How easy is it to buy a piece of home from afar?
Some overseas Kiwis are trying to buy homes from afar to come home to when the time is right.16 September 2020
438 Point Chevalier Road, Point Chevalier, Auckland
This year has been a hard time for those of you away from home and family in different parts of the world. As other countries’ handling of the global pandemic is in stark contrast to New Zealand’s, a number of you are considering a return home.
Chances are you’re in one of three scenarios. Some of you will only really feel like your plan to return is real when you buy a home back here, and you have the finances to take action right now.
For others, you’ll have to sell where you are first, bring the money back, then start your search.
If you’d like to buy before you return, and can’t buy with cash, you may be considering how easy it is to get a mortgage in New Zealand from overseas.
Most mortgage advisers here will do a swift intake of breath when asked if they organise mortgages for Kiwis who are living and earning overseas.
“It’s difficult, there’s no appetite for a lender to lend to someone with an overseas income,” says Mortgage Planners’ Gavin Lendich.
“It’s a minefield,” says Astute Financial mortgage adviser, Andrew Mackay. If you want to find a way, you’ll need a very good adviser, and you’ll have to be prepared to go through various hurdles made necessary by anti-money laundering legislation in recent years.
Every bank is different, he adds, and everyone has a specific situation. Some will own a home in the country they’re living in, they may own assets and businesses. Second tier non bank lenders can be more flexible and will look at every deal on a case by case basis and their interest rates are “palatable” says Mr Mackay.
Your re-entry to New Zealand becomes much easier if you have an investment property here already, and you’ve been paying off the mortgage with rental income. One of the first questions you’ll be asked when you start making inquiries are, what are your links to New Zealand, and this would make a great link. Alternatively, if you’re coming back to a job, that will give you brownie points with the banks.
Getting to know the NZ real estate market again
If your finances allow you to buy before you arrive in the county, there’s still plenty of work to do. Something you need to know if you’ve just started your Trade Me Property search in your area of interest, is that there are more buyers than sellers at the moment.
Well-located family homes are experiencing extremely busy open homes and attracting multiple offers so, if you’re out of the country, you’ll need someone who’s a real advocate for you on the ground and you’ll have to compete strongly on price.
If there’s a street you like, or even a house that you’ve always wanted to buy, and you want to see what prices are doing in that area, the Trade Me Property Insights Tool can be helpful. This interface allows you to view records, rateable values (RVs), estimates and recent sales for over 1.5 million NZ properties.
Real estate coach, blogger and investor advisor, Andrew Duncan, has worked with buyers from overseas and recommends going through the home with the agent on video chat. If you’re asking friends or family to visit the property for you, get them to do it as a video call so you’re still the one looking, and they don’t have to make a judgement on the home.
Remember, if you’re buying from afar, you’re not going to be able to see what the neighbours are like or what the wind aspect is. A building report will however show you plenty of warts and all photos which is useful if buying sight unseen, says Mr Duncan.
Consider a variety of options for that first property purchase
Buying an investment property as the first step could be a consideration, then you don’t have the pressure of looking for the perfect property.
“I would try and strip the emotion out of it. You might end up in a different town, but I’d try to buy in the biggest town you can afford with good population growth,” he says.
“Don’t let perfection get in the way of progress,” he adds.
If you’re looking at initially renting the home out, while you organise your departure from L.A. or London, or wherever you are, do your research on what the property could rent for. Mr Duncan suggests asking a local property manager as an unbiased source for this, with the incentive that you might use them to rent the home through. The Tenancy Services site is also a good resource for checking market rents, he says.
Nick Gentle from iFindProperty, who works with investors, local and overseas, says the best idea is to get to know an agent in a real estate firm who you’ll stay loyal to.If there’s a company selling a lot of property you like, don’t approach the selling agent, approach another agent in their office. They will have an incentive to help you.
“If there’s a rumour circulating that you’ll have to pay a certain price, they’ll tell you about it,” he says. “You need someone on your team.”
Just to whet your appetite
438 Point Chevalier Road, Point Chevalier, Auckland
She urges Kiwis overseas to do thorough suburb research. What are the schools like and what’s the community feel, for instance.
Find out what’s really happening in your chosen market.
“Other parts of the world’s markets may have slackened off but in Auckland, anything that is a good family home is going to be highly contested,” she says.
If you’re watching from afar, you’re not seeing the sheer numbers of people at the open homes or getting a feel of buyers’ responses to a property. If you don’t see the momentum, it’s very hard to visualise the competition out there. If a home is going to auction, ask how many registered bidders there are, she suggests
Ms Temm Munns reminds Kiwis abroad that agents aren’t lacking buyers right now so if you want your agent to help you, you have to hold up your end too. You need to be easy to contact, to give a clear range of budget, and, if successful, to stay on top of timing around when the property settles.
Make sure the company you’re buying from has a property management division, she adds, if you’re planning to put tenants in initially.
“Missing out a few times, may be the only way to learn,” she says.
Harcourts’ Wellington agent, Jane Park regularly deals with buyers who are trying to buy from overseas.
Her message is, don’t hold information back. “If they hold stuff back, we can’t help them,” she says. Be clear about your actual budget, for instance.
The more open you are, the more likely you are to succeed, she says.
“The market has hundreds of buyers to choose from, so it’s about giving us the truth and nothing but the truth.”