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  • Hello and some questions regarding a purchase of apartment

    Hi, Im a newbie to this forum and I reckon this site is one of the best and useful New Zealand web-site I've ever surfed. By just reading some of the threads the members have put, have been very useful.

    I used to live in NZ for 13yrs and now I am currently in overseas. I was wondering whether it would be wise to invest in purchasing a 1bdroom apartment in Auckland CBD ranged between 200k to 250k. If the mortgage is allowed, we even consider to purchase 2bdroom apartment. up to 300k. Some of my friend in NZ recommend to purchase a house rather than an apartment due to its depreciation and not a dramatic gain in capital.

    However, houses in Auckland are usually more expensive and hard to look after due to my overseas investor status.

    We are currently looking at one bedroom apartment at Metropolis cost about 250k. without a car park. Will this be a good investment or just a money blow in a long term? Any comments would be appreciated!!!

  • #2
    Hi CityBloke
    (and a warm PT welcome),
    How much do you think the Metropolis apartment would rent for?

    tricky

    Comment


    • #3
      Hi CityBloke

      Welcome to PT.co.nz soon to become PT.com with a more global face.

      Now your apartment, what are all your expenses going to be
      eg, rates, body corporate fees, property manager fees, interest and possibly principal, insurance.

      Give us some figures so that the experts can analyse the deal for you, and then you will be able to make up your mind whether it will be a good deal or not.

      As Pooomba says a good deal puts money in your pocket not take it out.

      Regards
      "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

      Comment


      • #4
        Thanks muppet and tricky for your warm welcome and instant replies

        Sorry for not indicating any infor. about the apartments I am looking for.

        The 1Bdroom metropolis apartments were normally priced between 230k up to $280k as I searched on the internet only. These were 42sqm without a car park. The vendors and real estate agents say I could fetch well over $450 p.w.....But what kind of dump people would believe word come out of their mouth on selling? A realistical rental expection I believe to be about $300 to $350....?

        Here's some of the details of one of the units I am interested in... The owner wishes to get about $285000 but.. I would say dream on... there were other 1bdroom units which were on sale for around 230k- 250k.

        My plan is to raise $150k cash somehow and get the rest from HSBC as a mortgage in order to purchase the unit.

        Any kind suggestions or advice would be very appreciated.


        Details:

        One bedroom apartment located on eastern face of level 10 of a high
        quality purpose

        The apartment is zero rated for GST purposes. I bought the property newly
        built in
        1999 and have operated it successfully as an investment since. Although I
        have been
        out of the hotel pool since 2001, the apartment continues to operate under
        zero
        rating for GST as it is managed for me by Bayleys. The tenancies have
        varied from
        shorter term to longer term (9 months) and have been mainly corporate
        clients. The
        property is being let at $450 (incl GST) per week. I've been happy with
        the service
        given by Bayleys Property Services Ltd over the last 4 years.

        Regular outgoings include;

        Body corp. fees are $1185.07 (excl GST) paid every 6 months.
        Auckland City Rates/ARC rates 2004/2005 $1188.27 (excl GST) for the year.
        Property Management Fees (Bayleys) 8.5% of rental income (excl GST)
        Contents insurance (Note apartment and fixtures insurance premiums are
        covered by
        Body Corp Fees).

        My intention was that the advertised price for the apartment is $275,000
        incl GST
        with the furniture package ($15,000 incl GST) able to be sold on top of that.
        If the property were to be sold to a registered individual or entity as a
        going
        concern (and including the furniture package) then the price would be
        $257,778 (excl
        GST).

        Comment


        • #5
          Hi CityBloke,

          A warm welcome to PT

          Since you indicated you have spent some time reading posts on this forum, I assume you have read the many discussions on CBD apartments and are aware both prices and rents may drop with some 40% more apartments this year.

          Have you done a cashflow analysis to see how much profit you can get out of the deal at the price you offer?

          Comment


          • #6
            Hi Citybloke. To simply answer your question
            I was wondering whether it would be wise to invest in purchasing a 1bdroom apartment in Auckland CBD ranged between 200k to 250k.
            In the current phase of the cycle and the drama's going on in the CBD apartment market my answer at the moment would be

            NO DON'T BUY ONE

            Comment


            • #7
              However, houses in Auckland are usually more expensive and hard to look after due to my overseas investor status
              Best bet is to find a good property manager to make your life easier. I also live overseas, and have my properties managed for me. I can certainly recommend mine.

              I would take your friends' advice and have a look at houses in the Auckland suburbs - which areas are you familiar with?.

              My plan is to raise $150k cash somehow and get the rest from HSBC as a mortgage in order to purchase the unit
              You can also try the other lenders (Westpac, BNZ, Kiwibank...) - they are quite happy to lend to overseas investors. Even $75,000 cash is a hefty deposit, I'm sure the banks would love to give you a loan.
              handmade art for kids rooms

              Comment


              • #8
                Warning!

                Don't buy in Auckland - there is a predominance of crap and low quality housing there that taints the apartment market there.

                Suggest you go for one of the other main centres. Wellington is my favourite (city can't spread out, creating increased inner city apartment demand, most people working in the city are well paid and affluent, better pricing for return than Auckland and Nelson etc). I've made some very good gains here.

                I agree that buying new apartments are a good investment for anyone, but do your research and don't buy crap. Most maintenance and looking after duties are also handled by the building manager etc

                Buying straight from the developer will also let you get some extra gains (don't be scared to ask for a discount!)

                Comment


                • #9
                  Hi martyparty

                  Wellington is my favourite (city can't spread out, creating increased inner city apartment demand, most people working in the city are well paid and affluent, better pricing for return than Auckland and Nelson etc). I've made some very good gains here.
                  Are you familar with VicCentral, 169 the Terrace,Wellington? Operated by EDPAC with a 17 year lease to the Uni of Victoria.
                  The apartments are [as most apartments] pocket size.
                  Edpac offering a net 8% yield [after body corp, local rates and management fees] up to Dec 2008. Seems good but also seems too good to be true.

                  appreciate your views.

                  Comment


                  • #10
                    Originally posted by jadelotus
                    Are you familar with VicCentral, 169 the Terrace,Wellington? Operated by EDPAC with a 17 year lease to the Uni of Victoria.
                    The apartments are [as most apartments] pocket size.
                    Edpac offering a net 8% yield [after body corp, local rates and management fees] up to Dec 2008. Seems good but also seems too good to be true.

                    appreciate your views.
                    Its OK, and IIRC the figures do stack up, but I was put off by the lack of control (the property is out of your hands for over 15 years). Living on the Terrace is a bit of a drag too - no views, too many cars, who else bu students would want to live there, and what happens whewn the tertiary market slows down?

                    I can only recommend what works for me: Buy quality, off the plan apartment stock that won't be completed for at least several months, and lock in todays prices - ask for a discount, especially if you can buy more than one. Work out what the local area will be like when the building is completed - Don't buy crap and buy brand new - don't want to accidentally buy into a leaky building.

                    Tax free captal gains are the key

                    Comment


                    • #11
                      Thanks guys for your thoughtful advice. As you have suggested and seeing some projects will be on the way in CBD, I've decided to wait a bit before getting into the market.

                      Comment

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