House purchase a superannuation step

Ruapehu Bulletin, Volume 14, Issue 655, 24 September 1996, Page 10

House purchase a superannuation step

Buying. his first house was not an ovemight decision, but for Andrew Hudson it was the first step in his superannuation plan. Moving back to his home town of Hamilton four years ago, Andrew set a goal of buying his own home by the time he was 30. He .missed his goal by only about two months. Once he saved enough for a deposit, he took the recommendation of his family and chose a well known local real estate agent to give him advice. "I talked it all over with him and told him about my long term plans. I only had the minimum deposit, so that really dictated what I was going to be able to buy." Looking back Andrew admits the whole process was relativejy painless. 'There was very little on the market in my price range really .. I looked at some abysmal outfits at first. "Then my real estate agent told me about a former state house that had been tenanted and was in a fairly run down condition. "However, the neighbourhood and location were good. It was in Hamilton East which is beginning to appreciate. Originally predominantly a state housing area, more and more of the houses are becoming privately owned. I also liked the fact that my agent told me property owners in that area could expect good capital appreciation." "It's a three bedroomed brick house that had been privately owned for a while. It had been rented out and was a bit tired and run down - the kitchen was abysmal and the carpet was shot, but you could see the potential, rimu doors, lintels and architraves and floorboards - all with about three inches of enamel paint on top!" The next step was to arrange the necessary finance. Once more he took the advice of his family and went to the bank his family already used. He said the bank manager was very helpful and I' m sure knowing the family made all the difference. It took him the next 12 months to get to the stage of getting his head above water. "Having a flatmate has helped. I was right on the limit budgetwise, but my flatmate has really taken the heat off." Once he moved in, he concentrated initially on tidying the house up. "I did the easy stuff first. Stripped paint off the doors, and ran a coat of paint over the walls and ceilings. Then I started budgeting to renovate the house." By just tidying the property up, Andrew made enough capital appreciation over the first two and half years to go back to his bank and arrange an additional loan to start his renovations. "The capital gain I made over that period was a good $50,000, so I went back to the bank and added $ 1 5,000 to my mortgage to improve the property." When it came to arranging what type of mortgage to take out, Andrew says he took advice again and settled for a fixed interest rate mortgage over a three year period. "I was lucky, I got a three year fixed rate at under 8 per

cent and with the way mortgages have risen this yea know I've saved a tremendous amount of money." With additional funds available, Andrew was able start major renovation projects. "Previously the kitchen was big and unusable. With i extra money I've been able knock a wall out to mak dining room area. I've put a new kitchen in that's half 1 size of the old one but with three times the useable spa "I also closed off a couple of doors, ripped the old 1 94 electric hot water cylinder out and installed gas, gi ving i enough space for a new laundry. I've also had new car] laid right through the house." Turn to Page

House purcha a superannuation step

FROM PAGE 10 He's also building new fences down one side of the property. "When that' s fmished the real estate agent that sold me the house tells me it will be worth around $139,000." Andrew says that while the renovations haven't added substantially to the capital value of his house yet, he wanted to live comfortably and enjoy his home. And the next step in his superannuation plan? "I really like my house now and I'd like to hang on to it. I figure in about two or three years I'll be able to buy another house and do the same thing again. My plan is to have half a dozen places by retirement. "I've gone from buying a home for $83,000 four years ago to one that's worth around $139,000. "It's by far and away the most sensible investment I've ever made. If I sold the house today I'd be walking away with at least $50,000 to $60,000 - far more than I could have saved in that time."