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  1. #11
    Join Date
    Mar 2015
    Location
    Brisbane Wellington Auckland
    Posts
    655

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    Quote Originally Posted by surfbluedog View Post
    Thanks for your reply.
    We are looking at this long term. And I have found pricing in Wanganui appear good.
    Best I can find so far. I was initially looking at Auckland, Hamilton and Wellington, but nothing has even come close to being cashflow positive. Am I looking in the wrong places?
    I think you are looking at the wrong properties
    Maybe look at units
    My last conversation with the real estate agent was (as a vendor ) "we do not list units unless the net yield is 6.5pc"...that will return 30pc of the net rent as profit.

  2. #12

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    Quote Originally Posted by surfbluedog View Post
    Thinking of investing in Wanganui. New to the game.
    Just after people's opinion?
    Speaking from experience- I think it's a great place to invest in. I bought 8 places there in 2014. My rationale for buying back then (and still now):
    - only buy in towns with 30,000 population as they are sufficiently large enough to probably not disappear, have multiple supermarkets/schools etc
    - a $100k house doesn't need to increase much to double in value (the doubling of a purchase price being one of my main investing goals).

    In total, I bought 8 places for $880k in 2014. They are now valued at $1.6million- so almost achieved my doubling price goal in 4 years
    Back then, they were rented at $2100pw together. Now they are getting $2760pw, so 31% rent increase over 4 years.

    I don't know if Wanganui has already "done it's thing" since I got in, or whether it will still keep going. In fact, haven't studied how the numbers even stack up there today if I was to buy. But my experience over the last 4 years has been a good one. I imagine that if you can still do some hard negotiating to find a good deal, that there will still be good scope for property prices to increase as a relative % of what you bought it for. NB. rates there are $2.5kpa

  3. #13
    Join Date
    May 2007
    Location
    Hamilton
    Posts
    3,450

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    Quote Originally Posted by deechnz View Post
    Speaking from experience- I think it's a great place to invest in. I bought 8 places there in 2014. My rationale for buying back then (and still now):
    - only buy in towns with 30,000 population as they are sufficiently large enough to probably not disappear, have multiple supermarkets/schools etc
    - a $100k house doesn't need to increase much to double in value (the doubling of a purchase price being one of my main investing goals).

    In total, I bought 8 places for $880k in 2014. They are now valued at $1.6million- so almost achieved my doubling price goal in 4 years
    Back then, they were rented at $2100pw together. Now they are getting $2760pw, so 31% rent increase over 4 years.

    I don't know if Wanganui has already "done it's thing" since I got in, or whether it will still keep going. In fact, haven't studied how the numbers even stack up there today if I was to buy. But my experience over the last 4 years has been a good one. I imagine that if you can still do some hard negotiating to find a good deal, that there will still be good scope for property prices to increase as a relative % of what you bought it for. NB. rates there are $2.5kpa
    Hi Deechnz,

    Obviously you have done well and timed extremely well, so I'm not trying to criticise you at all. Just point out how the figures would now look.

    Your starting gross yield was 11.93% based on 50 weeks. This would easily be cashflow positive.

    Now would be 8.6%. This will be neutral or even a cash loss, based on 100% debt, fair repairs, 4.5% interest rate. If interest rates went up, would be negative.

    So if you purchased the same houses now for $1.6 million, your cashflow would be signficantly down and the whole rental equation would be very different.

    Capital gain - no one has a crystal ball, but if house prices in Wanganui have doubled in 4 years(not sure this is right, you may have purchased very well), then based on history they are unlikely to go anywhere for the next 5-7 years. Also if there is a bit of a recession there is a chance of a correction, and prices could actually drop back slightly. Doubling in 4 years isn't sustainable!

    Ross
    More Profit from Property? TEACH ME MORE
    Ross Barnett - Coombe Smith Property Accountants
    Proud to give the best property advice for over 13 years.

  4. #14

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    Quote Originally Posted by Rosco View Post
    Hi Deechnz,


    Now would be 8.6%. This will be neutral or even a cash loss, based on 100% debt, fair repairs, 4.5% interest rate. If interest rates went up, would be negative.

    So if you purchased the same houses now for $1.6 million, your cashflow would be signficantly down and the whole rental equation would be very different.


    Ross
    Good point- I was too lazy to do the math! But yeah, I did bargain hard back then and bought at extremely good prices- even a couple of mortgagee auctions. So Wanganui probably hasn't doubled in 4 years, although my stuff nearly has. But as before, if you could haggle a good deal now, like I did then, then you most likely will be cashflow positive and still with opportunity for some more capital gains. But then again- would I buy those 8 properties in today's market for $1.6million? I'm not sure. It's still only $200k per house, so I'd probably consider it when looking at a few other likely towns. But I haven't been in buying phase for a few years so I really don't know how the numbers stack up in other towns like this at the moment.

  5. #15
    Join Date
    Nov 2015
    Posts
    186

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    Good on ya Deechnz and thanks for sharing.

    Some questions for ya:
    How would you rate your PM and would you recommend them to others, or do you do it yourself?

    How have your tenants been? Do they hang around or have you been through some changes?

    Once the railway pulled out all those years ago, Wanganui had the feel of a dying town. How's industry there now?

    Cheers.

  6. #16

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    Quote Originally Posted by Sportsvee View Post
    Good on ya Deechnz and thanks for sharing. Some questions for ya: How would you rate your PM and would you recommend them to others, or do you do it yourself? How have your tenants been? Do they hang around or have you been through some changes? Once the railway pulled out all those years ago, Wanganui had the feel of a dying town. How's industry there now? Cheers.
    I use Ray White for PM and they have been pretty good over the last 4 years. Currently, the PM there is really onto it and I'd recommend. Tenant turn over isn't too bad. Off the top of my head, I'd say they probably average 2.5y per tenancy across my 8 houses, i.e. a few have probably had 3-4 changes over 4 years, while others have had the same tenant the whole time. I can't comment on the industry in Wanganui. I have heard from my PM that real estate in the region has boomed in the last few years (possibly the Auckland effect)?


 

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