Tokoroa investment

[mrDOitYOURSELF]

Hi there, does anyone know whether it's worth buying in Tokoroa? House prices down there are rather obtainable for first time home buyers. However I'm not planning on living there, just wondering whether it's worth buying an investment home there?

Thankyou for your thoughts..

[snobilo]

• There are 294 occupied dwellings and 54 unoccupied dwellings in Tokoroa Central.
• For South Waikato District as a whole, there are 8,457 occupied dwellings and 1,032 unoccupied dwellings.
• There are 3 dwellings under construction in Tokoroa Central, and 39 under construction in South Waikato District.

Taken from stats.co.nz... don't know if this will provide some insight. It was also mentioned earlier today that the population in Tokoroa is decreasing a thread or two down. I'm still look for up to date figures on this.

[Frezzinghot]

Run forest run!

Word to the wise, don't bother looking there.

FH

[muppet]

Well, Pizza Hut have just opened a fast food outlet.
Lincoln Transport have built a new rail siding to provide for container traffic.
Fonterra are spending $250m building a new milk powder plant at Lichfield.
And you don't spend 2hours a day travelling back and forth to work.
80kms to Hamilton.
75kms to Tauranga.
53kms to Rotorua.
65kms to Taupo.
And once the new bypass around Huntly is built then only about 21/2hrs to Auckland.

[Nick G]

We have a really, really cool bloke operating as a property finder in Tokoroa. He can fill you in on it a bit. His wife runs a PM company so working together they've been great for our clients who prefer lower cost but high CF properties - here are his details if you'd like to talk to someone who actively invests there http://www.ifindproperty.co.nz/about...wayne-dickson/ Bear in mind that he is a raging optimist and is very passionate about the community so you will want to get a few other opinions.

I've invested in a couple of cheaper towns in NZ and here's what I've found:
- Speak to a good PM before you invest, always. Ask about turnaround time between tenants. Buy in areas they recommend, always.
- Rates & insurance take more weeks rent to pay typically.
- You should be able to get equity when you buy (maybe via a reno) so you can refinance out your deposit.
- Maintenance costs similar in small towns and big cities unfortunately.
- Don't expect much capital growth but do expect good cashflow and the ability to create equity and the ability to recycle your deposit
- Have a plan. Buying well in Tokoroa means next you can do ____?

[snobilo]

Good points there, cheers for sharing Nick.

[mrDOitYOURSELF]

Thanks Nick, appreciate it.

[AlFa]

The main issue with small towns as I see it there're 1-3 main employers. If 1 pulls out to cut costs or something - half of population will move to somewhere else. What would you do then?

[Frezzinghot]

Agree, Kawerau comes to mind! And look at what happened tp that place.

FH

[Shalodge]

Ah Tokoroa .. Pop around 19,000 in the eighties .. Has declined steadily since..

1996: 15,528

2001: 14,443

2006: 13,524

2013: 12,714


Notice any pattern?

What makes it worse is that the 6,000 odd that left were the well paid workers (and their families) . If I were investing in Tok (and I am certainly not) I would buy flats not houses.

[Damap]

Unless you're a local like Muppet who can make it work, forget it. 100,000 plus and increasing should be your minimum yardstick.

[Shane D]

Note to self.

Investors considering Tokoroa again ...... we must be near the market top (12 oclock).

Seems like deja vu doesn't it.

[BlueSky]

Really in regions - I thought it is a ripple effect due to Auckland

How is the market in Hamilton and Tauranga - is it still pretty strong?

I am certainly seeing urgent sales are being added but still with the same price tag in Auckland?
Eventually if one has to sell, they need to be more realistic

[Shane D]

Really in regions - I thought it is a ripple effect due to Auckland

How is the market in Hamilton and Tauranga - is it still pretty strong?

I am certainly seeing urgent sales are being added but still with the same price tag in Auckland?
Eventually if one has to sell, they need to be more realistic

I think Hamilton and Tauranga still going well but that is typical for this stage of the cycle. The cycle correction usually starts in the poorer Auckland suburbs...and I believe that is happening as we speak..

The area I focus on in South Auckland (Papatoetoe & Mangere East) have completely stalled. Presently only very good quality owner occupier type properties selling. Lots of absolute crap (cheap reno projects) just sitting unsold. And unsold for good reason...over priced, crappy renovations on a property that an investor paid way to much for in the first place.

Possibly just a short term market dip but my gut feeling this correction may get worse in South Auckland at least (the area I know quite well).

Shane

[BlueSky]

I concur, it has a lot of rentals and investors who paid top $ and having to subsidize at least 50% and that doesn't even include maintenance and repairs...

example 2 bdrm unit. T

Purchase Price $	$ 525,000
Deposit $	$ -
Loan Amount $	$ 525,000
Term (years)	25
Interest Rate p.a.	5.50%
Mortgage Payment (weekly)	$743.38
Weekly Rental Income	$ 400
Expenses
Annual Rates	$ 2,100
Regional Rates (annual)	$ 250
Insurance (annual)	$ 1,500
Total Rates and Insurance (weekly)	$ 74.04
Property Management Rate (% incl GST)	0.00%
PM Cost (PM % incl GST x weekly rent)	$ -
Rent p.w. minus expenses	$ 325.96
Yield - Yearly Rent/Purchase Price x 100	3.96%
Cashflow Positive / Negative p.w. With a 200K deposit you are still paying $130 to prop it up	-$ 417.42