Property investment is deemed one of the causes of the Auckland housing crisis and last year the bright line test rule, and 70% LVR on Auckland rental properties came into effect to target investor activity. In March however property values took off again, and property investors remained in the firing line of blame causing some investors to question their choice of investment and it’s impact on the property market and in particular first home buyers.
The suggestion, property investors should limit the number of properties they own to a couple; actually inspired some intelligent comments from PropertyTalk ’s regulars. Most notably was comment about the challenge with owning just one or two rental properties on cash flow.
When an unexpected expense arises; such as a hot water cylinder replacement lack of excess cash flow results in the investor dipping into their own pockets. Therefore investors, many whom are accidental investors with one or two rentals end up selling their investment properties sooner than desired due to a lack of funds to service them. Remember most investors want to hold their rental properties into their retirement for the extra income.
Here is the response from a PropertyTalk member:
“I think one or two would be the death of property investors. I’m currently having a problem with a pipe thats burst. Had to get part of wall & vanity removed, plumber does his thing blah blah fixed. Oh a hot water cylinder in another property, oh busted mains on my side of meter in another. If you didn’t have a few more to offset repairs you’d be down the road with your tail between your legs.”
from this property discussion.
While the blame game continues to rage on unabated, PropertyTalk provides property investors with a forum to debate news and views and allow commonsense to prevail.
This blog article was written for PropertyBlogs by Mobilize Mail.