Investing in Wellington, Lower Hutt or Porirua

[DontPanic]

looking at cheaper areas like Waimuimana for example, they have always had capital growth in the past, they have just been stagnant since the GFC wouldn't they follow on if the main centre starts to see momentum, I just see it as another Papakua or Ranui except you can buy with positive gearing today.

Brendon

[orion]

looking at cheaper areas like Waimuimana for example, they have always had capital growth in the past, they have just been stagnant since the GFC wouldn't they follow on if the main centre starts to see momentum, I just see it as another Papakua or Ranui except you can buy with positive gearing today.

Brendon

Why would it matter if it did stay stagnant in prices?

[DontPanic]

Just inflation proofing

[orion]

Just inflation proofing

Not sure what you mean?
What if there is no inflation for the next 10 - 20 years, or even deflation?

[DontPanic]

Then you are glad you bought positive cashflow,

Its in interesting how this thread about positive cashflow turned to a discussion about weather the market would go up

I agree with your strategy, and I understand your mindset, it fact I find it refreshing, we started out on these principals 14 years ago our first properties were 10-12% yield, then at the start of this last cycle 6-8%, next cycle in Auckland allowing for a correction we will have to be looking at 4-5% at best, we have all adjusted to it by factoring in capital gains but you don't end up holding onto much for long because you cant afford to carry it through a recession.

That's why Im liking this idea so much the 5% long term rates makes it work right now.

Brendon

Cheers

[BlueSky]

So Auckland is giving you poor returns,( and its not going to get better anytime soon save a crises so why not look at other regions where you CAN get positive cash flow?

If not then yes term deposits are alternative without having to do anything at all.

I think most people have the tendency of missing out (FOMO) -especially on the capital gains over the last 3 years. The latter is not sustainable. You have way go back a long way(years) before you get decent yields, All those people who bought in GFC , Auckland central hardly dropped in price unless you bought from desperate vendors below RV or bought 1 bedroom units and converted into 2 , hopefully consented.

[DontPanic]

Sorry I was referring to 5% interest on borrowing fixed for 5 years, it makes positive cash flow viable right now in a lot of areas in NZ

Brendon

[ivanp]

bought 1 bedroom units and converted into 2 (illegally in most cases).

would you care to elaborate this statement? i.e. what makes the conversions "illegal in most cases" (in your opinion of course)?

[orion]

Then you are glad you bought positive cashflow,

Its in interesting how this thread about positive cashflow turned to a discussion about weather the market would go up

I agree with your strategy, and I understand your mindset, it fact I find it refreshing, we started out on these principals 14 years ago our first properties were 10-12% yield, then at the start of this last cycle 6-8%, next cycle in Auckland allowing for a correction we will have to be looking at 4-5% at best, we have all adjusted to it by factoring in capital gains but you don't end up holding onto much for long because you cant afford to carry it through a recession.

That's why Im liking this idea so much the 5% long term rates makes it work right now.

Brendon

Cheers

Think of the market as what is - is, rather than cycles. It's all just a made up word for people to try to make sense of something they don't understand.
In other words, whatever the market is today is what it is. You can look back and make assumptions about why things happened and have pretty little diagrams or graphs, but it's all meaningless.
To keep it simple, if something makes sense today and fits into your plan and strategy and you are in a position to do so - then buy. If not, don't

The 5% interest rates would not cover much on a P & I loan unless you are using very large deposits for your purchases?

[BlueSky]

would you care to elaborate this statement? i.e. what makes the conversions "illegal in most cases" (in your opinion of course)?

Good point , wrong choice of words have corrected.

[ivanp]

It's not about choice of words. Even after correction, you assume you'd need a consent to add an internal wall or two to make a bedroom. The assumption is wrong.

[Kbkiwi]

It's not about choice of words. Even after correction, you assume you'd need a consent to add an internal wall or two to make a bedroom. The assumption is wrong.

In an apartment building? It has to be up to the buildings fire code standards, and also the new bedroom has to be up to building code standards for a living space in terms of ventilation and Window space, and also the maximum amount of people able to live in the unit would change. Somewhere amongst all that you might require a council consent at some point.

[Sebastian]

Hi Brendon

Wellington is heating up. An open home I went to on Sunday had almost 150 people through that day (standalone villa, do up, mid $400s, city fringe).

Instead of looking at buying a handful of cheap properties in the lower socio suburbs you've mentioned, how about considering a home and income in a nice central suburb. One of the really cool things one can do in Wellington is buy in excellent central suburbs like Newtown, Berhampore, Brooklyn etc and still get decent yields. These suburbs are full of character buildings, walk or easy bus to CBD, and plenty of young professional tenant demand.

Last property I bought was in Newtown, after a renovation it has 9.5% gross yield, delightful young professional tenants, and prospects for cap gains are significant as it's a character standalone house in an excellent central suburb.

Happy hunting.

Sebastian

[DontPanic]

Hi Sebastian
That's a very impressive yield, in a central location, was it just a case of buying something cheap because it was run down and then renovating it into something desirable,
Could you share some of the details and numbers of your deal, ie buy price, reno price, rent value at completion and the condition of the property and level of work undertaken.

I have experience with reno's but not in a different city from were I live

Brendon

[donna]

Last property I bought was in Newtown, after a renovation it has 9.5% gross yield, delightful young professional tenants, and prospects for cap gains are significant as it's a character standalone house in an excellent central suburb.

Happy hunting.

Sebastian

Hi Sebastian,

How much was the purchase price and what did the renov. cost? Just interested in how much you needed to invest etc.

cheers,

Donna