well” we have bought. RT is your Agent and will never resell at a profit to clients.

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Risks and Considerations

Property values are tied to interest rates, how many buyers there are for your property, and how many others are also selling their properties at the same time. You may risk losing capital on your initial investment when you sell.

Buying a property can tie up your savings. If you invest most or all of your cash in property and then need access to cash, you’ll either need to sell, tenant your property or increase your mortgage. This isn’t always easy and there are usually fees involved. Your ability to sell your investment will also be dependent on the terms of your Group Investment Contract, if applicable.

Most people pay a deposit and borrow money to invest in property. Ask yourself how much debt you can afford to take on. Use your bank’s mortgage repayment calculator to find out how much you need to repay per month, and how much of your income is left to pay other household bills.

If you cannot find tenants, you will be required to cover the mortgage payments while there is no rental income. Make sure you have enough savings to cover these unexpected costs.

Your mortgage repayment will rise when interest rates go up, affecting your disposable income. A 0.5% rise in interest rate to 6% for a loan of $300,000, fixed for 30 years, would add about $110 more to your mortgage each month, or a repayment of around $1,800 per year.

If interest rates fall, and you choose to refinance a mortgage rate that has been fixed for a number of years, you might need to pay a penalty fee for breaking the terms. This may make your total loan repayment more expensive. It’s also possible to end up owing more than your property’s worth if its value drops. This is known as negative equity.

You need to think about your intentions when you first agree to buy a property. What you intended to do will determine your tax situation when you come to sell. If you buy with a firm intention to resell the property, then you will have to pay tax on any profit you make. This is separate to the brightline test. The intention to sell does not need to be the main reason for buying the property – it could be one of a number of reasons for buying.

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