Dunedin property investment- Student flat or outside the city?

[property newbie]

Hi all,

Anyone invests in DUNEDIN on this forum? I have got IPs in AKL but am looking at diversifying and getting higher yield properties (8% above).

I am currently tossing between buying a student flat in the city or houses with decent land outside Dunedin such as Mosgiel. Wouldn't want to spend anything over 550k.

Any advice/suggestion on what to look out for would be greatly appreciated.

Thank you!

[Nick G]

I'll PM you. We have an investor in Dunedin on our team. 8%+ above definitely achievable but you need to be careful about the same sort of things as investing anywhere else - location, desirability, maintenance, sun, parking etc etc.

[property newbie]

Appreciate it Nick. At this stage I am more looking for information like dos and donts in Dunedin area, as I've never bought there before

[Nick G]

I don't invest there myself but own a student rental in Wellington. A nicer property will attract nicer tenants!
David actually lives in Mosgeil so feel free to ask him if you like. When I was at varsity there there was about a 4km area between my flat, new world, uni and the pubs that was about all I knew - most of those pubs are gone now too.

Also stay away from North East Valley. There's a stigma there about sun and dampness issues and even if you get a property that is great in there it can be affected by that reputation.

[jimO]

Also stay away from North East Valley. There's a stigma there about sun and dampness issues and even if you get a property that is great in there it can be affected by that reputation.

i think you mean Leith Valley.. if you want a student flat you need to buy into the "dress circle" and even then you wont be guaranteed a lease for the year, According to local paper....ourhttp://www.odt.co.nz/news/dunedin/288904/demand-student-flats-down..... as i see it a lot of the old shitboxes have been pulled down and replaced with 3 storey modern shitboxes, so a section that use to house 4 to 6 students now has 15 so that has compressed the student area. If you want to rent to "normal" people look at Waverly, Andersons Bay, Opoho, Mosgiel, Vauxhall, but be aware rents arnt as high in Dn as they are on other places in NZ

[ScottSI]

I have found Dunedin a good place for investment. We hold 17 properties down there but only one is a student place (doesn't have students at the moment though).

Looked at Mosgiel many times but never bought out there, just couldn't get the return. Watch out for low spots.

We are in South Dunedin, Caversham, Mornington, Carlton Hill, The Glen, St Kilda, Dalmore. Each area has pros and cons but all areas are cash-flow positive for us.

We haven't been buying there for a couple of years as been busy buying in Hawkes Bay. Friends are still buying there (3 last year) but prices have increased considerably in our target market and it is more difficult to find nice cash-flow positive properties. Still watch the market and are down there regularly and going to open homes to be nosey (crazy busy they are nowdays).

Things to consider in Dunedin

1 - SUN, SUN, SUN - some places like in Malvern st never get sun over winter, tenants run away, damp ness issues, difficult to fill so high vacancy. they turn over yearly between investors who don't know the area.

2 - Age of property - many very old houses with huge maintenance costs. Rotten floors, old wiring, stuffed piles, rusty pipes etc, insurance hard to get pre 1954.

3 - Parking - Now days everyone has cars, trouble is many streets in Dunedin do not have much parking, houses with no driveways so walk up only. Makes them harder to rent etc.

4 - Be wary of room by room properties as will be more operating costs than just a house (often LL covers internet, electricity etc) so do your calculations carefully.

5 - Flood areas on the flats

You are in Auckland so why not look at Hawkes Bay, Palmy, etc, They are in the same Island to and tax deductible when visiting the sunny Hawkes Bay and staying at the vineyard.

We went there in 2012 as houses are newer (1950's up) and generally on flat sections with parking. Gross returns were initially in the 20+ range but those days are long gone now unfortunately but still 9+ % for ok areas if you work hard and fast to secure them. You are going to have your property managed so you won't have any day to day hassles.

Prices are rising in HB & Dun as they are everywhere as we are well into the cycle now and the regions gain speed now (which they are all doing).

[Anthonyacat]

Also watch out for the price of property management in the area!

I couldn't find anything for less than 9%+GST, often with a surcharge for student rentals.

And you generally don't want to go with the lowest price, anyway, so you'd be looking at the 9.5-10% range!

[nicsa122]

Agree with all the points by ScottSi. Take a look at the 2GP hazards map for areas to avoid. Some streets will be good for sun on one side and bad on others, and you really need the sun in Dunedin. Some suburbs will have good parts and bad parts. I read somewhere that brockville makes great returns and is going up in value...but it has a bad stigma and don't know where I read that. Don't buy I south Dunedin, you may have to visit the house some day and you don't want to have to venture into south d if you don't have to. Anywhere central city I imagine is good...Belleknowles,
Maori Hill and Roslyn all great suburbs. I wouldn't want to invest in a student flat, I was a student in Dunedin and my flatmates use to treat the landlord like a flat mediator when they were bickering, and would call him out over the stupidest things...never open windows, party every weekend, show no respect for the house.

[property newbie]

So much to learn...Thank you all so much and these are exactly the kind of info I am after. Still trying to decide which region to focus on and do my research..