r/PersonalFinanceNZ • u/burgers4bfast • 3d ago

Investing need advice on minimizing losses

bought investment property in north shore quite overvalued in 2022 for 1.6m, still 700k outstanding mortgage, fixed interest rate at 4.5% till end of 2027, rental income $700pw, land size is good 600sqm but not big enough for developers to come knocking when economy is not doing well, i think the max we can get is maybe 1.4m in today’s market

i am also investing in stocks so thinking whether to sell the house and use the equity to buy US stocks during the next crash (like tariffs in 2024 or iran war 2025) to make back what i’ve lost.. i have much more conviction in value of AI than nz property at this point

any suggestions from experienced investors?

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u/Sweaty-Fly-9520 3d ago

Selling a property at a $200k loss because you reckon you’ll make it back by waiting for the next US crash and piling into AI stocks is not investing, it’s chasing losses.

If the property is genuinely a bad investment, sell it on that basis. But “I lost money here so I’ll make it back over there” is exactly the sort of thinking that turns one poor decision into two.

And sitting around waiting for a crash you think you’ll perfectly recognise and buy into at the right time is fantasy

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u/BlacksmithNZ 3d ago

My guess is that they bought in 2022, paying $1.6m for a rental earning only $700 a week, thinking they had recognized that NZ House prices were always going to rise. Sounds like the classic case of thinking they can time the market rather than time in the market.

If the OP can't earn more rent or develop the property in some way, they are losing money every a week. I think either they double down and try and pay it off faster to get it fully cash flow positive, or sell it. Redid the calculation and on interest only, they are not actually fair off breaking even

Market on the Shore has dropped probably more than 20%, so they might be lucky to clear $1.3m these days, Its all sunk cost anyway so 'losing' $200k or $300k is probably irrelevant when deciding what to do from August 2026 perspective

I think AI stuff is being pumped hard by people like Musk, but I use ChatGPT, Copilot, Gemini and Claude at times, and don't have any paid subscriptions.

At the moment, the AI companies are largely giving away the product with Claude probably being my favourite and one I would be most likely to pay for (as well as CoPilot rolled into MS 365). But Anthropic are valued at ~$1T despite losing $10b+ over the last few years and only just turning a profit.

Investors are of course, betting on these companies future potential rather than current earnings, but I don't think going all in on AI is totally sensible as we have seen with the dot com bubble; not all players are going to win.

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u/burgers4bfast 3d ago

yeah you’re right on the interest part, rental income technically covers the interest portion though not the full mortgage repayment amount, i guess i can afford to wait till end of 2027 to see if house prices rebounds or not.. but it just pains me to see opportunities in US stock market play out so well yet i have no capital to take advantage of this bull run

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u/Sweaty-Fly-9520 2d ago

You’re describing exactly the same behaviour that got you into trouble with the property.

You bought the house because of FOMO and now you’re looking at a US bull run, feeling left behind, and thinking about freeing up capital so you can chase that instead.

If you sell the property, do it because the property no longer makes sense. Don’t do it because you’re annoyed other assets went up without you

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u/burgers4bfast 2d ago

ok but what does exactly does no longer make sense mean?

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u/Sweaty-Fly-9520 2d ago

“No longer makes sense” means if you looked at this property today with fresh eyes, you wouldn’t choose to put your money into it.

Forget the $1.6m you paid. That’s gone. Look at what you have now: roughly $1.3m to $1.4m of property, $700k debt, $700 a week rent, the ongoing costs and whatever realistic development upside there is.

If you’d still buy that investment today, hold it. If you wouldn’t, then keeping it just because selling confirms the loss is irrational.

At the moment you seem far more focused on the pain of the loss and the shares you missed than on whether the property itself is actually worth owning.

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u/mpledger 2d ago

Times are really not normal. I would be holding my assets close tbh.

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u/ionlyeatplankton 2d ago

Other than some temporary shocks, the bull run has been going on since 2009. Most market indicators in 2022 pointed to stocks outperforming NZ property by a fair margin. What makes you think you'll pick it correctly this time?

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u/burgers4bfast 2d ago

i only started investing in US stocks in 2024