Hello,
Welcome
to the second edition of the West Auckland monthly Residential Landlords
Newsletter.
I am a
landlord myself and have been for over 30 years. I currently own rental properties
in South Auckland, North Shore and West Auckland. Being a high preforming Real
Estate Agent (top 1% in New Zealand) for over 25 years and always working in
West Auckland I know the real estate market and the rental market very well.
In this
and ongoing newsletters I hope to provide ongoing up to date information
relevant to landlords who own rental properties in West Auckland.
Regular
features will include:
- Current sale prices
- Current mortgage rates
- Current rents
- A monthly suburb spotlight review
- A relevant feature article each month
I hope
you will find it useful. I am available for free advice and opinion on any
residential real estate matter.
|
Sale Prices
| |||
|
Suburb
|
Median selling price April 2014
|
No sold
|
Days to sell
|
|
Titirangi
|
$ 613,500.00
|
16
|
26
|
|
Hobsonville
|
$ 524,450.00
|
4
|
48
|
|
West Harbour
|
$ 705,000.00
|
23
|
25
|
|
Glendene
|
$ 521,250.00
|
8
|
25
|
|
Henderson
|
$ 528,000.00
|
56
|
34
|
|
Massey
|
$ 465,000.00
|
32
|
29
|
|
Royal Heights
|
$ 541,000.00
|
5
|
32
|
|
Ranui
|
$ 453,750.00
|
8
|
28
|
|
Sunnyvale
|
$ 438,675.00
|
8
|
25
|
|
Green Bay
|
$ 745,000.00
|
7
|
32
|
|
Te Atatu Peninsula
|
$ 616,250.00
|
22
|
24
|
|
Te Atatu South
|
$ 518,000.00
|
17
|
39
|
|
Glen Eden
|
$ 455,000.00
|
39
|
29
|
|
Kelston
|
$ 480,000.00
|
4
|
36
|
|
New Lynn
|
$ 536,000.00
|
32
|
28
|
Source
REINZ
Current
Mortgage Rates 22/07/2014
|
|||||
Float
|
1 yr fixed
|
2 yr fixed
|
3 yr fixed
|
5 yr fixed
|
|
ANZ
|
6.49%
|
6.05%
|
6.49%
|
6.65%
|
7.15%
|
ASB
|
6.50%
|
6.09%
|
6.40%
|
6.65%
|
6.99%
|
BNZ
|
6.49%
|
5.99%
|
6.39%
|
6.59%
|
6.99%
|
Westpac
|
6.24%
|
6.09%
|
6.39%
|
6.65%
|
7.40%
|
Kiwi Bank
|
6.40%
|
5.99%
|
6.29%
|
6.29%
|
6.95%
|
Best of other lenders
|
5.64%
|
5.75%
|
5.80%
|
5.85%
|
6.79%
|
Source
– J Goodrum – Internet search
Current Rents
Jan 14 - Jun 14
| Glen Eden | Average Rent | Bonds Paid |
| 2 Brm flat | $306.00 | 18 |
| 2 brm house | $343.00 | 26 |
| 3 brm house | $413.00 | 94 |
| 4 brm house | $514.00 | 18 |
| Glendene | ||
| 1 Brm flat | $308.00 | 8 |
| 2 Brm flat | $325.00 | 15 |
| 2 brm house | $365.00 | 19 |
| 3 brm house | $412.00 | 69 |
| 4 brm house | $485.00 | 17 |
| Henderson | ||
| 1 Brm Apartment | $282.00 | 7 |
| 2 Brm Apartment | $377.00 | 9 |
| 3 Brm Apartment | $405.00 | 6 |
| 1 Brm flat | $287.00 | 17 |
| 2 Brm flat | $330.00 | 48 |
| 1 brm house | $256.00 | 6 |
| 2 brm house | $374.00 | 46 |
| 3 brm house | $431.00 | 224 |
| 4 brm house | $512.00 | 90 |
| 5+ brm house | $613.00 | 11 |
| 1 room | $296.00 | 8 |
| Kelston | ||
| 1 Brm Apartment | $283.00 | 19 |
| 2 Brm Apartment | $383.00 | 5 |
| 1 Brm flat | $271.00 | 15 |
| 2 Brm flat | $326.00 | 13 |
| 2 brm house | $354.00 | 20 |
| 3 brm house | $425.00 | 57 |
| 4 brm house | $461.00 | 16 |
| 5+ brm house | $607.00 | 5 |
| 1 room | $165.00 | 7 |
| New Lynn | ||
| 1 Brm Apartment | $260.00 | 22 |
| 2 Brm Apartment | $322.00 | 14 |
| 1 Brm flat | $268.00 | 13 |
| 2 Brm flat | $330.00 | 62 |
| 3 Brm flat | $391.00 | 12 |
| 2 brm house | $374.00 | 31 |
| 3 brm house | $435.00 | 84 |
| 4 brm house | $502.00 | 20 |
| 5+ brm house | $575.00 | 5 |
| 1 room | $196.00 | 8 |
| Ranui | ||
| 2 brm house | $354.00 | 12 |
| 3 brm house | $394.00 | 68 |
| 4 brm house | $483.00 | 8 |
| Royal Heights/Massey | ||
| 2 Brm flat | $331.00 | 14 |
| 2 brm house | $360.00 | 24 |
| 3 brm house | $412.00 | 149 |
| 4 brm house | $467.00 | 33 |
| 5+ brm house | $597.00 | 5 |
| Te Atatu | ||
| 1 Brm flat | $275.00 | 10 |
| 2 Brm flat | $334.00 | 21 |
| 2 brm house | $377.00 | 12 |
| 3 brm house | $450.00 | 50 |
| Te Atatu Peninsula | ||
| 2 Brm Apartment | $399.00 | 6 |
| 1 Brm flat | $267.00 | 7 |
| 2 brm house | $379.00 | 19 |
| 3 brm house | $455.00 | 68 |
| 4 brm house | $512.00 | 20 |
| Titirangi | ||
| 1 Brm flat | $318.00 | 14 |
| 2 Brm flat | $363.00 | 9 |
| 1 brm house | $271.00 | 6 |
| 2 brm house | $382.00 | 21 |
| 3 brm house | $465.00 | 74 |
| 4 brm house | $579.00 | 22 |
| West Harbour | ||
| 1 Brm flat | $313.00 | 6 |
| 2 Brm flat | $331.00 | 8 |
| 2 brm house | $375.00 | 11 |
| 3 brm house | $444.00 | 93 |
| 4 brm house | $562.00 | 35 |
| 5+ brm house | $672.00 | 15 |
| Western Beaches/Rural | ||
| 1 Brm flat | $258.00 | 6 |
| 1 brm house | $261.00 | 5 |
| 2 brm house | $382.00 | 32 |
| 3 brm house | $458.00 | 52 |
| 4 brm house | $516.00 | 25 |
| 5+ brm house | $575.00 | 5 |
| 1 room | $170.00 | 6 |
|
||||||
Te Atatu South
|
||||||
Date
|
Median selling price
|
5 year gain %
|
||||
May 1994
|
$ 137,000.00
|
|||||
May 1999
|
$ 187,000.00
|
36.5
|
||||
May 2004
|
$ 280,000.00
|
49.7
|
||||
May 2009
|
$ 340,000.00
|
21.4
|
||||
May 2014
|
$ 565,000.00
|
66.2
|
||||
Over 20 years
|
312.40%
|
|||||
|
||||||
Glendene
|
||||||
Date
|
Median selling price
|
5 year gain %
|
||||
May 1994
|
$ 152,000.00
|
|||||
May 1999
|
$ 215,500.00
|
41.5
|
||||
May 2004
|
$ 293,500.00
|
36.5
|
||||
May 2009
|
$ 380,000.00
|
29.5
|
||||
May 2014
|
$ 570,000.00
|
50.0
|
||||
Over 20 years
|
275.0%
|
|||||
Source NZ statistics
Rental Property or
Shares?
There
is absolutely no doubt in my mind that residential property investment has consistently
outperformed investment in NZ shares. Almost every financial advisor and fund
manager has an agenda to earn an income from management fees and commissions. They
will continually advise their clients to either totally invest in shares or
have a “balanced” portfolio of shares and property. Not put all of your eggs in
the one basket!!
In my
view if the safest basket also gives the best return, why invest in the other
more volatile / risky / lower return basket at all. The new mantra is put all your
eggs in one basket and carefully look after that basket – your rental
investment.
You can
find numerous articles written by fund managers, share brokers and the like
portraying the returns on shares compared to rental property. Many are very
misleading because they compare the return on shares with property capital
gains but conveniently ignore the rental income. Here are some investment
figures:
NZX
Asset class Performance Annual Returns for 10 years June 2003 – June 2013
Listed
Property 8.3%
NZ
Shares 5.8%
In
other words 8.3% - 5.8% = 2.5%
difference
2.5% = 43.1%
5.8%
Property
performed 43.1% better than shares.
Price Trend for Auckland property
over the last 10 Years
|
|||||
2003
|
2008
|
2013
|
10 Yrs
|
||
West Auckland
|
$
223,919.00
|
$
380,414.00
|
$
448,847.00
|
100%
|
|
All Auckland
|
$
324,651.00
|
$
491,810.00
|
$
567,716.00
|
78%
|
|
If
shares are such a good investment why will the bank not fund 80% of the money
you may want to invest in the share market? The banks will if you have other
collateral. What is collateral? – Why real estate of course. Banks will lend
80% on rental properties which means you can use the banks money to leverage
your return massively.
Suppose
you have $200,000 to invest. With shares you invest $200,000 and receive at
that time $200,000 worth of shares. Using the NZX figures they would be worth
105.8% x $200,000 after a year = $211,600 a profit of $11,600 less brokerage
fees.
If
however you brought two rental properties valued at say $475,000 each and paid
the 20% deposit ($95,000) on each, allowing $5000 for legal valuation and
incidental costs. After a year the rental properties would be worth:
108.3%
x $475,000 each = $514,425
A
profit of $514,425 - $475,000 = $39,425 each x 2 properties = $39,425 x 2 = $78,850
In the
first couple of years there may be some further outgoings that are not fully
covered by the incoming rents but the net result is still likely to be well
ahead of the shares income. After a couple of years as rents rise there will
eventually be a net income over and above the capital gains.
Gearing
has made the superior return possible. With shares you receive income on the
$200,000 you invest. On rental property you receive capital gains on your
$200,000 invested PLUS the banks mortgage of $750,000 to you which is offset by
the tenants rent. Which would you prefer? As safe as Hanover Finance share
investment or as safe as houses investment?
Until
next time,
Best
wishes,
John
Goodrum
Licensee
Agent REAA 2008
021945140
09 838 8895
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