Originally posted by Damap
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Rental Property in Nawton Hamilton
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(Other than nothing because prices are high), you buy the best quality you can find as it is least likely to be affected in the next phase of the cycle. Of course this is a massive generalisation but if you are concerned about eroding values buy as blue chip as you can afford. Booms always drag below the median up much higher than above so if you are getting in late you have to avoid the cr*p. One could argue that Hamilton is only just starting to go and that may be true but why buy in Hamilton's slum when you can buy in middle of the road areas for a few dollars more?
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Some of the figures mentioned in this thread are not very good returns.
320 per week on $320k = 5% Gross yield. My quick figures are a $5636 loss before tax if you use 4.6% interest. If interest goes up long term, I also look at 7.5% interest and this would cause a $14,916 loss before tax!
Nawton is one of the bad areas in Hamilton, why would you invest there for a crap return? Some investors buy in good locations and gamble on capital gains, but I wouldn't put Nawton in that category.
If you could subdivide or had a great exit plan, then could be worth looking at as a long term hold project.
Otherwise you are really just gambling on huge capital gains to make up for the hassle (and there can be a few with tenants in Nawton) and for the cash loss. If you were a true investor, I would look for better deals(better cashflow). If you are a speculator, I would speculate in better areas!
Quality Rental Management (www.qrm.co.nz) are great property managers in Hamilton. Derrick and Robyn, the owners, have been involved in property for years and are large property investors themselves.
RossBook a free chat here
Ross Barnett - Property Accountant
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Originally posted by Rosco View PostSome of the figures mentioned in this thread are not very good returns.
320 per week on $320k = 5% Gross yield. My quick figures are a $5636 loss before tax if you use 4.6% interest. If interest goes up long term, I also look at 7.5% interest and this would cause a $14,916 loss before tax!
Nawton is one of the bad areas in Hamilton, why would you invest there for a crap return? Some investors buy in good locations and gamble on capital gains, but I wouldn't put Nawton in that category.
If you could subdivide or had a great exit plan, then could be worth looking at as a long term hold project.
Otherwise you are really just gambling on huge capital gains to make up for the hassle (and there can be a few with tenants in Nawton) and for the cash loss. If you were a true investor, I would look for better deals(better cashflow). If you are a speculator, I would speculate in better areas!
Quality Rental Management (www.qrm.co.nz) are great property managers in Hamilton. Derrick and Robyn, the owners, have been involved in property for years and are large property investors themselves.
Ross
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Originally posted by P.Bateman View PostHi Rosco- Been looking for 6 weeks now and have narrowly missed out on 3 properties all purchased by owner occupiers who do not have to do the numbers. In Hamilton I've been seeing houses with rental appraisals of $350-$370 going for $390-$400K. These are all in good neighbourhoods- Fairview Downs, Maeroa, Dinsdale, Ham East etc. With prices rising are we likely to see increased rents moving forward? What sort of yield should be happy with in this case. The examples I've seen are below 5% gross
Main question, what are you after? are you a speculator or investor?
Speculator - you buy now hoping (speculating) that prices will be higher in a year or two, and you probably sell. I would say the majority of people are really after a quick buck and fit into this category. Nothing wrong with being a speculator, its just good to admit that this is what you are after, then gross yield and other investment advise is really meaningless.
Investor - generally is after a long term passive income. So if you buy at 5% gross yield and long term interest rates are probably 7.5%, then you are losing cashflow. So you need to have a plan to turn this around, and I would say within 5 years. Or buy better! So you would look at
- putting cash in (note most people don't have cash)
- smart renovation
- subdivide, add a dwelling or other options to drastically change rental income
- pay off principal hard over next 5 years (difficult for most as most people have high personal home mortgage already)
- buy well
Rental increases in Hamilton are not large. If you looked at a specific property and what rent it was achieving 10 years ago, you probably aren't getting much more now. Bit different with the new builds to the north, but with say an older 3 bedroom home, the rent has probably barely changed. So relying on rental increases probably won't work, unless majorly under rented.
RossBook a free chat here
Ross Barnett - Property Accountant
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Thanks Ross- I'm basically looking to buy and hold so when I get to retirement (about 35 years away) I have 7-10 mortgage free rental properties to draw income on. I'm based in Auckland but have lived in Hamilton, Cambridge and Wellington so I'm keen on Orions strategy to buy cashflow positive in the regions but have PPOR and at least 1 other investment in Auckland to contribute to capital gains
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Nawton and Bader are two of the roughest areas in Hamilton and I have had awful experiences with tenants there.
Why not look at other suburbs that are in similar price range (might be slightly more) with better chance of good tenants?
Frankton is a suburb I highly recommend as it is close to CBD and prices are still affordable compared to the rest of Hamilton. Also, rents are higher than in Nawton/Bader.
Hamilton East is also great for cash flow except I have noticed that the average 3 bedrooms 1 bathroom houses are going for >$400k noow so it might not be a suburb within your budget.
Good luck.www.PropertyMinder.co.nz
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Bad memories of being a landlord in Nawton, haha, and capital gains are rubbish. Damap is right, now is the time to sell out of that area not buy in.Profiting from Property, not People
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