Be interesting to know with the lack of rentals in Wellington inner city ,if the ending of negative gearing played a major role in this...I invested in Lower Hutt and Porirua a few years back so they were neutrally/positively geared but with the properties more expensive in Wellington central and investors relying on negative gearing for there own income now gone, perhaps this played more of a role than the healthy homes bill?
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Be interesting to know with the lack of rentals in Wellington inner city ,if the ending of negative gearing played a major role in this...I invested in Lower Hutt and Porirua a few years back so they were neutrally/positively geared but with the properties more expensive in Wellington central and investors relying on negative gearing for there own income now gone, perhaps this played more of a role than the healthy homes bill? -
According to the below article in the Herald today most rentals sold are being bought by other investors so are still in the rental pool.
This time of year has most demand in Wellington, and similar in some other locations. It will settle down a bit in a couple of months. Only a bit though.
Lots of additional costs and compliance on landlords, ring fencing of rental losses being just one. I would say many landlords with one or two rentals might not yet realise they won't be getting the usual tax refund this year. When they do realise they will be looking hard at whether they can put the rent up.
Part-time paradise: Mum and dad landlords own more than a third of property
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Does seem a little odd. But Id hate to have bought a property in East Welli at the top of the market with a $900k mortgage and getting $550 rent a week. It seems logical then that they are owner occupied in Kelburn etc.
Lower hutt though Id have thought there would be plenty to go around.
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Rents will skyrocket this year. There will be great disruption to renters as the far more complicated than just putting in ceiling and under floor insulation requirements become a focus of landlords.
As with insulation installation last year there will be a glut of work for those with jobs associated with HHG upgrades leading to higher than normal costs to get this work completed.
Beyond that, a likely a shortage of materials (bathroom fans/range hoods/heat pumps etc) as the retailers use prior year to estimate their inventory needs and are surprised to find the demand for these items far exceed their forecast.
Landlords will find it easier to do these modification on empty properties displacing tenants and forcing up demand for already limited housing.
Any sound business person would look at what other work would allow them to achieve max rent for their investment so coupling these upgrades with a lick of paint/carpet/new vanity etc will allow them to achieve a fairly good ROI on the additional costs of the work resulting in a good uptick in the weekly rent (we're seeing 50-80% ROI on these sorts of additions)
Those landlords who in the past had a set and forget mentality - renting out the property when they bough it at market rent then went about their busy lives in effect providing below market housing for their tenants will be hit with costs they hadn't anticipated (HHG and lring fencing of tax losses) resulting in the property upgrade and justifiably a reset of the rent to market price.
2020 the year of greatly improved profitability in the buy and hold residential rental market.
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Originally posted by Don't believe the Hype View Post
2020 the year of greatly improved profitability in the buy and hold residential rental market.
Also buy and hold will only be good IF you already own a property, with the median house prices in surrounding suburbs over $1m, as someone else posted the only areas left around $400k are in Porirua. Buying now is like watching the Titanic via your spy glass ;-p
Last edited by OnTheMove; 07-01-2020, 12:38 PM.
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relying on macro data like the link is worrying... I certainly wouldn't rely on it.
Buying now - I posted about a property we acquired recently which after a small reno delivered 10% Gross yield.
The 10% wasn't obvious... we bought it based on a far lower yield but knowing the micro market we work in we could confidently pay more than the next person knowing with the small cost of a renovation would result in a finished product at 10% gross.
You talk a lot about buying below market - we didn't do that... we paid market or above based on the available data but what we knew was that the property was under rented and tired.
There is always a way to make money - more often than not it is by seeing something the majority don't see. The risk here is that you need to be prepared to get it wrong from time to time.
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So maybe there will be a swing away from the ma & pa to the 'professional investor' (20+). I wonder if there are stats on who is buying up investor properties? Is it the Pro's or ma&pa investors.
cheers,
DonnaEmail Sign Up - New Discussions, Monthly Newsletter, About PropertyTalk
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10% increase for Wellington. I go here https://www.tenancy.govt.nz/rent-bon...s/market-rent/ seems accurate and our rentals always aim to stay in the upper quartile but they're in Kapiti so the rents are lower.
cheers,
DonnaEmail Sign Up - New Discussions, Monthly Newsletter, About PropertyTalk
BusinessBlogs - the best business articles are found here
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Originally posted by donna View PostSo maybe there will be a swing away from the ma & pa to the 'professional investor' (20+). I wonder if there are stats on who is buying up investor properties? Is it the Pro's or ma&pa investors.
cheers,
Donna
Mum and Pa with the cash, then the excess cash created by the Key handling of the GFC, who then had even more spare change to invest and when Auck dried up with a resistance line and a small correction, not knowing more than you buy properties and they go up in in value, so start investing in smaller towns which then doubled within 3 years. Then while talking to their friends discuss how successful their strategy or renovating has been, of course none of that would have done much to change CG.
I do have hope with Auckland losing value and flattening that normality will return to the market. These investors will learn other ways to make money both inside and outside property and in other types of property. Leaving room for those who dont let crazy price increases do the work, professional investors as you put it.Whether it be the guy finding a rare gem and adding a lot of value and making 20% profit with reno and sell, or the guy buying what looks like a high yield will continue, along with reasonable 8% CG PA. Of course buy and hold in normal markets cant happen until the bullish ones flatten and have a correction. Either way those in for the 20 year term will see rent increases etc. It doesnt HAVE to be a self driven luck game by the same people who do not understand asserrs outside bullish property markets. Any common sense person knows that is not sustainable.
Its those that can make money when the markets in major correction or flatlining ie Sydney, Brisbane, Auckland and imo soon to be Welli and Dunedin. Those are pro investors who do not need a bullish market to make money.
I do have faith things will return to normality, prior to 2001 and then again in 2009. Markets that double every decade take the gambling out property. Which is not good for anyone. Especially the next gen or the current trying to enter a market that then corrects itself below their deposit, not cool.
Now many articles are talking NZ outside Auckland is cooling off, potentially the the correction and 4 year flatline may follow, where Auckland some are suggesting is about to take another rise after 4 years and a 10% correction. If it stays at 9%~ I will be happy to see a less volatile market return to NZ, instead of vertical spikes, corrections and flatlines. Its easy for everybody to generate property wealth in a consistently growing market.
If it does occur this way, its taken 4 years for this to reach the rest of NZ where IMO mostly Auck investors have hyper inflated the markets. Being CG focussed, I expect if these are Auck investors with PPORs then a mass sell off could occur to achieve the CG. Just a guess......Last edited by OnTheMove; 10-01-2020, 03:28 AM.
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