Hello Folks, I've recently relocated to NZ and had started looking into buying an apartment or house (2-3 bed).. based on what I've learnt from BiggerPockets is that you're better off with 2% Rule to remain profitable. Now the problem that I see here is that an average property is around 330k - 370k (nothing less) for a 2 or 3 bed apartment. The rents on an average is about $350 -$425pw depending on the location and amenities... wondering how should one approach to investing in a market like this where you can make only 1% ? And then you have this 50% of expenses :(
I'm based in Auckland - and have found the only way to get even close to the numbers people talk about here is to look outside of the main city centres.
So maybe if you're in Wellington check out Upper Hutt or Palmerston North (Though Palmy is notorious for slow capital growth).
Its almost impossible to find any +ve cashflow in the main cities... Good luck! Let me know how you get on.
Thanks James for your input.. glad there's someone out there who's from NZ :)
Sure.. I will keep you posted.. btw, how is the market in Auckland.. looking at Trademe, it appears that the prices are skyrocketing and you seemed to have bought a property already.. could you share some experience of yours and where did you invest ?
My place is in Avondale, Auckland. Its definitely an up-and-coming neighborhood. With the Auckland Unitary Plan proposing a lot more development in the area. So I'm confident it will only improve.
Though at hte moment I'm focusing on finding properties that dont impact my current cashflow. So need to be neutral or positive.
(i.e. I want to hold them long term and get the tenants to build my equity...)
I'm interested in investing near Wellington. How would you rank Porirua for value for money?
I'm also wondering what the hidden risks in the foreclosure market might be in New Zealand?
Thanks in advance for sharing your insight.
Carolyn there is no foreclosure market at all in New Zealand. We do have mortgagee sales where a bank is forcing a sale. There are very few of these in a year. Our market is highly regulated so defaults are uncommon. Porirua has some rough parts. If it is purely investment for new zealand then Auckland or Hamilton would be better growth wise. So why Wellington?
Hi @Carolyn Guertin - Small towns tend to have a lot of very small pocked of good vs bad value (Even street to street the quality of tenants will change). You will get a much better yield in smaller towns (around 8%) but very little capital gains. Whereas in Auckland you'll probably only get 2.5% yield but the market has been going crazy the last 3 or 4 years. So depends what your strategy is.
If you're going for a small town I recommend talking to a few property management companies in those towns to get a feel for which streets are worth investing in, and look at historical values etc.
Maintenance and rehab is expensive in NZ, so if there is any work to be done get quotes before you buy. And always do a meth test!
At the risk of confusing you @Carolyn Guertin , which is not my intention, I wouldn't go near small towns in NZ when you are overseas. You want 100,000 population minimum and lots of jobs. Auckland, Hamilton or Wellington are safe markets requiring less expertise to get a decent return and have high probability of capital growth over time.
Thanks all. I appreciate you sharing your expertise. You've given me new areas to investigate.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Join the Largest Real Estate Investing Community
Basic membership is free, forever.