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  • Cannons Creek - Good Investment or Not?

    Hi Guys

    We are very new to investment and have got a property in cannons creek under offer. My husband's main concern is what sort of tenants will we get? The current tenant has made a mess of the property so its a bit scary. Can you guys please give your thoughts on this? What should be our main concerns and any advise to mitigate those?

    Cheers
    K

  • #2
    i'm not based in Wellington, but i did made a trip to Cannons Creek when I was hunting for property investment before. Personally I would avoid that area because of the demographic of people who is or will be comfortable to leave on that area. I think that area is kinda rough.

    I’m not saying it’s not feasible, but since I’m not based in WLG area then I rather have an investment with potentially less problem. Although the yield maybe very good . I know some people in this forum who have good tenants for years!

    Comment


    • #3
      Message a guy in here Don't Believe The Hype, he's done a lot of investing there and done quite well.
      Free online Property Investment Course from iFindProperty, a residential investment property agency.

      Comment


      • #4
        Originally posted by Nick G View Post
        Message a guy in here Don't Believe The Hype, he's done a lot of investing there and done quite well.
        Sorry what is that guy's name on the forum?

        Comment


        • #5
          Free online Property Investment Course from iFindProperty, a residential investment property agency.

          Comment


          • #6
            thanks Nick

            Comment


            • #7
              Originally posted by kanwal13 View Post
              Hi Guys

              We are very new to investment and have got a property in cannons creek under offer. My husband's main concern is what sort of tenants will we get? The current tenant has made a mess of the property so its a bit scary. Can you guys please give your thoughts on this? What should be our main concerns and any advise to mitigate those?

              Cheers
              K
              I know this is completely of topic, but as you are new to investments.

              What is the Gross Yield?
              What is the cash profit or loss? So this is rent less all expenses including items like accounting, interest, property mgmt, rates, insurance etc, and also fair repairs.

              Presuming this is a cash loss;
              - why are you buying the property?
              - Do you have a long term strategy to turn the loss into a profit?

              What happens to your investment if interest rates go up or if Labour takes away tax refunds?

              Hope that gives you a bit more to think about!

              Ross
              Book a free chat here
              Ross Barnett - Property Accountant

              Comment


              • #8
                Originally posted by Rosco View Post
                I know this is completely of topic, but as you are new to investments.

                What is the Gross Yield?
                What is the cash profit or loss? So this is rent less all expenses including items like accounting, interest, property mgmt, rates, insurance etc, and also fair repairs.

                Presuming this is a cash loss;
                - why are you buying the property?
                - Do you have a long term strategy to turn the loss into a profit?

                What happens to your investment if interest rates go up or if Labour takes away tax refunds?

                Hope that gives you a bit more to think about!

                Ross
                Hi

                The gross yield is 8.3% but it is slightly cash flow negative on the 100% lending i.e. When I calculate on 100% lending.

                Also with our current financial situation we can only afford properties in low socio-economic areas.

                Comment


                • #9
                  You will need a property manager who understands maintenance and preferably does it in-house otherwise you will be in big trouble.
                  Rents in Porirua are relatively high, especially considering the state of many of the properties and the deferred maintenance issues.
                  If you get emotional when some one breaks your stuff, stay way.

                  Comment


                  • #10
                    In Cannons creek there is currently 1 property for rent - expand that search to ranui heights and waitangirua, porirua, porirua east on TM you'll find 5 properties. There is huge demand for rentals
                    - 3br units that were 12 months ago renting for $260/wk now renting for $320/wk.
                    - 3br houses that were renting for $320/wk 12 months ago now renting for $360$380.

                    I recently listed a renovated 4br house new kitchen/bathroom, fully insulated, heat pump 1.5 bathrooms for $550/wk and received 20 enquiries in 2 weeks.

                    prices have jumped in the past 18 months which drove gross yields down from 10% to below 8% but unlike many other parts of the country rent increases have jumped driving Yields back towards 10%.

                    recent sales prices have been surprising too both pricing and the demographic of purchasers - we've seen renovated 3br houses sell the young professional couples from out of area in $400k range.

                    The buyer demand is there - recently 4 blocks of 2x3br units hit the market at the same time - I didn't think there was enough buyer demand for all so was looking for a bargain - as it turns out there was 4 separate contracts on the units in the 3 wk selling campaign all at or above $350k - one fell through and I went back for another go only to see it sell higher than the first 3 with 3 other offers in on the property. These units would rent for $330-$350 wk each putting the gross rent at 10.4% on the higher rent estimates

                    There is plenty of deferred maintenance issues in the area but I see them as opportunities as they reduce purchase price but seeing there is demand for maintained/renovated properties there is the opportunity to add value for owner occupiers and buy and hold investors as the rent increases justify the work and for these looking to buy improve and sell the home to buyers who don't have the time, knowledge or spare cash to buy a rundown property and then fund the renovations.

                    Last point - Always use a property manager.

                    Comment


                    • #11
                      Originally posted by learningInProgress View Post
                      i'm not based in Wellington, but i did made a trip to Cannons Creek when I was hunting for property investment before. Personally I would avoid that area because of the demographic of people who is or will be comfortable to leave on that area. I think that area is kinda rough.

                      I’m not saying it’s not feasible, but since I’m not based in WLG area then I rather have an investment with potentially less problem. Although the yield maybe very good . I know some people in this forum who have good tenants for years!
                      hi leadninginprgress - can you tell me more about your research?
                      - what are the problems that you refer to that are exclusive to Cannons creek?
                      - how long did you spend in the area when you visited as part of your research before writing it off as a potential investment?

                      Comment


                      • #12
                        As what Lighthouse pointed out, I'm not ready to have my rental getting damaged every now and then. I will rather have a lower rental yield but more peace of mind.

                        I agree as what you posted on the previous post that it is an opportunity if you have time to look after it and improve the property.

                        Originally posted by Don't believe the Hype View Post
                        hi leadninginprgress - can you tell me more about your research?
                        - what are the problems that you refer to that are exclusive to Cannons creek?
                        - how long did you spend in the area when you visited as part of your research before writing it off as a potential investment?

                        Comment


                        • #13
                          Originally posted by Lighthouse View Post
                          You will need a property manager who understands maintenance and preferably does it in-house otherwise you will be in big trouble.
                          Rents in Porirua are relatively high, especially considering the state of many of the properties and the deferred maintenance issues.
                          If you get emotional when some one breaks your stuff, stay way.
                          Yes that is what we trying to figure out, how to find a good property manager

                          Comment


                          • #14
                            Originally posted by Don't believe the Hype View Post
                            In Cannons creek there is currently 1 property for rent - expand that search to ranui heights and waitangirua, porirua, porirua east on TM you'll find 5 properties. There is huge demand for rentals
                            - 3br units that were 12 months ago renting for $260/wk now renting for $320/wk.
                            - 3br houses that were renting for $320/wk 12 months ago now renting for $360$380.

                            I recently listed a renovated 4br house new kitchen/bathroom, fully insulated, heat pump 1.5 bathrooms for $550/wk and received 20 enquiries in 2 weeks.

                            prices have jumped in the past 18 months which drove gross yields down from 10% to below 8% but unlike many other parts of the country rent increases have jumped driving Yields back towards 10%.

                            recent sales prices have been surprising too both pricing and the demographic of purchasers - we've seen renovated 3br houses sell the young professional couples from out of area in $400k range.

                            The buyer demand is there - recently 4 blocks of 2x3br units hit the market at the same time - I didn't think there was enough buyer demand for all so was looking for a bargain - as it turns out there was 4 separate contracts on the units in the 3 wk selling campaign all at or above $350k - one fell through and I went back for another go only to see it sell higher than the first 3 with 3 other offers in on the property. These units would rent for $330-$350 wk each putting the gross rent at 10.4% on the higher rent estimates

                            There is plenty of deferred maintenance issues in the area but I see them as opportunities as they reduce purchase price but seeing there is demand for maintained/renovated properties there is the opportunity to add value for owner occupiers and buy and hold investors as the rent increases justify the work and for these looking to buy improve and sell the home to buyers who don't have the time, knowledge or spare cash to buy a rundown property and then fund the renovations.

                            Last point - Always use a property manager.
                            Tonight on TV3 news they reported that Porirua had the highest growth rate of any major city in NZ - then seconds later reported kapiti growth was greater by 0.2% - the summer intern must be writing the articles

                            Prices have been growing and it seems they'll keep going. A single side of a duplex on a cross lease just sold for $380k at 195 Bedford st.

                            6 months on from my post above, rent on 3br units are heading towards $370-$380/wk, 3br houses well over $400/wk

                            very few listings, still huge demand

                            Comment


                            • #15
                              Thanks for the update!!

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