Is it a good time to buy in Auckland?

[elguapo]

There are a hundred reasons why somebody sells a house as I am sure you are aware.
Death, divorce, owners upsizing downsizing relocating.
I think maybe you meant why would any INVESTOR sell. Answer is they shouldn't unless they are cashing up IMHO.

What I meant was why would someone sell a house at a price anywhere near cash flow neutral given what your positive outlook on Auckland real estate? Both properties I'm selling will be yielding well under 4%, if Auckland's upside is so great, you'll be an eager buyer of them won't you?

[Damap]

The right property can be a deal at 4%. Obviously I meant ideally cash neutral at purchase price but I would buy in say Bucklands Beach on a 5% yield and put in a bigger deposit to make it cash neutral.
Everybodys experience is different but mine has led me to conclude buy quality and hold it. Find a way to hold it. Don't buy cheap crap, don't buy in bad areas even for cash flow. Find a way to make quality work because it will set you up for life.
So that is my mantra but by no means what another person should do. That is for them to figure out. If I had a better run in Otara for example maybe I would think opposite I don't know!

[donthatetheplayer]

100% agree with Damap. Of course there are other strategies but this is the safest in my opinion. And probably easiest but you generally need a decent income to make it work.

[JTC]

I think there is still a housing shortage in Auckland and there will be a lot of external and internal migration to Auckland over next two years. That's where the jobs are / will be. There is a lot of consenting happening but that doesn't convert to finished houses immediately. There is a major shortage of skills in the building sector and I'm picking the cost to build new homes will only go up - quite strongly mid to later this year. A lot of the building will be in outer areas. Whilst people like new houses I like proximity to the CBD or other good amenities.

New Lynn has had millions pumped into it with lots more to come. It has a major train station and once the Waterview connection is complete it will be even more desirable. Prices have risen a lot around here but they are still not out of reach for first home buyers and young new migrants so I expect demand to continue to be strong. You can get some ok yields on properties in New Lynn but they are not without some risk - some need remediation. They are not for me but I am sure some other investors will do well if they can stomach the risk.

I am currently closing a deal for a property in Titirangi. Yield is not high but I have good cashflow and am more focused on quality properties than high yields. It's better for me to focus on my business and income from that than spend the time it takes to find the 7-8% yields others can find. I can spare $100 a week. With some very minor work I know the property I'm buying will have instant equity so that's a good result. West Auckland has been good to me over the past few years. I think it still has a way to go yet.

Although I don't own property there myself I can't help but think Kelston, Glendene and Sunnyvale offer some good buying opportunities.

I live out west - What yeilds are you getting in West Auck that only cost extra $100 a week out of your pocket???
- ive been crunching numbers on property in Tauranga and an 8% yield is at least negative $100p/w. (after costs)

[donthatetheplayer]

Something is wrong there JTC. You should be positive at 8% yeild. Latest purchase is 4.7% gross yeild. After interest, rates, insurance and maintenance I top up $148. After tax deductability at 33% it's $100 out of my pocket. Are you doing principle and interest perhaps??

[speights boy]

Wife read John Bolton's recent articles and now has the speed wobbles.

For those interested in reading John's latest article.

Fixation with short-term news delivers false security

[BigRedDog]

What do u reckon Speights?
you seem a smart fella judging from your posts

[speights boy]

Ha...'fraid not BRD.
I'm not the right chap to ask really, because property is not a major part of my net worth anymore.
I am very much income focused thru shares and bonds mainly.

Would I buy low yield, high quality property as Damap suggests.
Sure; but only if I had large equity in it so the bank would not bother me. (about 40%)
I do not believe we can depend as much on immigration as we are now... past next year.

I can't answer about the property everyone is looking for....7%, subdividable , add value, upcoming area, as I am well past bothering with all that work those require ( IE too lazy)
The fact that everyone is looking for the same limited stock does give me some pause however.

If you need cashflow through good yields to survive another banking liquidity crises, Auckland seems to be a risky market.

Me?
I'm not selling property as I don't need to, and have long term plans.
Bonds ....not selling.
Shares....selling some growth ones, holding onto good dividend payers.

Will I take a big hit if markets crash ....sure will; but I'm not beholden to banks.

I sold stuff during the last GFC which was a mistake....I'll ride the wave next time and see what sort of ride I get from it.
I wasn't paying attention 10 years ago....I'm more focused now, so I guess you could say my antennae is up.

So; sorry, not really helpful for your particular circumstance.
But don't want to blow hot air up your trouser leg by pretending I was either.

Be cautious and treat the banks with a great deal of respect.
There is little doubt our household debt levels are now too high I reckon.
We will be affected by overseas events a lot more than 8 years ago.

[BigRedDog]

Cheers Speights

[speights boy]

Here is John's latest.
Far more coherent than my ramblings.

Will there be a market correction in 2015?

John Bolton says it's wise to have your personal finances prepared for the next financial crisis, whenever and however it comes along

Market corrections are in a way exciting because if you’re one of the few who are prepared then you can do very well on the other side of it.
It requires zigging when others zag.
It means ignoring ‘hype’ and it means largely ignoring our main stream media.

In a nutshell cash is king.
From a property perspective, now is not the time to be over leveraged.
You should be working to lower your loan to value ratio (LVR), not leveraging up to buy more property.
Get yourself into a position to buy assets when prices fall.

[Davo36]

Man, a lot of people talking with certainty here e.g. boom will go on for 1 to 2 more years, or it's all over, I'm selling 2 out of 3 properties in Auckland...

Last time I sold up, had cash in the bank and lost out big time, had to buy back in when prices had gone UP!

So I don't forecast any more

[elguapo]

but I would buy in say Bucklands Beach on a 5% yield \

Of course, Bucklands Beach at 5% would be a bargain on the current market.

[elguapo]

Man, a lot of people talking with certainty here e.g. boom will go on for 1 to 2 more years, or it's all over, I'm selling 2 out of 3 properties in Auckland...

Things that are certain; I will be selling two Auckland properties.
Things that are not certain; the future of the Auckland property market.

I'm very comfortable with that risk/reward calculation. I move from very little debt with significant assets, to a very large stack of cash & a few less assets. If things collapse, I'm positioned to take advantage, if things carry on going up I still benefit modestly.

[Damap]

Hardly Elguapo it's lying round if you look properly.

[chrisgoh]

Buy and hold strategy reaps better rewards in long term than trading (or time the market), regardless of property cycle. Unless we have better use of the cash, I would rather keep the properties in perpetuity.