Many buyers approach the home buying process, probably the biggest financial transaction in their lives, unprepared. They then deal with real estate agents, bankers, mortgage brokers, lawyers and others who are accustomed to property deals and in may times end up confused and frustrated.

The solution?

First, create a strategy that’s right for YOU!

Ask yourself these questions:

1. What am I trying to achieve? For some it is being in the right school zones, for others it’s about living stumbling distance for the local bar.
2. How long will I live in this house? Long term solution or just a step onto the property ladder.
3. Is my lifestyle going to change? There is no joy in buying a house and committing to a mortgage if you can’t enjoy overseas holidays and going out to a restaurant like you were used to.
4. Do I still want to travel or work overseas? Than buy a house that would be easy to rent out and maintain.
5. What type of ownership would suit my requirements, straight ownership, Ltd company or a trust? Speak to lawyer or accountant on how to best protect your assets.
6. Do I want to buy an investment in 2,3,5 years? Than buy a property that would allow you to create or generate enough equity for future leverage.

Second, create your own team of experts, people who can advise you on the many aspects of home buying.

These experts may include a solicitor or legal executive, a building inspector, a finance / banking adviser, a buyer’s advocate an accountant and a town planner.
Talk to them about what you should look out for when buying, how to structure your purchase, how to structure your finance and what you can or can’t do with your future house or land.

Third, become your own expert. Choose a suburb, an area or a building style and immerse yourself into it.

Study its the history, recent sales, common titles, average prices, better streets etc.

Connect with the local agents – they are a source of valuable information.

Drive and walk the streets and talk to the residents.

They will be flattered and proud you have chosen to buy in their neighborhood and tell you everything you’d want to know including properties that may be coming on the market soon.

Once you know the area and a property opportunity presents itself, you will be well prepared to snap it up quickly for the right price.

Part 2 (understanding Auction, tenders and price by negotiation) and part 3 (working with real estate agents ) coming soon.

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Sole owner

This structure provides ownership for one person who has total control of the property.

Joint Tenancy

A joint tenancy occurs when there is more than one owner of a parcel of land, and most importantly, it bestows a right of survivorship. Therefore, on the death of one joint tenant, their interest in the land passes to the remaining tenant(s).

Tenancy in Common (co-owners)

There is no right of survivorship, and on the death of one tenant in common, the interest in land will be dealt with in accordance with the tenant’s will.

Ordinary Company

The benefits of an ordinary company are the company tax rate of 33% and limited liability. The cost of incorporation of a company in NZ is about $NZ300 with annual costs about $NZ100 for an annual return. Companies of this sort are filed electronically and returns are also completed electronically.

Loss attributing qualifying company (LAQC)

The company’s losses are passed onto the shareholders which may then be used to offset the shareholder’s taxable income. The dividends paid from capital gains are tax exempt in the hands of the shareholders. However the shareholders are personally liable for the tax liabilities of the company. Read more about LAQC.

Family Trust

A Family Trust can be used to good effect to achieve a number of purposes including:

1. Protecting the long term interests of yourself, your spouse and your children
2. Removing assets from the scope of family protection or testamentary promise actions
3. Protecting your assets against claims by future creditors and predators
4. Protecting your assets against matrimonial property claims including the interests of your children against claims by their spouses and incidentally possibly maximising the benefits that can be obtained from Work and Income New Zealand
5. Possibly obtaining other tax benefits including avoidance of the impact of some form of capital gains tax or other
6. Replacement for estate duty
7. Enabling greater income tax deduction of charitable gifts

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