Small town New Zealand

[cube]

Idly flicking through listings on Trademe, I noticed some tidy looking 3 bedroom houses in Wairoa for under $100,000.

The listings claim that the rental market in the town is strong (no doubt, at the right price).

Has anyone any advice from experience as to whether towns like Wairoa are a risk or a goldmine waiting to be discovered?

http://www.trademe.co.nz/Browse/CategoryAttributeSearchResults.aspx?search=1&cid=5748&sidebar=1&rptpath=350-5748-3399-&132=PROPERTY&134=5&135=29&216=0&216=0&217=0&217=0&153=&122=3&122=3&49=0&49=0&178=0&178=0&sidebarSearch_keypresses=0&sidebarSearch_suggested=0

[BigDreamer]

I recall seeing a $6k land for sale in Wairoa mid last year. I thought of purchasing as a holiday-ground for my dog during summer break

[ScottSI]

Has anyone any advice from experience as to whether towns like Wairoa are a risk or a goldmine waiting to be discovered?

Just check if it is in the Mongrel Mob half or the Black Power half - try not to be in the middle as that is where they fight.

Not a lot there - If looking outside Auckland I would recommend looking at towns with at least 100K population as more stable.

[Maccachic]

When a town has garage doors on shop fronts I find its best to keep driving.

[Wayne]

Hard to sell so the asset is less liquid than property usually is.

[Corleone]

I sniffed around these kinds of places for awhile. As previously stated, hard to on sell should you need, populations are sadly dropping not developing, work is often based on one big local employer (AFFCO in Wairoa) and that work or other industries are often intermittent so good stable long term renters may be a very limited pool. Seriously, if houses are that cheap and there are many renters, then the local workers should have no trouble buying them on the good wages AFFCO/NZ Forestry pay. A big killer is the rates are high in small town NZ, Im sure they are $2500-3000 in Wairoa, which cuts into your yield on cheap properties.

I don't think its impossible to turn a reasonable yield profit, but Id imagine living in the town with local knowledge would be very helpful if not a prerequisite. Isn't there a forum member who moved to Karewau and bought up some places? he's doing ok, happy as, but he did move there then invested.

[Nice]

I tried this a few years back, I found that not living in the town was a huge barrier to collecting the rent. Those that I know who live there don't have this problem; there isn't a high penetration of email and technology, so rent collection is usually done by knocking on the door. Some areas this is not a safe practice ! I've since sold and am far happier with bigger centre investments, even though they cost more.

[PTILoveYou]

When a town has garage doors on shop fronts I find its best to keep driving.

+1 .

[PTILoveYou]

Also you need to find a good and reliable property manager and handyman first.

If both don't exist, no point buying a property in these towns.

[Maccachic]

Id never seen it (garage door shop fronts) before coming from the South island and couldn't work out why an Indian takeaway would have one and way stayed the night at Wairoa. When I got back to the office everyone was shocked I had stayed there as there was a killing a few days earlier - think it was a gang issue.

[muppet]

Hawke's Bay's property market is moving fast, a local property expert says.

QV's May residential price movement index showed average home values increased across the region year-on-year.
In Napier, house values increased by 1.3 per cent to $328,921; in Hastings, values increased 1.8 per cent to $306,993; and in Central Hawke's Bay, they increased 3 per cent to $216,750.
QV data is based on settled sales. Tremains Real Estate director Simon Tremain expected growth in the number of unconditional sales to be far greater.
"We're getting lots of out-of-town buyers," he said. "The gap between the Auckland median and Hawke's Bay median is huge so people are seeing Hawke's Bay as a really viable option to put their money."
Investors, speculators and local buyers were also in the market.
"Seeing capital growth in the market gets people on board. Nobody likes selling their properties at a loss so now they're selling them for a reasonable price."

Read more at

http://www.nzherald.co.nz/hawkes-bay-today/news/article.cfm?c_id=1503462&objectid=11462806

[Nice]

I don't see Wairoa mentioned here anywhere.

Last end-of-Auckland boom, I was seeing Australian buyers purchasing sight unseen in Wairoa; it was a great opportunity to offload at good prices !!

[marklowes]

I don't see Wairoa mentioned here anywhere.

Last end-of-Auckland boom, I was seeing Australian buyers purchasing sight unseen in Wairoa; it was a great opportunity to offload at good prices !!

Population of 8000. I wouldn't go near it myself. Too isolated too.

A lot of investors make the mistake of looking at places that might be nice holiday destinations and also very cheap.

Existing core facilities, uni's, hospitals, govt departments, est industry in larger cities attract more of the same and other businesses, hence cities over 80k have been growing, towns under 40k have almost all been declining in population (gisborne, wanganui, at 65k and only being tourist based Rotorua is a borderline case having static population since 2006). Wellington, Hamilton, Tauranga, PN, Napier Hastings all demonstrate consistent stable growth as they have the core structures (critical mass) in place.

Who wants to set up a business in a town that lacks a decent library, hospital, support business network, Uni or research facilities, freight services?

[Nice]

Wairoa is one of the last places you would go on holiday !

Mahia is different though.

[Azimuth]

I bought my first investment proprty less than a month ago, so am considering myself an expert in the field
In addition to the comments already posted, I would try to work out what the yield REALLY is. I wouldn't expect a great deal of capital growth, so what else is there? If the mortgage payments ended up being in the range of $100 p/w and the rent was in the range of $250 p/w, it looks good on the face of it, but take into account the rates and insurance - probably no less than $70 p/w add in some maintenance costs (say $2k per year for there I would think - something like $40 p/w) and costs are rapidly approaching the income generated. A bad tenant (and I suspect there is no shortage of them in Wairoa) that damages the place could easily mean that you are forever bleeding cash into the place. It might be hard to get rid of once you decide you've had enough too.