Property investment in Wellington 8% return

[jamesnz]

Hi there
i am trying to invest about -$300k (including bank loan )in a property in Wellington which can give me a return of 8% after expenses

any recommendations which type type of property I should go for ?

thanks for advising

[Don't believe the Hype]

Hi James -

you need to factor in much more than just the yield at purchase price into your decision into type and location of your property investment.

some of those things to consider are listed below:
- what is the holding period you want on this property?
- are you planning to only buy 1-2 properties or are you looking to build a 5+ property portfolio?
- are you planning to manage them yourself?
- are you capable of doing maintenance yourself?
- what is your (financial) risk tolerance?
- what stage or your working/investing life are you at?

There are many more considerations which I'm happy to talk to you about - shoot me a PM if you like.

[Nick G]

Why do you need an 8% return when bank rates are 4%? How did you choose that number?

You'll be in the lower socio economic areas in that price range, which means you might get to your desired return but you're going to have to roll up your sleeves and increase rents and value a bit.

DBTH knows what he is on about so well worth chatting with him.

[MikeC]

There are several Wellington apartments currently for sale offering this kind of return.
i think I've discussed with you previously my personal rules for buying Wellington apartments (very central location, no leasehold, no reclaimed land, no converted buildings, maximum of around ten years old).
But choose carefully, prices are crazy at the moment.

[jamesnz]

There are several Wellington apartments currently for sale offering this kind of return.
i think I've discussed with you previously my personal rules for buying Wellington apartments (very central location, no leasehold, no reclaimed land, no converted buildings, maximum of around ten years old).
But choose carefully, prices are crazy at the moment.

Hi Mike

I can't find a single property giving a return of even 6% amongst all the listed properties in Wellington
Am I missing them ?
Can you give me a link to a property when you are free

Thanks for advising

[Kbkiwi]

Hi there
i am trying to invest about -$300k (including bank loan )in a property in Wellington which can give me a return of 8% after expenses

any recommendations which type type of property I should go for ?

thanks for advising

8% net yield after expenses is pretty tough ask now in wellimgton, but some apartments currently for sale with 8% gross yield (eg priced under $300k and renting for $450+ a week)

[MikeC]

Quick look at trademe, check the following listings:
1131762387 and 1127630183

If you can stretch the budget a little:
1131524179 and 1130459378 and 1111319452

And a little more again:
1122208763

I'm sure there are others there too if you do the maths.

[James.wu]

i think I've discussed with you previously my personal rules for buying Wellington apartments (very central location, no leasehold, no reclaimed land, no converted buildings, maximum of around ten years old).
But choose carefully, prices are crazy at the moment.

Hi Mike

I think you discussed this with me

[Judge]

I have read it somewhere on this forum "You do not buy cashflow positive properties. You make them." You buy a property that is cashflow negative but with potential, and you make it cashflow positive. You add a room, or subdivide or something else. There are two old houses on adjacent sections in Berhampore for sale at the moment. If you buy them for the right price and renovate them or demolish and build new, you will get yourself a good investment.

[cube]

For Wellington city centre apartments, what is a reasonable gross yield to work with for a rule of thumb, given that current rent is known - e.g. TM listing 1130459378 is currently rented at $550pw, which would give a value of

$408,000 @ 7 %
$381,000 @ 7.5%
$357,000 @ 8%

Any idea what the actual value may be?

Thanks

[roughy]

Quick look at trademe, check the following listings:
1131762387 and 1127630183

If you can stretch the budget a little:
1131524179 and 1130459378 and 1111319452

And a little more again:
1122208763

I'm sure there are others there too if you do the maths.

This is what I love about this forum, never short information!
How about:

http://www.trademe.co.nz/Browse/Listing.aspx?id=1131524179

As you suggested. Surely they has to be a catch? Are people advertising them as high yields but they are going for a larger price like the housing. Seems to good to be true!

[jamesnz]

Hi there
As a newbie I can tell you that working on the basis of the gross rent will get you no where in Wellington apartment.
The body Corp fees can vary from 3k per year to 12k per year depending on the building and flat size
Even similar size flats can have twice the body Corp fees between them in adjacent buildings
So in an excel sheet you have to put the Price of the apartment gross rent you may get , and then deduct the body Corp fees and the rates and then calculate the yield for every property you come across within your budget
Atleast that's what I am doing and would love to understand if there is any simpler way of doing it.

some ads give the rates and body Corp fees but most don't so you have to email the agent and ask for the same, which adds to your work and is a nightmare reminding the agents to give you the figures

Cheers

[Wellyinvest]

This is what I love about this forum, never short information!
How about:

As you suggested. Surely they has to be a catch? Are people advertising them as high yields but they are going for a larger price like the housing. Seems to good to be true!

I saw this one yesterday at an open home, a bit outside my price range (still saving for my first investment!) trademe.co.nz/1130426149

Was renting for $450 per week, and it's listed as BEO $275k (so yield a bit tricky to work out unless you know what they actually want to sell for - how do others work out potential yield for BEO prices?).

Bodycorp & rates totaled about $5k I think. I share the sentiment about what others said above about Wellington apartments being all over the map in terms of body Corporate fees - you can look at identical size apartments in similar size buildings and one body Corp might be $4k and in another it's $10k! Definitely makes a difference when calculating net yield!!

[MikeC]

..........

[MikeC]

This is what I love about this forum, never short information!
How about:

http://www.trademe.co.nz/Browse/Listing.aspx?id=1131524179

As you suggested. Surely they has to be a catch? Are people advertising them as high yields but they are going for a larger price like the housing. Seems to good to be true!

The only real catch with this building is that there is only a single power meter (with check meter) for the two apartments (bad decision by developer) so landlord probably needs to pay for power and say it's included in rent. Also both apartments are very small, but never a problem finding tenants.
should go for around $430k, so an excellent return.