Hello,
Welcome
to the fourth 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, the 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 August 2014
|
No sold
|
Days to sell
|
Titirangi
|
$ 610,500.00
|
14
|
44
|
Hobsonville
|
$ 562,500.00
|
6
|
71
|
West Harbour
|
$ 665,000.00
|
16
|
42
|
Glendene
|
$ 468,000.00
|
10
|
25
|
Henderson
|
$ 575,000.00
|
49
|
30
|
Massey
|
$ 490,000.00
|
37
|
25
|
Royal Heights
|
-
|
-
|
-
|
Ranui
|
$ 458,000.00
|
21
|
23
|
Sunnyvale
|
-
|
-
|
-
|
Green Bay
|
$ 555,000.00
|
13
|
45
|
Te Atatu Peninsula
|
$ 747,500.00
|
12
|
30
|
Te Atatu South
|
$ 623,000.00
|
22
|
28
|
Glen Eden
|
$ 504,000.00
|
39
|
29
|
Kelston
|
$ 453,000.00
|
8
|
28
|
New Lynn
|
$ 373,000.00
|
87
|
169*
|
Source REINZ *New apartment building effect
Current Mortgage Rates 19/09/2014
|
|||||
Float
|
1 yr fixed
|
2 yr fixed
|
3 yr fixed
|
5 yr fixed
|
|
ANZ
|
6.74%
|
6.15%
|
6.49%
|
6.49%
|
7.15%
|
ASB
|
6.75%
|
6.09%
|
6.40%
|
6.65%
|
6.99%
|
BNZ
|
6.74%
|
5.99%
|
6.39%
|
6.59%
|
6.99%
|
Westpac
|
6.59%
|
6.09%
|
6.39%
|
6.65%
|
6.99%
|
Kiwi Bank
|
6.65%
|
5.99%
|
6.39%
|
6.65%
|
6.79%
|
Best of other lenders
|
5.64%
|
5.75%
|
5.75%
|
5.75%
|
6.79%
|
Source
– J Goodrum – Internet search
Current Rents
|
||
1st Mar - 31st Aug 14
|
||
Glen Eden
|
Average Rent
|
Bonds Paid
|
1 Brm flat
|
$
245.00
|
5
|
2 Brm flat
|
$
312.00
|
19
|
3 Brm flat
|
$
379.00
|
5
|
2 brm house
|
$
345.00
|
29
|
3 brm house
|
$
414.00
|
98
|
4 brm house
|
$
529.00
|
17
|
Glenene
|
||
1 Brm flat
|
$
320.00
|
6
|
2 Brm flat
|
$
340.00
|
15
|
2 brm house
|
$
367.00
|
19
|
3 brm house
|
$
417.00
|
66
|
4 brm house
|
$
491.00
|
17
|
Henderson
|
||
1 Brm Appartment
|
$
264.00
|
6
|
2 Brm Appartment
|
$
407.00
|
10
|
3 Brm Appartment
|
$
413.00
|
6
|
1 Brm flat
|
$
290.00
|
23
|
2 Brm flat
|
$
330.00
|
45
|
3 Brm flat
|
$
441.00
|
5
|
1 brm house
|
$
318.00
|
6
|
2 brm house
|
$
371.00
|
51
|
3 brm house
|
$
427.00
|
202
|
4 brm house
|
$
514.00
|
98
|
5+ brm house
|
$
601.00
|
10
|
1 room
|
$
288.00
|
8
|
Kelston
|
||
1 Brm Appartment
|
$
281.00
|
19
|
1 Brm flat
|
$
266.00
|
15
|
2 Brm flat
|
$
337.00
|
12
|
1 brm house
|
$
270.00
|
5
|
2 brm house
|
$
359.00
|
25
|
3 brm house
|
$
421.00
|
51
|
4 brm house
|
$
461.00
|
15
|
5+ brm house
|
$
593.00
|
5
|
1 room
|
$
149.00
|
6
|
New Lynn
|
||
1 Brm Appartment
|
$
266.00
|
24
|
2 Brm Appartment
|
$
326.00
|
13
|
1 Brm flat
|
$
261.00
|
10
|
2 Brm flat
|
$
340.00
|
54
|
3 Brm flat
|
$
401.00
|
10
|
2 brm house
|
$
370.00
|
32
|
3 brm house
|
$
436.00
|
84
|
4 brm house
|
$
534.00
|
24
|
5+ brm house
|
$
571.00
|
5
|
1 room
|
$
195.00
|
8
|
Ranui
|
Average Rent
|
Bonds Paid
|
2 brm house
|
$ 359.00
|
13
|
3 brm house
|
$ 399.00
|
67
|
4 brm house
|
$ 477.00
|
10
|
Royal Heights/Massey
|
||
2 Brm flat
|
$ 327.00
|
14
|
2 brm house
|
$ 360.00
|
24
|
3 brm house
|
$ 410.00
|
157
|
4 brm house
|
$ 471.00
|
34
|
5+ brm house
|
$ 560.00
|
6
|
Te Atatu South
|
||
1 Brm flat
|
$ 282.00
|
9
|
2 Brm flat
|
$ 355.00
|
18
|
2 brm house
|
$ 373.00
|
14
|
3 brm house
|
$ 448.00
|
63
|
Te Atatu Peninsula
|
||
1 Brm flat
|
$ 273.00
|
5
|
2 brm house
|
$ 372.00
|
23
|
3 brm house
|
$ 453.00
|
71
|
4 brm house
|
$ 509.00
|
20
|
Titirangi
|
||
1 Brm flat
|
$ 324.00
|
9
|
1 brm house
|
$ 281.00
|
7
|
2 brm house
|
$ 386.00
|
25
|
3 brm house
|
$ 462.00
|
66
|
4 brm house
|
$ 547.00
|
20
|
5+ brm house
|
$ 702.00
|
7
|
West Harbour
|
||
1 Brm flat
|
$ 310.00
|
9
|
2 Brm flat
|
$ 320.00
|
6
|
2 brm house
|
$ 368.00
|
15
|
3 brm house
|
$ 455.00
|
85
|
4 brm house
|
$ 588.00
|
45
|
5+ brm house
|
$ 688.00
|
16
|
Western Beaches/Rural
|
||
1 Brm flat
|
$ 231.00
|
7
|
1 brm house
|
$ 282.00
|
6
|
2 brm house
|
$ 379.00
|
31
|
3 brm house
|
$ 456.00
|
55
|
4 brm house
|
$ 521.00
|
24
|
5+ brm house
|
$ 601.00
|
5
|
1 room
|
$ 185.00
|
7
|
Source
NZ Government building & housing
|
||||||
West Harbour
|
||||||
Date
|
Median selling price
|
5 year gain %
|
||||
Aug 1994
|
$ 125,000.00
|
|||||
Aug 1999
|
$ 265,250.00
|
112.0
|
||||
Aug 2004
|
$ 464,500.00
|
75.7
|
||||
Aug 2009
|
$ 500,000.00
|
7.6
|
||||
Aug 2014
|
$ 665,500.00
|
33.0
|
||||
Over 20 years
|
432.0%
|
|||||
|
||||||
Massey
|
||||||
Date
|
Median selling price
|
5 year gain %
|
||||
Aug 1994
|
$ 125,000.00
|
|||||
Aug 1999
|
$ 177,500.00
|
42.0
|
||||
Aug 2004
|
$ 255,000.00
|
43.7
|
||||
Aug 2009
|
$ 325,000.00
|
27.5
|
||||
Aug 2014
|
$ 490,000.00
|
50.8
|
||||
Over 20 years
|
292.0%
|
|||||
Source
NZ dept of statistics
The benefits and
pitfalls of Subdividing
For
those landlords (or homeowners in general for that matter) who own a property
on a large section or investors who buy a property on a large section with the
option of subdividing to add value may seem very attractive. Whilst in general terms
there is a financial benefit to be gained all is not as it seems. Let’s suppose
you own a 100m2 rental property on a large say 1100m2 section.
In West
Auckland providing you can produce two sections of 450m2 each net size
(excluding driveways) you can “of right” subdivide. In some locations the
zoning allows smaller than 450m2 and discretion may be granted to allow
slightly smaller than 450m2 even when that is the zoning requirement.
A
typical subdivided section in West Auckland of 350 – 500m2 may be worth between
$200,000 and $450,000 depending on a whole range of factors. To be worth
$450,000 it would have to tick all the builders boxes – a great location,
excellent views (probably water views), be near level, set well back from the
existing property, have separate driveway access, no storm or wastewater
service interfering with the building platform, well presented and desirable
neighbouring properties and all services (power, water, telephone, driveway,
fences etc) already in place.
Obviously
if one or more of these factors are missing (or there are other negative
factors) then the value would be progressively less. Let us take as an example
a section with middle market value of say $375,000. Many owners think if they
subdivide and sell the section or create another site and build another rental
on it they will increase their equity very substantially, often thinking they
will be $250,000 or even $300,000 better off based on these typical figures.
WRONG.
Here are some of the costs involved:
·
Surveyor
fees
·
New
driveway
·
Fencing
between the two sections
·
Stormwater
connections and possibly stormwater upgrade contribution
·
Wastewater
connections and possibly wastewater upgrade contribution
·
New
water meter connection $7000 - $12,000!
·
Council
fees (around $50,000 in total is typical) – 223 and 224C subdivision costs –
Reseve contribution – Development levy etc
·
Power
connection
·
Telephone
connection
·
Legal
fees – Lawyer – title office
·
Real
Estate fees to sell the section
·
Arborist
report (if trees are involved)
·
Finances
costs to meet all these expenses
These
are the certain costs but there may well be many more (often unexpected) along
the way – such as soil contamination reports, traffic impact reports,
geotechnical reports and so on. It is a brave (some may say foolish person) who
does not allow a $30,000 - $50,000 contingency for the unexpected when
subdividing.
A
straight forward subdivision of a section into 2 sites would typically cost
around $100,000 plus contingency costs. Even so one would think - $250,000 -
$300,000 extra value less even $150,000 cost to subdivide means a gain of
$100,000 - $150,000 doesn’t it?!
WRONG.
Think for a minute. If the original house was on 1100m2 of land and now it has
lost half that land it is going to be worth a lot less. How much less? That is
hard to say but it will be significate. Probably not $100,000 - $150,000 but a
good portion of that amount is certain. I know of examples where people have even
lost money by subdividing ending up with a section and a house on a smaller
site with a combined value less than the original property when the subdivision
costs are all factored in.
Subdivision
typically takes 9 plus months providing everything goes well. It can take a lot
longer if snags occur. With a shortage of tradespeople at the moment I know one
small scale developer who cannot get a drainlayer for 2 months at least and he
is a past client of the drainlayer. Many drainlayers have six months work ahead
of them and won’t even take on more work.
So what
to do? Unless you are experienced at doing subdivisions think seriously about
the risks, work and time involved. If you have such a property (a subdivision
potential property) and want to sell there is no doubt you will get quite a
premium over and above one without that potential. How much more? $100,000 plus
is not unusual.
I am
not saying do not subdivide. I am saying if you do be aware of the pitfalls
that you may encounter along the way.
Until
next time,
Best
wishes,
John
Goodrum
Licensee
Agent REAA 2008
021945140
09 838 8895
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