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If I knew how I'd start this as a separate thread .....
Gerraard I can tell you why I bought the 2x2 property in Newland for $320k if you like
(assuming you were speaking to Kngsly I think we are talking about the same one!) The property is currently under-rented (according to my valuer) - the yield is actually 6.8% . And yes from a yield point of view I wouldnt buy it at the rate either. I have 2 other properties which yield >10% but neither are in Wellington. I wanted to buy more property in Wellington basically because of the long term CG and good rental demand (which is just as important to the bottom line as the theoretical yield).
But why this property in particular:
* two separate crossleased titles - the purchase was a joint with my ex-pat brother - this made it cleaner
* 1/2 the purchase price was the amount my brother wanted to borrow (given his deposit) - this made the property as is CF neutral after tax for us (including paying a PM & allowing for mtce and vacancy but including depreciation) its CF +ve before tax for my brother.
* the units were available separatly but we bought both because I am a control freak and I wouldnt want (or want my brother ) to own 1/2 a property.
* opportunity to add value because the crossleases can probably be converted to fee simple with minimal outlay
*opportunity to add value because one unit can have alternative street access there by giving the option to convert the existing carport (under the same roof) to a 3rd bedroom and changing the unit from 60m to 80m (havent done the detailed sums on this one yet - might have to wait until builders are more available and cheaper)
* bought slightly under valuation
* rentability - superior location - good access, park over the back fence, on a main road but quiet (because its down a drive) . Good size bedrooms and good indoor out door flow with deck and small grassed area each which is easily made secure for animals/children About the median rent for the area too.
* yes I think Newlands has/is changing - have you driven up Woodridge lately - we would get no change from selling our (nice) house in Khandallah to buy in that area ! That said there are some crap areas in Newlands I wouldnt buy in. Dont ask me where I read it - but I remember someone saying that out of towners can see what the locals are blind to because they assume nothing has changed . Westfield is going to triple the size of Johnsonville's shopping mall - I'm confident that the are is going places. Oddly enough I noticed in today's paper that the eastern suburbs have had the biggest drop of values in Wgtn - maybe someone noticed how far from town they are (I know I grew up there).
*the only place for Wgtn to expand is North of Jville - Newlands has not caught up with Jville yet
Its a small world isnt it ! I guess my point is - that on the surface of it your comments are right - but every deal can have a different twist. You just have to be able to think of them on the spot (in this case we had to offer at the open home as someone else was inside doing the same ! )
The current yield is a good start (and at least they advertised it on this one!) but its not the end of the story - even if you dont rely on CG - which I dont - its the nice bit at the end. BTW I also buy to hold for 10 years no matter what! Now you wont the other offerer were you
Originally posted by lissie
Originally posted by Gerrard
Gerraard I can tell you why I bought the 2x2 property in Newland for $320k if you like
(assuming you were speaking to Kngsly I think we are talking about the same one!) The property is currently under-rented (according to my valuer) - the yield is actually 6.8% . And yes from a yield point of view I wouldnt buy it at the rate either. I have 2 other properties which yield >10% but neither are in Wellington. I wanted to buy more property in Wellington basically because of the long term CG and good rental demand (which is just as important to the bottom line as the theoretical yield). But why this property in particular:
* two separate crossleased titles - the purchase was a joint with my ex-pat brother - this made it cleaner
* 1/2 the purchase price was the amount my brother wanted to borrow (given his deposit) - this made the property as is CF neutral after tax for us (including paying a PM & allowing for mtce and vacancy but including depreciation) its CF +ve before tax for my brother.
* the units were available separatly but we bought both because I am a control freak and I wouldnt want (or want my brother ) to own 1/2 a property.
* opportunity to add value because the crossleases can probably be converted to fee simple with minimal outlay
*opportunity to add value because one unit can have alternative street access there by giving the option to convert the existing carport (under the same roof) to a 3rd bedroom and changing the unit from 60m to 80m (havent done the detailed sums on this one yet - might have to wait until builders are more available and cheaper)
* bought slightly under valuation
* rentability - superior location - good access, park over the back fence, on a main road but quiet (because its down a drive) . Good size bedrooms and good indoor out door flow with deck and small grassed area each which is easily made secure for animals/children About the median rent for the area too.
* yes I think Newlands has/is changing - have you driven up Woodridge lately - we would get no change from selling our (nice) house in Khandallah to buy in that area ! That said there are some crap areas in Newlands I wouldnt buy in. Dont ask me where I read it - but I remember someone saying that out of towners can see what the locals are blind to because they assume nothing has changed . Westfield is going to triple the size of Johnsonville's shopping mall - I'm confident that the are is going places. Oddly enough I noticed in today's paper that the eastern suburbs have had the biggest drop of values in Wgtn - maybe someone noticed how far from town they are (I know I grew up there).
*the only place for Wgtn to expand is North of Jville - Newlands has not caught up with Jville yet
Its a small world isnt it ! I guess my point is - that on the surface of it your comments are right - but every deal can have a different twist. You just have to be able to think of them on the spot (in this case we had to offer at the open home as someone else was inside doing the same ! )
The current yield is a good start (and at least they advertised it on this one!) but its not the end of the story - even if you dont rely on CG - which I dont - its the nice bit at the end. BTW I also buy to hold for 10 years no matter what! Now you wont the other offerer were you
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