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Would you invest in Auckland in the current market?

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  • Would you invest in Auckland in the current market?

    Looking at getting into the investment game, and purchasing a property around $500k. Looking to rent (rental estimates are around $500/ week mark)
    However with the current market a little flat, I am not sure about it.
    This is long term, so I guess current market is a little irrelevant.
    Advice appreciated.

  • #2
    Originally posted by surfbluedog View Post
    Looking at getting into the investment game, and purchasing a property around $500k. Looking to rent (rental estimates are around $500/ week mark)
    However with the current market a little flat, I am not sure about it.
    This is long term, so I guess current market is a little irrelevant.
    Advice appreciated.
    Can you provide more details ?
    What type of property you are looking at ?

    Comment


    • #3
      It is a good deal to get a real property for about $500k at the purchase price and about $500 per week for rent in Auckland. I am curious where you can get this type of properties in Auckland?

      Comment


      • #4
        Originally posted by jhab View Post
        It is a good deal to get a real property for about $500k at the purchase price and about $500 per week for rent in Auckland. I am curious where you can get this type of properties in Auckland?
        That equates to approx 4pc net yield
        So probably everywhere in Auckland
        Remuera , ponsonby , Mt Eden etc. ..all the recent commercial properties i have seen are in this range
        But I don't think they are great deals ...no profit. .total reliance on capital gains "To Get ahead"

        Comment


        • #5
          It is 3 bedroom, 1 bathroom property on about 600 sqm of land. Freehold.
          It does need a bit of work, but is decent. More a tidy up than anything.
          I am looking long term, and understand will probably be running negative for a while.

          Comment


          • #6
            Originally posted by surfbluedog View Post
            It is 3 bedroom, 1 bathroom property on about 600 sqm of land. Freehold.
            It does need a bit of work, but is decent. More a tidy up than anything.
            I am looking long term, and understand will probably be running negative for a while.
            Where is this located ?

            Running a property at CF-ve means you are relying on CG (which may not happen for some time after such a large increase over recent years)

            Comment


            • #7
              Anyone buying a rental at the mo should be looking carefully at political activity around these, which may well include interest rate rises.

              There are changes in place already for insulation. The Healthy Homes Guarantee Bill will soon be passed covering heating and insulation standards. We don't know what these standards are yet but it is quite possible that they will be framed in such a way that heat pumps are expected. Not a cheap option, and don't forget regular servicing.

              All government parties support a rental warrant of fitness - Labour and Greens want it to be mandatory. Wellington CC's attempt at a voluntary RWOF has not been successful so far but its basis will be used for the whole nation. It looks on the surface to be quite reasonable, and its proponents say cheap to achieve. (I beg to differ.) It can be found in full on the Welly CC website. I can forward a copy to anyone who PMs me with an email address.

              Increased tenant rights are also on the agenda - some that have been flagged up are - auto right of renewal by tenants, no more 180 day rent increase but only annual, end of no fault 90 day terminations, end of offsetting negative net rents against other income, weird and costly Tenancy Tribunal rulings, tenants have to be allowed pets. Doubt that last one will get off the ground, but who knows?

              And at a macro level - 100,000 new 'affordable' houses in the next 10 years, almost certainly a capital gains tax for implementation in 2020, immigration might (or might not) be slowing, extension of the bright line test to probably 5 years but may be longer.

              Why would anyone buy a rental in such circs?

              Well IMO there are some reasons. The number of rentals is dropping at a rate of knots according to TradeMe rental vacancy ad numbers, so rents will rise as demand and compliance cost rise. There is much better info now on applicants with poor rental or credit records. Airbnb can be a good alternative though looks like some tightening up is on the way - Queenstown for example want to slash to 28 nights a year.

              Comment


              • #8
                Originally posted by Beano View Post
                Where is this located ?

                Running a property at CF-ve means you are relying on CG (which may not happen for some time after such a large increase over recent years)
                It is in west Auckland.
                There is a lot of property being built in the surrounding areas.
                And yes i am planning to hold for a long time. 10 years +

                Comment


                • #9
                  Originally posted by artemis View Post
                  Anyone buying a rental at the mo should be looking carefully at political activity around these, which may well include interest rate rises.

                  There are changes in place already for insulation. The Healthy Homes Guarantee Bill will soon be passed covering heating and insulation standards. We don't know what these standards are yet but it is quite possible that they will be framed in such a way that heat pumps are expected. Not a cheap option, and don't forget regular servicing.

                  All government parties support a rental warrant of fitness - Labour and Greens want it to be mandatory. Wellington CC's attempt at a voluntary RWOF has not been successful so far but its basis will be used for the whole nation. It looks on the surface to be quite reasonable, and its proponents say cheap to achieve. (I beg to differ.) It can be found in full on the Welly CC website. I can forward a copy to anyone who PMs me with an email address.

                  Increased tenant rights are also on the agenda - some that have been flagged up are - auto right of renewal by tenants, no more 180 day rent increase but only annual, end of no fault 90 day terminations, end of offsetting negative net rents against other income, weird and costly Tenancy Tribunal rulings, tenants have to be allowed pets. Doubt that last one will get off the ground, but who knows?

                  And at a macro level - 100,000 new 'affordable' houses in the next 10 years, almost certainly a capital gains tax for implementation in 2020, immigration might (or might not) be slowing, extension of the bright line test to probably 5 years but may be longer.

                  Why would anyone buy a rental in such circs?

                  Well IMO there are some reasons. The number of rentals is dropping at a rate of knots according to TradeMe rental vacancy ad numbers, so rents will rise as demand and compliance cost rise. There is much better info now on applicants with poor rental or credit records. Airbnb can be a good alternative though looks like some tightening up is on the way - Queenstown for example want to slash to 28 nights a year.
                  Thanks for this. Very useful information

                  Comment


                  • #10
                    What is a good deal is very subjective. What do you want to achieve in property? If prices go down 10% in 2 years then double in the next 15 would you get upset and sell after 2 or are you in it for the long game?

                    Is there any upside in value or rent that you can achieve with a reno?
                    Free online Property Investment Course from iFindProperty, a residential investment property agency.

                    Comment


                    • #11
                      As others have suggested, this is a relatively simple question with a complicated answer. Especially in the current political climate where it looks like some action (the jury is sitll out on the affect it will have, of course!) might actually be taking place in terms of housing / housing affordability, especially in Auckland. As Nick G suggests, it all depends on what it is you're trying to get out of your investment, and the timeframe you have to achieve those goals.

                      Comment


                      • #12
                        Originally posted by Nick G View Post
                        What is a good deal is very subjective. What do you want to achieve in property? If prices go down 10% in 2 years then double in the next 15 would you get upset and sell after 2 or are you in it for the long game?

                        Is there any upside in value or rent that you can achieve with a reno?
                        I am in it for the long haul. And yes I believe the property has a lot of potential for upgrading, such as adding an on-suite and even an extra bedroom.

                        Comment


                        • #13
                          If you are CF-ve (which you will be with this property) you have to be accepting that it may will be a long time to before you can recoup this cash deficit ..which you may not be happy with if the property also goes down in value.
                          Personally I would rather be CF +ve and treat CG as a bonus ...

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