Again - another question on Apartment investment in Auckland CBD

[newbieinvestor]

Hi all, I'm new in Apartment investments... not sure if they're good as many people said it's dangerous, but others suggested it's good cashflow...

Have read several articles recently including the one in Property Investment Magazine (some months ago) and this article on NZ Herald today on Cup fever could get landlords carried away




Currently I'm looking into the following deals

Studio apartment 36sqm in Tower Hill (Emily Place) for 152k (rent $300pw if furnished, BC around 1500pa).

Studio at Statesman 38sqm (Anzac Ave) for 179k (rent around $300pw if furnished)

2 beddie + carpark in Statesman for 349k (Ad didn't mention the size).

In regards to Property Management... has anyone used this Property Management Co. called 'Apartments in Auckland' - I believe they let apartments to travellers on a nightly basis. Was wondering if it's a good idea to let out to travellers as city apartments seems to have a higher turnover in tenants....?

[CJ]

I dont think many on here invest in Auckland apartments.

I have been away from auckland a few years now so I cant really comment. However, those rents look at bit high for a studio. Maybe it is because they are furnished? Have a look on trademe to confirm they are accurate.

I would personally stay away from studios but that is where the cashflow is (wonder why - maybe it is the higher turnover).

Have heard of Appartmens in Auckland. You will need to furnish to high standard and if doing nightly rentals, remember there will be GST and additional costs like cleaning/linen/etc.

[Commercial Dan]

Hi all, I'm new in Apartment investments... not sure if they're good as many people said it's dangerous, but others suggested it's good cashflow...

Have read several articles recently including the one in Property Investment Magazine (some months ago) and this article on NZ Herald today on Cup fever could get landlords carried away




Currently I'm looking into the following deals

Studio apartment 36sqm in Tower Hill (Emily Place) for 152k (rent $300pw if furnished, BC around 1500pa).

Studio at Statesman 38sqm (Anzac Ave) for 179k (rent around $300pw if furnished)

2 beddie + carpark in Statesman for 349k (Ad didn't mention the size).

In regards to Property Management... has anyone used this Property Management Co. called 'Apartments in Auckland' - I believe they let apartments to travellers on a nightly basis. Was wondering if it's a good idea to let out to travellers as city apartments seems to have a higher turnover in tenants....?

Don't be a fool, you will lose your shirt by investing in any of the dogs you mentioned!

[Monid]

While I don't necessarily disagree with you Dan, a bit more detailed analysis would go a long way to making your point.

Cheers
David

[Commercial Dan]

While I don't necessarily disagree with you Dan, a bit more detailed analysis would go a long way to making your point.

Cheers
David

If you don't disagree, then why bother...

At this stage of the market and the economy, apartments are 'fool's gold', we have past the oversupply phase. This guy is about to lose his shirt, some frank statements might be the only ones that wake him up.

[Monid]

If you don't disagree, then why bother...

Because I'm trying to prod you into saying a bit more than X is stupid. Look at it this way if you say X is stupid sure you may stop him doing X but he will probably go and do Y which is just as stupid. If you explain why X is stupid then maybe he will be able to learn from that and figure out why Y is stupid on his own.

Its the old give a man a fish feed him for a day, teach a man to fish and feed him for a life time.

At this stage of the market and the economy, apartments are 'fool's gold', we have past the oversupply phase. This guy is about to lose his shirt, some frank statements might be the only ones that wake him up.

That is more like it, although I still reckon some more detail would help, so for example the shoebox size of these, that they still aren't cashflow positive... and so on.

Cheers
David

[Commercial Dan]

Because I'm trying to prod you into saying a bit more than X is stupid. Look at it this way if you say X is stupid sure you may stop him doing X but he will probably go and do Y which is just as stupid. If you explain why X is stupid then maybe he will be able to learn from that and figure out why Y is stupid on his own.

Its the old give a man a fish feed him for a day, teach a man to fish and feed him for a life time.



That is more like it, although I still reckon some more detail would help, so for example the shoebox size of these, that they still aren't cashflow positive... and so on.

Cheers
David

Fair enough David, no question is a dumb one. Point taken

[Monid]

Grand, and my apologies to Newbieinvestor for the brief hijacking of your thread.

Cheers
David

[BusyLizzy]

OK.. now that we've got that out of the way, hopefully someone would like to help newbieinvestor out?!

I don't have experience in apartments, but generally I am aware that people are advising against them at the moment. Do a search on these forums, newbie, for an article by Kieran Trass of Hybrid. I think it's a year old or so, but it's very informative. Kieran's views are generally very highly regarded....

Also - do a search on 'apartments' - there have been several discussions about this recently.. Good luck!

[whitt]

The AKL CBD could potentially uncover some goldmines in the right timing. The trick is to know what and where to buy.

Do a search on these forms on apartments and you will get heaps of info.

Also look at bottom of each thread for similar posts.

[BusyLizzy]

Here is one link in particular:
Beware of 'Falling Knives' in Aucklands CBD apartment market

Also check out this page on Hybrid's website:

http://www.hybridgroup.co.nz/MarketInsights/GeneralNews/Detail.aspx?id=1787

[Josko]

Hi newbeinvestor,

I am keeping a close eye on Apartments in Auckland, both those buildings are exceptional as far as quality and management is concerned and anything bought in there will increment well in capital value.


Be wary of overstated rental returns, keep an eye out on TradeMe as CD recommends to get a better overview of the market.

Personally I stay away from Studio and will only look at properties 50m2 and above with Parking.

The 2 Beddie in the Statesman is a 50.05 m2 with 16 m2 of balcony, rental is $430 per week a little on the low side could get better return if furnished.

It is a safe investment if you have a decent deposit to make it cashfolw neutral.

You WONT Loose your shirt investing in the two buildings you mention.

All the best!

[newbieinvestor]

Hi everyone,

Thanks for all the advise, I done some research before I ask in the forum. Have spoke to an investor who owns 40 apartments in the CBD. He reckons the better quality ones are Statesman, Quadrant, Tower Hill, Heritage, Connaught, Metropolis and Precinct. I'm not looking at Metropolis as I believe the BC is pretty high.

I started my first property investment 3 years ago, now owned 4 properties (all in Auckland), but never ever touched apartments. The closest try was to place an offer on a block called Nova en Scotia, nice apartment facing Myers Park, 2 beddie 50sqm with carpark for $250k. Ended up the building have serious structural issues so I pulled out.

I believe now might be a good time to buy apartments as they aren't building any much more? (Compare to 2-3 years ago anyway).

I have checked the rental on trademe, seems like unfurnished studio in Tower Hill is around $280pw and gone pretty quickly.

I'm still undecisive though, whether to buy an apartment or another property (with some land) in places like Tokoroa or Invercargill? I'm a hands on landlord and I like to manage the properties myself... That's why I invest in Auckland...

Mind my English and grammar mistakes, it's not very good (not my 1st language...)

[Monid]

Hi Newbieinvestor

You ain't too much of a newbie then, I'd say somewhat experienced investor myself. I usually defer to Josko on apartments, he keeps a close eye on the market.

You are right that they aren't building them at the same rate they used to, but in part that is because the market is full.

Cheers
David

PS Your English and grammar are fine, better than at least some of the native speakers here, I couldn't tell that English was your second language.

[CJ]

The problem with the Auckland apartment market is at the end of the last boom, one company (was it Conrad??) built a shiit load of crap apartments - harvard, stanford, volt, altitude, etc.

These are always going to bring the markets down. When i am back in NZ, I will be looking for bargains in the higher quality buildings. these are hard to find though as these are the ones that owner occupiers are also after (this is one area where they are the ones pushig the price up, not the investors).

Stateman still sounds a bit small for a 2 bed. i am sure they have larger ones but they probably cost more too (remember this when comparing rentals and you might not be comparing like for like. Likewise 1 Hobson has a couple of small 2 bedders which would rent closer to a 1 bed).