# Where to buy house with limited budget



## trang_vietnam (Aug 3, 2015)

We are planning to buy a house in NZ. Budget is arround $200 NZdollars. Donot eligible for mortgage. Which region would be the best with this budget?
Can I buy somewhere in Aukland, which is close to any University?


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## inhamilton (Jun 10, 2011)

No, you wouldnt come close to buying anything in Auckland for that price, except perhaps a fairly grotty one bed apartment. Your best bet is a small town in the Waikato with a view to bussing into Waikato University. Youd easily be able to find something in Invercargil in the deep south for that price but there is no university there. Just a polytech. Yot wont be able to buy anything in a University city for that price except perhaps something really poor in Palmerston North. Or maybe Dunedin. If you looking to bring a family with you while attending University here, youd find it very hard financially indeed, unless at least one of you was working or you have cash in the bank.


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## trang_vietnam (Aug 3, 2015)

then I think an apartment in Auckland is best for my budget


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## inhamilton (Jun 10, 2011)

trang_vietnam said:


> then I think an apartment in Auckland is best for my budget


I dont think your budget would allow anything in the central city, even a one bedroom unit. It might buy a very poor unit in a bad area of South Auckland but thats about it I think.


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## trang_vietnam (Aug 3, 2015)

I have found these apartment under 200$NZ. They are central, close to Uni and quite nice. Is this true or not????

Do Nothing - Realestate.co.nz

Fact Not Fiction - Realestate.co.nz

Britomart - Realestate.co.nz

Q Central Penthouse Two Bedrooms and Two Car Parks - Realestate.co.nz


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## escapedtonz (Apr 6, 2012)

trang_vietnam said:


> I have found these apartment under 200$NZ. They are central, close to Uni and quite nice. Is this true or not????
> 
> Do Nothing - Realestate.co.nz
> 
> ...


These are all leasehold properties.
Normally when buying a home you want a freehold property where the sale includes ownership of the building and the land it sits on. In Auckland the cost of a freehold property is massive. Average is now a tad over $1M in a couple of areas.

With a leasehold property it can be purchased for a fraction of the freehold price, but you will NOT own the land that the building stands on, only the actual apartment itself and as such only have the right to use that land for the remaining period of the lease and you must pay a fee to the landowner for that lease so you may be able to purchase an apartment for say $200 000 but you will then have ongoing ground rent payments. The ground rent costs are generally a fixed % of the value of the land the building stands on and then this may be shared further if there are multiple properties on that land. Typically around 5%

As an example let's say there's a piece of land in Auckland worth $10M. 
An apartment block is erected with 100 identical units and you buy one of them leasehold for $200 000.
The leasehold - as a total for the whole development is set at 5% of the land value so 5% of $10M = $500 000. This is split across all apartments so everyone pays a 100th of that cost so $5000 per year. This will generally be paid in equal installments over the year - maybe monthly ?
Every 7 years the lease will be reviewed and the land revalued. If the value of the land goes up then so will the leasehold rent. 

Risky way of buying a home in Auckland in my honest opinion as you cannot guarantee what the leasehold costs will be in the long term only the short term on application to purchase the property.
Also what happens in 20 years or 40 years or 60 years when there's less time remaining on the lease......can it be extended ? What if the landowner changes and decides not to allow an extension to the lease as maybe they want to do something else with the land.

Lots of research needed!!!


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## trang_vietnam (Aug 3, 2015)

thank you so much escapedtonz and inhamilton for your knowledge and thoughts on my concerns. it do open my eyes about buying houses in NZ.


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