Mega landlords poised to scoop up property from exiting mum and dad investors

[artemis]

As small property investors walk away from investment properties in the newly regulated environment, better-financed long-term players will step in.

Article in NBR today, the rest behind the paywall.

Are readers here seeing this? Or doing it, given there are some multi-property owners here.

There was some media recently about a developer building an apartment complex designed for long term tenants. But this article is different, suggesting it is small players selling up to bigger players.

It will impact tenants as rents will go up and properties will be managed in a businesslike way for max cashflow and a decent profit for owners.

[GLin]

The word "mega" sounds misleading.

I thought it was HNZ buying up Wellington when I saw the headline haha.

[eri]

with the current media fashion

for extreme exaggeration

Mega Landlords probably = >5 rentals

but even if they mean >50 rentals

nothing surprising about it

overbearing regulation forced; corner stores, grocers, taxis, buses, pubs, car rentals etc

into a few well-funded multi-nationals that could afford professional paper-shufflers for the hoop jumping

why wouldn't it do the same to rentals?

short-sighted voters that demand a nanny-state

can't expect freedom too!

[Don't believe the Hype]

Pretty sure I posted on this forum about a year back the potential of the rise of corporate landlords ( couldn't find it with a quick search... maybe Perry with his super powers can find it) super funds looking for a regular return. I'm still saying it will happen - not sure buying individual houses is the right model for them but build to rent is certainly the future.

[Anthonyacat]

I had a quick meeting with Kenyon from DuVal group a few weeks back. Build to rent is an excellent proposition for those with the means and experience to do so. I could absolutely see the big super funds underwriting (or even outright all the titles) for new apartment complexes. Sell one or two apartments a year to get an accurate gauge on the current market value of the investment, and reap significant rents from the rest.

[DaveW]

Seasoned investors will only pounce if the exit of mum and dad investors is so great as to flood the market. Last time was during the GFC. One should always position themselves to buy in an exit market. That's when properties can be bought at a minimum 20% below market value - if you put in enough offers!
I'm sure a number of us remember those days of faxing offers to agents and recycling the equity on a monthly basis.

Otherwise in a market like now you need to be creative. Build to rent is one of those creative ideas but there are not many on this forum who look favourably on development, or major renovations.

[klauster]

S
Otherwise in a market like now you need to be creative. Build to rent is one of those creative ideas but there are not many on this forum who look favourably on development, or major renovations.

Consider the difference of property as investment and property as income generating business.
The attraction of these investments fading away as the govt doesn’t stop here with CGT (bright-line test), ring fencing, attacking negative gearing, and rental market killing regulations. Profit from rentals is for equity rich landlords and not for debt carrying “mums & dads”.

The impact is visible - total reduction in rentals especially for lower income renters. Numbers of renters who don’t get into a labeled “warm and healthy home” are exploding!
In contrast the number of renters as potential tenant for a fully renovated house is shrinking (group of first home buyer) and the demand of social housing is on crisis level high. Our last rental advertisement attracted in 3 weeks 165 enquiries from desperate people!

“Build to rent” – is that attractive for private investors under current govt, or who is able to provide housing for people pushed on the street?

[donna]

There could have been a flood to the market if the CGT had gone through aye.

cheers,

Donna

[klauster]

There could have been a flood to the market if the CGT had gone through aye.

cheers,

Donna

What “flood to the market” are you talking about - people looking for a home to rent, to buy or people selling up?
I’m just watching how the govt goes on with emergency housing on taxpayer’s expense. Also homeowners struggling with these expenses by govt spending going through the roof. Not to talk about related cost caused be poverty and sourcing crime like burglary, etc.

[donna]

Seasoned investors will only pounce if the exit of mum and dad investors is so great as to flood the market. .

Klauster my reply was in response to DaveW earlier reply - did you read it?

cheers,

Donna

[Davo36]

I had a quick meeting with Kenyon from DuVal group a few weeks back. Build to rent is an excellent proposition for those with the means and experience to do so. I could absolutely see the big super funds underwriting (or even outright all the titles) for new apartment complexes. Sell one or two apartments a year to get an accurate gauge on the current market value of the investment, and reap significant rents from the rest.

I'll just leave this here: http://www.stuff.co.nz/waikato-times...-firms-owe-50m

[DaveW]

I'll just leave this here: http://www.stuff.co.nz/waikato-times...-firms-owe-50m

Sounds like they are not living within their means.

[Don't believe the Hype]

This article doesn't seem to be related to the mega landlord business model being flawed rather one of ego driving decisions.


A ferrari, jaguar and Range Rover are un-required drains on cash flow. You can find a large list of people who have had early success following good business principles, got a bit ahead of themselves and spend money on things that they thought they deserved only to find things tumbled around them.


I think my partner has shown me comments/articles on the Property Investor FB page with this bloke talking it up. If you listen to him he'll tell you he's an expert and the best of the best. I can't help thinking of Icarus

[Don't believe the Hype]

of note is that the article is 2009 a very different time.

the corporate landlord concept I've talked of before is a lower risk proposition as they would likely be kiwisaver funds who get regular funds from KS contributions so they would not be doing this with debt.

[Davo36]

I think my partner has shown me comments/articles on the Property Investor FB page with this bloke talking it up. If you listen to him he'll tell you he's an expert and the best of the best. I can't help thinking of Icarus

Yep, he says things like "We have hundreds of units and..." and then proceeds to give advice.

Shows photos of his development under way etc. I've met heaps of people like this over the years.