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Question about investing in Rotorua

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  • Question about investing in Rotorua

    Hello, I am currently in the process of purchasing an investment property (I have approximately $700k i can spend) and Rotorua is looking very attractive due to rental yield. I have noticed you can get over 8% which will give positive cashflow. As I live in Auckland im not too familiar with Rotorua, i have been looking in Holdens Bay area, has anyone got any experience investing in this area. Is it ok for rentals?

  • #2
    Originally posted by Vickip05 View Post
    Hello, I am currently in the process of purchasing an investment property (I have approximately $700k i can spend) and Rotorua is looking very attractive due to rental yield. I have noticed you can get over 8% which will give positive cashflow. As I live in Auckland im not too familiar with Rotorua, i have been looking in Holdens Bay area, has anyone got any experience investing in this area. Is it ok for rentals?
    If you're looking at $700k in Rotorua those will be some pretty nice houses. My rental down there (low socioeconomic area) cost all of $200k less than a year ago.

    Dont know Holdens Bay, but nice houses with an 8% yield seem a bit unlikely. The higher yields tend to be on the cheaper properties. If you can get 8% on a "A Grade" property, take it.

    But keep in mind that gross yields aren't the same as net. The council rates in Rotorua are pretty nasty, will eat up a couple months rent immediately.
    AAT Accounting Services - Property Specialist - [email protected]
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    • #3
      Also be weary of streets with gangs, that can mean much slower capital gains, best to talk to local rental managers.

      When you go to a town with less than 100,000 people you can have very diverse suburbs. You can have a good street right next to a bad street.
      Hamish Patel | ph: 09 625 4693 | mob: 021 625 693
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      • #4
        Thank you very much for your helpful answers. Sorry I should have mentioned we are looking at purchasing more a block of units for that price so will be in the lower socioeconomic areas for the higher yield. I think talking to a local property manager would be best!

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        • #5
          Your 8% on paper will be 5% in your pocket. With that much money buy Hamilton not Rotorua.

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          • #6
            Unfortunately from what I have seen you cant get anywhere near that yield in Hamilton anymore. Bit too late

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            • #7
              Rotorua is not that large and as will be pointed out there are a lot of low socio-economic tenants. You need to know your pockets within the suburbs because even in today's market there are a large number of properties at that $300-350pw price point. It is easy to over pay or buy something that is always last to rent if you don't know the town.

              Rates are higher there, so look at net yield too. If you can lock in 5 years debt at a low rate and do P&I you should be in a good position to weather rate rises down the track.

              I'll put our foot forward - we're an investment buyers agency and Debbie V from our team is particulalry strong at helping investors source a property that will do well now (when there are people queueing for housing) but also will hold up well during a down-turn when renting becomes a buyers market.
              Free online Property Investment Course from iFindProperty, a residential investment property agency.

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              • #8
                Work on net yield.

                You will be surprised how much the property rates are in Rotorua.

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                • #9
                  Originally posted by Vickip05 View Post
                  Hello, I am currently in the process of purchasing an investment property (I have approximately $700k i can spend) and Rotorua is looking very attractive due to rental yield. I have noticed you can get over 8% which will give positive cashflow. As I live in Auckland im not too familiar with Rotorua, i have been looking in Holdens Bay area, has anyone got any experience investing in this area. Is it ok for rentals?
                  My parents built a house in Holdens Bay a few years back in a new subdivision. I really liked it and they are retired and there was a good mix of ages, families etc. Just gotta watch out for the midgies around the lake at certain times of the year and check if the property is in the flight path for the airport as that was a negative.

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