Investing in Wellington, Lower Hutt or Porirua

[FJW]

Hi Brendon

Good post, see below with my answers in bold / italics, don't hesitate to get in touch if you have any further questions / queries

Hi PT Forum

We are long term Auckland Investors who are currently selling one off 1 property to reduce debt and exposure to market risk.

Grahams post has got me thinking about our next step (we are in our 40,s) and I am crunching numbers on leveraging a freehold Auckland rental (would require selling 1 more Auckland property) to build a positive cash flow portfolio outside of Auckland with 20 year P&I terms. This is the type of fundamentals we started out with 14 years ago but with the Auckland market you adjust your strategy to make it work, no regrets there either.

My search of potential locations has lead me to Wellington suburbs were stagnant market seems to have provided an abundance of potential 7 or 8% deals that would work with a 20% deposit.

I need information about the market if Wellington investors can help.

• I like the idea of looking for target yield in the best area possible and closest to the main centre would this make Lower Hutt a better candidate than Porirua or Upper Hut or is there other factors to consider around Wellington Demographics

When you refer to the main centre are you referring to Wellington or the CBD of that suburb?

In terms of what' the better suburb of the three, that' a hard question, if you look at rents, the rents in Lower Hutt are generally more dearer than Upper Hutt but it does depend entirely on each individual 'pocket' of those areas. There are some areas in Upper Hutt that have higher rents than certain areas of L/H and vise versa, same rule applies to Porirua

• What are vacancy rates like in these centres, is the tightening or the government sector affected the suburban rental market
• Would a $200K 300pw, 3 bedroom home attract professional people if it was in tidy condition or should I look at different type of properties

Generally more of a blue collar person however I'm just basing that on my experience.

• There has clearly been a short-medium term lack of confidence in the Wellington property market, what is the real fundamentals like, has the population suddenly declined, is the job market deteriating or is there real long term factors that need to be considered before investing there.

Not sure about this, I haven't noticed an increase in vacancy rates if anything I've seen a decrease in them.

• Is there Earthquake risk to consider with single level standalone homes in Wellington

More apartments I would say

Hope that helps



I hope my questions don't sound to derogatory, I think Wellington is an awesome city but I don't know much about the suburbs and just need gather information and would be grateful for any advice or perspective anyone who knows the investor market can provide

Cheers Brendon

[Sebastian]

Hi Brendon and Donna,

It ended up being a bigger project than intended (aren't they all?!).

Fortunately I bought it really cheap. Purchased for about $285,000 standalone 2brm character cottage, very run-down 60s decor, old plumbing/wiring etc. Deceased estate.

I converted the large basement to living space. It's now 5brm 2bath. I don't have all the numbers handy, it was a costly reno. Revalued at mid to high 600s so still created plenty of equity and +CF, current rent $925/week, with possible further upside in the rent.

Brendon, I'm not an expert but feel free to PM me deals you're looking at I'm very happy to give you an opinion on the location etc. I've mainly bought in eastern and southern suburbs so I'm no good for anything north or west of the CBD

Cheers
Sebastian

[SleepyTiger]

wow, $285K.

a normal 2 bed in newtown would cost at least 400 - 500K even with average condition.

[AlFa]

It's now 5brm 2bath. ... current rent $925/week

unreal mate... I did 4bed 2bath out of 2 bed 1 bath and got good result but your rent is crazzzzy %)

[Nick G]

Location is key in Wellington - I bought a 3br 1ba over a 1.5br / 1ba and added rooms and bathrooms, now gets around $1300 pw and that's on the low end because I'm renovating as people move in.

[Bluecoat]

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.

Agree so not an assumption

[Bluecoat]

Used to love it in Mt Victoria, as student LL used to come and collect rent.

Not many listings in wellington, Prices are firming up.

Is this area any good?

http://www.trademe.co.nz/property/residential-property-for-sale/auction-1003910307.htm

[Kbkiwi]

Used to love it in Mt Victoria, as student LL used to come and collect rent.

Not many listings in wellington, Prices are firming up.

Is this area any good?

http://www.trademe.co.nz/property/re...1003910307.htm

This is well out of the inner city. you can get some nice 3 bedroom houses in inner city for much less than that, and your rents would be far higher.

[Lissica]

This is well out of the inner city. you can get some nice 3 bedroom houses in inner city for much less than that, and your rents would be far higher.

Not a new townhouse though. It depends what that poster is after. You wouldn't buy this for yield; but no maintenance or low quality tenants to worry about.

Churton park is only a 10min drive to the city. That development is next to Churton Park mall, and 3 min to Johnsonville shops. Although many people find Churton Park soulless, it's generally a family area with new housing generally in the 600s to 800's- no rubbish tenants or neighbour's in this area.

Very handy.

[Kbkiwi]

Not a new townhouse though. It depends what that poster is after. You wouldn't buy this for yield; but no maintenance or low quality tenants to worry about.

Churton park is only a 10min drive to the city. That development is next to Churton Park mall, and 3 min to Johnsonville shops. Although many people find Churton Park soulless, it's generally a family area with new housing generally in the 600s to 800's- no rubbish tenants or neighbour's in this area.

Very handy.

Are you kidding? You can get a townhouse in Mt Vic for under $700k and be in one of the most desirable suburbs in the inner city, with Courtney place, oriental bay and the cbd on your doorstep.

You obviously haven't commuted to churton park - It's at least 20-30 minutes from the city during peak hour traffic.

Churton park is outside the best school zones as well.

If you did want to spend over $600k in churton park - I would highly recommend getting a new build 4 bedroom house for the same money.

[Nick G]

If I was buying new in Wellington at that money Aotea would be my bet. You can get a 4br 200m2 house on a large site for at or under $700K. It's a great subdivision and transmission gulley will be a game changer out there.

[Lissica]

Are you kidding? You can get a townhouse in Mt Vic for under $700k and be in one of the most desirable suburbs in the inner city, with Courtney place, oriental bay and the cbd on your doorstep.

A "new" 3brdm townhouse?

You obviously haven't commuted to churton park - It's at least 20-30 minutes from the city during peak hour traffic.

I commute from Johnsonville to Miramar. It's 25min at peak hour. Churton Park to Central City will be about 20min peak hour, 10min non-peak

Churton park is outside the best school zones as well.

There are plenty of good primary schools in the Northern Suburbs. Secondary schools- both Newlands and Onslow have good reputations.

If you did want to spend over $600k in churton park - I would highly recommend getting a new build 4 bedroom house for the same money.

So would I. But the question was whether that was a 'good' area, not whether it would be a 'good' investment.

[Perry]

Big Increase In Wellington Sales By Tender As House Goes For $700,000 Above RV
Amy Jackman
15 March 2016

Houses being sold by tender in Wellington have almost doubled in one
year, and are continuing to go for tens of thousands of dollars above
rateable values. A Wadestown house is the latest to smash the RV
ceiling, selling for $700,000 above its $1 million price tag. The
Moorhouse St property has three bedrooms and a home cinema or fourth
bedroom, master bedroom ensuite, two living areas, open plan kitchen
and a large deck and landscaped garden.

The renovation design was done by architect Simon Novak. The tender
sale by Lowe & Co Realty in February was not a case of one buyer
putting in an offer far above the rest. Of the 11 tenders, five were
between $1.6m and the final $1.7m sale price, and 10 of them were
unconditional, agent Craig Lowe said.

[Jeffa]

Just read your thread interesting as I am an Auckland investor already purchased 1 property in Lower Hutt 250k looking to purchase in Upper Hutt or Porirua 250k and Wellington central 500k...seems we are on the same boat in the numbers and yes I see return at 7 to 8%.Im comfortable Wellington will return my investment as has most main centers in New Zealand e.g Auckland /Christchurch /Dunedin in 7 to 10 years .It will take patients but I believe with the coming transmission gully increased tourism numbers leading to visitors wanting to live as it is a beautiful city, Aucklands unaffordable house prices more young professionals will head there as they are highly paid.As well as overall migration to New Zealand (I don't believe we have even scratched the surface of China's migration or investment here)Wellington will follow Aucklands lead as did Christchurch as Auckland followed Sydney and Melbourne and as the large Australian cities follow and copy Beijing, Singapores skyline appartments etc, it's all relative .

[marklowes]

http://www.stuff.co.nz/life-style/home-property/78368083/firsthome-buyers-in-wellington-feel-the-heat-and-do-it-anyway

It's pretty crazy down here at present that is for sure.