This will avoid nasty surprises at a later date. Better to spend $100 or even $200 at this stage than $300 or even thousands later.
It may also interest your readers that a property information memorandum (Pim) report or a land information memorandum (Lim) report does not in any way duplicate what an independent inspector's report covers.
The Lim and Pim only cover what the local authority has on record. It would be most unusual for it to include any dangerous or illegal work done by previous owners.
Besides this, electrical inspections are no longer mandatory for most wiring work, and there is no "permit" arrangement as used to be administered by power boards, so in many cases there is no record of who has done additions or alterations to wiring.
This could lead to fire or personal injury that has been caused by an illegal act, in which case the insurance company might decide not to pay out.
I'm sure you get the picture.
A. I get several pictures, the first one of the Money Matters page wrapping up a feast of fish and chips. It always puts things in perspective for a journo to see her deathless prose used that way.
But you read the article as well as eating the meal. Good on you. And I do appreciate your letter.
Some readers might respond: "Oh no, not another thing to worry about when buying a house. The list was long enough already."
But buying a house is not like buying a meal - and we all like to know what's in a meal (including one wrapped in deathless prose).
A house is most people's biggest purchase. As you say, discovering after buying that the wiring is bad - or worse still, discovering that after a fire - can be a huge blow.
For those who didn't read the August column, a man who worked for an insurance company said that some houses would not be able to get insurance coverage, or the coverage would be limited. Hence the suggested "subject to insurance" clause.
As I said in August, if a seller or agent objects to your adding these clauses to a contract, you have to wonder what they have to hide.
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Q. I would like to challenge the New Zealand Holy Grail. Why buy a home in the first place?
We have recently sold our first house and have taken a small loss - once all costs are taken into account. Currently, we are renting.
I earn $47,000, and we're paying $220 a week in rent while saving $50 a week. We have $120,000 invested through a financial planner, with no debts.
We are both in our late 30s with tertiary qualifications and have three children under four. My partner is a home executive - and darn good at it too.
Our decision is based on:
* We are at our financially weakest with only one wage. If we get a place that we want, our mortgage will be around $120,000 to $150,000. On one wage, we really are just treading water until my partner returns to the workforce.
* We are disciplined enough to budget and continue to save for the long term.
* People upgrade/beautify/glorify their home, often with the associated costs.
* Our goal is to travel and work less when we get older (55 or so).
Mortgage repayments appear the same if not less than the rent that we are paying. Under closer inspection - nice thing - insurance, maintenance and services exceed this.
We are fully aware of the vulnerability of renting.
Is renting really throwing away money? Especially if you have a lump sum and are saving for the long term. Or are we missing something really obvious?
A. No, I don't think you're missing anything. Renting is certainly a valid option, as long as you do what you are doing: save the difference between the rent and the total costs of home ownership, including insurance, rates and maintenance.
There are, of course, drawbacks to renting. As you say, you're vulnerable. A landlord might kick you out at short notice.
But you might be able to reduce that risk with a long-term lease. And, on the plus side, it's much easier and quicker for tenants to move when they want to.
The landlord will also raise your rent every now and then. But rates, insurance and maintenance costs go up, too.
And while mortgage interest rates go down as well as up, there can be periods when they rise much more mercilessly than rents.
Other drawbacks of renting: often you can't decorate to your taste. And while homeowners who enjoy DIY work or gardening can make valuable improvements while indulging in their hobby, renters can't.
Still, as you point out, many people spend lots of money - to say nothing of time - on such projects. If that's not your cup of tea, who needs it?
As I heard someone say recently, "Did you have a good weekend, or do you own your own home?"
On the financial side, homeowners accumulate equity in their house. That makes it easier to raise a loan for business or other investments.
And - assuming you would like the security of owning your own mortgage-free home in retirement - it's less risky to be in the housing market all along. Otherwise, if house prices rise faster than other investments, you could be left behind.
If your savings are going mainly into shares, it's likely they will grow faster, over the decades, than house values.
Also, it's easier to diversify your savings if they're not all going into a house.
Note, too, that we made an assumption back there: that you want your own home in retirement. As long as you have saved plenty, there's no overwhelming argument against renting until you die.
Many a retired person would love to be able to just ring the landlord when the roof leaks.
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Q. In 1992 I was made redundant. I invested all of my redundancy as a top-up of my super. At that time, our other investments totalled $80,000.
I immediately commenced a part-time job for four years, then both my wife and I retired.
In that period, we managed to live on one average income and invested the balance from my part-time work, superannuation annuity and compounding investment income.
My investment strategy was to buy shares and hold long term.
The approximate split of investments was as follows: 50 per cent in New Zealand shares (10 companies), 30 per cent in Australian shares (5 companies), 10 per cent in capital bonds and 10 per cent in overseas managed funds.
On retirement in 1996 we had tax-paid inflation-proof annuities for life of $26,000 a year. Our total other investments in shares and bonds had increased to $250,000.
At the end of year 2003 these investments had grown to a value of $600,000.
The overseas managed funds have been the worst performers of the group.
My investment strategy, preferring New Zealand and Australian shares, is mostly worry-free, and we have coped with the peaks and troughs the market delivers.
Dividend and interest income after tax is about $25,000 a year.
My question is: why would anyone prefer the worries and poor net returns of rental property investment?
A. Because they hope to get a big capital gain. And some certainly do.
Also, many landlords would rather worry about tenants than about companies over which they have no control. Some even enjoy developing a property. It's a personality thing.
You, like me, prefer the low-maintenance life of the investor in shares or share funds. We also have the advantage of diversifying away from our own home, and so on. I've said it all before. But not everyone listens.
Anyway, congratulations on your savings.
If you had asked me when you first invested, I would have suggested that you do the following:
* Put more in bonds, and increase the bond proportion over time. Bonds give steadier income for those near or in retirement.
* Put less in New Zealand and Aussie shares, and more into the international funds, to spread your risk.
* Spread your Downunder investments over a larger number of shares, or use a share fund to do that.
While you've done much better than many, with 15 different shares, it's far from ideal.
To quote a newsletter from stockbroker Brent Sheather, who sometimes writes for Weekend Money, "the academics reckon a 50-stock portfolio is the minimum required to get the full benefits of diversification. Picking 10 stocks for a client is in our opinion irresponsible, reckless and (if you are a trustee) liable to wind you up in court for negligence".
As it has turned out, over the period in question your allocation has done better than mine would have. But that's only over the period in question.
Chances are that it won't keep doing that. So you might consider moving some of your Aussie and Kiwi shares into bonds.
Then again, you have good annuity income, plus presumably NZ Super.
And you say you can cope with market volatility. You could do worse than to stick with what you've got.
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