I bought an New Zealand property to prepare for my girl’s overseas studies: Here’s why
The thought of buying an overseas property for Mr & Mrs Tan, first came when they were chatting about education plans for Rachel, their 15-year-old daughter. The conversation started when they were sending Mrs Tan's nephew off to the UK to further his studies. They wondered if someday Rachel would do the same. As parents, they are always thinking ahead and planning for their daughter's future. They know how competitive it can be to secure a spot in Singapore universities of a chosen niche field, especially in medical school where Rachel seems to show interest in. They thought that going overseas for her studies will not just expand her education options, but also broaden her horizon and enrich her life experiences such as learning to live independently pre-adulthood.
Mrs Tan was at the airport sending her nephew off to UK for his studies
With that, the conversation led to potentially buying a property in advance, in the preferred country of choice, as a means to secure their daughter's future education
The unusual choice to go New Zealand
While exploring several countries as options for their daughter, New Zealand caught their attention. The Tans have been to New Zealand a few times and love the lifestyle, work-life balance, people, race equality, and overall environment. They see New Zealand as a potential destination where their daughter could continue to work after graduation. In addition, they also entertained the thought of potentially migrating there when they retire, to enjoy a different pace of life.
While New Zealand is not a usual or popular destination (as compared to Australia, the UK or the United States) that most Singapore parents would consider sending their child to for education, they see it as a hidden gem with plenty of good university options and future growth options.
The decision to not just rent a place
Solely relying on renting a place for their girl was a less desirable option
When we first met up, the Tans family shared about their plans and aspiration to own a property in New Zealand, but they are not sure where to start. In our conversation, they said:
"Instead of renting a place for our daughter when she goes overseas, we thought it would be more practical and beneficial to own a property in New Zealand in order for her to live comfortably and for us to stay over during our visits. It's better to pay a mortgage than to pay rent, such that I can still recover back the cost should I decide to sell the property down the road after Rachel graduates or continue to keep it as an investment since property prices are likely to hold steady and rise gradually. Moreover, this property could also provide us a springboard to upgrade to a larger or suitable property should we realize our dream to retire in New Zealand eventually"
The couple recognized the power of investing early in the property market, particularly in a country like New Zealand, where the prices are starting to rise. They knew that paying a mortgage was way better than paying rent, which ultimately is a sunken cost. With this in mind and after working out their finances, together we explored the various property options in New Zealand, particularly in the main cities where there are established and reputable universities that Rachel would potentially enroll into.
What if?
However, during our discussions, they had many concerns. What if their daughter decided not to go overseas for her studies, or chooses another country altogether? What if they bought a property in a city, and their daughter ended up enrolling in a university that is in another city? There were many variables at play that caused them to hesitate.
New Zealand is their top choice but what if it changes?
These are all valid concerns that were running in their minds and it's essential that we took the effort to take a step back and evaluate the situation. After listening to their concerns and discussing potential scenarios, we were able to develop a solid plan that provided flexibility in case of changes.
We decided to see the property as an investment first, and an option to stay as a second. If their daughter decided to drop the idea of studying overseas, the property could remain as an investment property, which they could sell off for a profit or keep for passive income once the loan is cleared. Moreover, if Rachel chose to study in a different city from the investment property, she could use the rental income to offset her own rental costs, provided the loan was paid up with no mortgage expenses on it. Otherwise, they are prepared to bear the rental cost for Rachel in a different city as they work out a comfortable budget. After-all, the equity gains from the investment property could potentially offset the rental costs and the profits from an eventual sale may also have the chance of funding the total tuition and accommodation costs.
In for the long game; investment is a good back up
She saw the benefits of investing in a property as a long-term financial strategy rather than just for immediate use. As such, we prioritize the criteria and we went on to identify properties with strong capital growth potential and consistent rental yields, taking into consideration the location and proximity to universities. That way, we position the investment to align with their plans with the best probability of success.
The Tans Family decided to buy a property in the beautiful city of Auckland
After careful consideration, the family decided to invest in a property in Auckland, New Zealand, with the intention of using it as an investment first, and a potential place to stay later on. Years passed, and while their daughter had yet to reach the age to go to university, they were pleased to see that their investment in the Auckland property had paid off. The property's value had gone up more than 18%, and they were earning a good rental income from it. The family now had a sense of relief, knowing that they had secured their daughter's future education and potential career path. If their daughter decides to study in New Zealand or live there after graduation, they have a place to stay. If not, they could always sell the property for a profit or continue to earn passive income once the mortgage was cleared. The family now looks back on their decision to invest in the Auckland property with pride and satisfaction. It not only secured their daughter's future, but it also allowed them to explore the beautiful country of New Zealand and its culture. They plan to visit the property soon and see how they can potentially extract equity out of the property through a reverse mortgage and use the funds to invest in more properties in New Zealand. Their investment in the Auckland property has given them a sense of financial stability and security, allowing them something to look forward to and to head towards their family's future goals and aspirations.
Should I Invest abroad, stay put or wait?
If you are reading this, you are probably wondering what your next best steps in your investment journey could be.
Perhaps you also a parent thinking about your child’s future overseas education plans? Will New Zealand market be a right fit for you and your family? Is this a good time to buy an overseas property, or should you wait and see?
Well, everyone’s situation is different. There is no one size fits all advice. What has worked for someone, may not necessarily work for you.
At Brickzwealth New Zealand, our aim is to bring clarity to your investment decisions with extensive on the ground experience for the overseas market.
Whether you are a first time property investor or a seasoned buyer with a portfolio, we are here to provide an honest and objective view to your investment journey.
We can help you by:
1) Providing Strategic property advice that best fit the outcome you desire
2) Identify & spot investment opportunities that align with your goals
Kick-start a conversation with us today. Invest differently. Inspire your future.
Ryan Quah
Founder
Brickzwealth New Zealand
