We decided to make a trip out of it, so we picked up a “relocate” camper van from Christchurch tp Auckland, visited some clients along the way, and went white baiting on the West Coast as well.
We were spoilt by beautiful weather , and met lots and lots of friendly Kiwis. Yes, we got some whitebait too – great fun.
After the Nelson conference,
In the morning I got talking to the motel owner, again another friendly Kiwi. The motel was only six units, and oldish, but quite comfortable. The night receptionist pays $100 pw rent for checking people in at night.
However the owner told me he would prefer to hire a manager rent free if he/she would clean and manage as well, but he can’t find good honest people who will do it.
Having run a small motel ourselves in the past, we know that six units is easy, and this motel gets lots of overnighters, catching or getting off the ferry, so they don’t cook or make much mess.
What an interesting opportunity of a young couple with a young family who are trying to save for a house.
Rent free, 2-3 hours work daily, mother or father can work, and one of them can be at home with the children, while they save for a home.
If you do the sums, you might find this is actually better all round than both parents working, then paying tax and day care fees.
The catch – someone needs to be there 24/7 - or do they? An outside phone for potential guests, they can ring you on your cellphone, which would allow you to pop in and out, so you can pop back if not far away – only 6 units remember.
Most of us could find a friend, parent, granny or aunt who would mind the motel while we had a day out, or a weekend off.
The owner said he would sell it for about $475,000.
For $475,000 you get a home and income. Not huge profit, perhaps, as it is an older motel, but if well organised the motel proceeds would probably pay most of, it not all, the mortgage.
Remember last week’s article - get someone else to pay some or all of your mortgage.
And the motel structure was sound – new paint and some clever décor and to make it homely would make a huge difference.
High debt in NZ
Reserve Bank Governor Graeme Wheeler in mid-November said that New Zealand’s financial system remains sound, and the biggest risk to the financial system is the high debt NZ households have.
The banks have are highly exposed to the housing market, with house prices are rising from already-overvalued levels, particularly in Auckland and Christchurch. This is increasing the risk of a future house price correction that could result in significant financial system stress.
Other risks to financial stability were high levels of debt in the dairy farming sector.
High debt equals stress
No doubt some people will say “What's the problem? We scrimped and saved to get into our first house, and we eventually got there financially."
House used to cost 4 times the average wage, but now cost more like 8 to 9 times.
High debt can mean mortgagee sales
Mortgagee sales of farms and homes are quite common, but are seldom publicised.
Is this excessive borrowing worth the awful social costs?
Money stress is known to be the no 1 cause of divorce.
How many innocent children are suffering as a result?
Or even worse, 540 suicides in NZ in the past 5 years.
150 of them were farmers.
Some of them were leaky home owners in impossible financial straits.
Hence we have to look for a better way than a massive mortgage when buying a home. Last week we gave you a number of ideas, and managing or owning a motel is another option.
There’s always a way – you just need to be inventive, open minded, and not necessarily accept the status quo.
Supplied by Alan Clarke, financial & retirement adviser, & author. His second book is virtually complete, & he also writes regular articles for the media & on line – see www.acfs.co.nz
Alan is an independent authorised financial adviser (AFA) FSP26532 & his disclosure statement is available on request and free of charge.