Welcome
to the twentieth 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 of course West Auckland.
Being a high preforming Real Estate Agent (top 1% in New Zealand) for over 26
years and always working in West Auckland I know the real estate market and the
rental market very well.
In this
and future 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 or lifestyle real estate matter.
|
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Sale Prices
|
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Suburb
|
Median selling price Mar 2016
|
No sold
|
Days to sell
|
Titirangi
|
$861,000
|
31
|
30
|
West Harbour
|
$850,000
|
21
|
34
|
Glendene
|
$720,750
|
14
|
36
|
Henderson
|
$712,500
|
88
|
27
|
Hobsonville
|
$920,000
|
8
|
13
|
Massey
|
$660,000
|
57
|
30
|
Ranui
|
$640,000
|
24
|
29
|
Sunnyvale
|
$572,000
|
11
|
25
|
Te Atatu Peninsula
|
$916,000
|
27
|
31
|
Te Atatu South
|
$740,000
|
37
|
29
|
Glen Eden
|
$689,000
|
43
|
27
|
New Lynn
|
$638,000
|
50
|
28
|
Laingholm
|
$802,500
|
6
|
32
|
Swanson
|
$855,000
|
5
|
25
|
Oratia
|
$1,426,000
|
5
|
59
|
Royal Heights
|
$714,250
|
6
|
22
|
Herald Island
|
$1,100,000
|
5
|
14
|
Whenuapai
|
$898,000
|
4
|
38
|
Waitakere
|
$700,000
|
4
|
74
|
Kelston
|
$691,944
|
6
|
30
|
Green Bay
|
$778,500
|
8
|
16
|
Current Mortgage Rates (11/04/2016)
|
|||||
Float
|
1 yr fixed
|
2 yr fixed
|
3 yr fixed
|
5 yr fixed
|
|
ANZ
|
5.64%
|
4.25%
|
4.35%
|
4.99%
|
5.30%
|
ASB
|
5.55%
|
4.15%
|
4.39%
|
4.65%
|
5.25%
|
BNZ
|
5.69%
|
4.25%
|
4.39%
|
4.64%
|
5.15%
|
Westpac
|
5.75%
|
4.25%
|
4.39%
|
4.80%
|
5.19%
|
Kiwi Bank
|
5.45%
|
4.29%
|
4.25%
|
4.75%
|
4.99%
|
Best of other lenders
|
5.45%
|
4.10%
|
4.25%
|
4.64%
|
4.99%
|
Source – J Goodrum – Internet search
| Current Rents | |||||
| 1st Sep 15 - 29th Feb 16 | |||||
| Glen Eden | Average Rent | Bonds Paid | Royal Heights/Massey | ||
| 2 brm apartment | $334.00 | 5 | 1 brm flat | $290.00 | 8 |
| 2 brm flat | $360.00 | 12 | 2 brm flat | $360.00 | 7 |
| 1 brm house | $330.00 | 6 | 2 brm house | $380.00 | 24 |
| 2 brm house | $375.00 | 23 | 3 brm house | $450.00 | 132 |
| 3 brm house | $450.00 | 105 | 4 brm house | $530.00 | 32 |
| 4 brm house | $510.00 | 22 | 5+ brm house | $605.00 | 14 |
| Glendene | Te Atatu South | ||||
| 2 brm flat | $360.00 | 17 | 1 brm flat | $272.00 | 6 |
| 2 brm house | $390.00 | 20 | 2 brm flat | $375.00 | 10 |
| 3 brm house | $450.00 | 46 | 2 brm house | $395.00 | 23 |
| 4 brm house | $540.00 | 15 | 3 brm house | $470.00 | 50 |
| Henderson | 4 brm house | $530.00 | 13 | ||
| 2 brm apartment | $380.00 | 9 | Te Atatu Peninsula | ||
| 1 brm flat | $300.00 | 12 | 1 brm flat | $310.00 | 7 |
| 2 brm flat | $372.00 | 38 | 2 brm flat | $400.00 | 7 |
| 3 brm flat | $425.00 | 5 | 2 brm house | $402.00 | 16 |
| 1 brm house | $320.00 | 9 | 3 brm house | $490.00 | 82 |
| 2 brm house | $400.00 | 57 | 4 brm house | $590.00 | 17 |
| 3 brm house | $460.00 | 208 | 5+ brm house | $630.00 | 5 |
| 4 brm house | $550.00 | 79 | Titirangi | ||
| 5+ brm house | $595.00 | 15 | 1 brm flat | $295.00 | 22 |
| Kelston | 2 brm flat | $390.00 | 14 | ||
| 1 brm apartment | $300.00 | 26 | 1 brm house | $330.00 | 5 |
| 1 brm flat | $290.00 | 18 | 2 brm house | $395.00 | 19 |
| 2 brm flat | $320.00 | 13 | 3 brm house | $512.00 | 58 |
| 1 brm house | $300.00 | 5 | 4 brm house | $595.00 | 16 |
| 2 brm house | $375.00 | 13 | 5+ brm house | $625.00 | 8 |
| 3 brm house | $450.00 | 57 | West Harbour | ||
| 4 brm house | $530.00 | 17 | 1 brm flat | $300.00 | 5 |
| New Lynn | 2 brm house | $400.00 | 17 | ||
| 1 brm apartment | $320.00 | 20 | 3 brm house | $500.00 | 73 |
| 2 brm apartment | $392.00 | 10 | 4 brm house | $610.00 | 30 |
| 1 brm flat | $290.00 | 9 | 5+ brm house | $840.00 | 12 |
| 2 brm flat | $380.00 | 45 | Western Beaches/Rural | ||
| 3 brm flat | $425.00 | 7 | 1 brm flat | $280.00 | 9 |
| 2 brm house | $400.00 | 38 | 1 brm house | $375.00 | 6 |
| 3 brm house | $485.00 | 91 | 2 brm house | $360.00 | 37 |
| 4 brm house | $550.00 | 9 | 3 brm house | $487.00 | 58 |
| 5+ brm house | $650.00 | 5 | 4 brm house | $500.00 | 14 |
| Ranui | 5+ brm house | $615.00 | 6 | ||
| 2 brm flat | $330.00 | 6 | |||
| 2 brm house | $375.00 | 5 | |||
| 3 brm house | $450.00 | 67 | |||
| 4 brm house | $500.00 | 8 | |||
Source NZ Government building & housing
|
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Herald Island
|
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Date
|
Median selling price
|
5 year gain %
|
|
Mar 1996
|
$427,250.00
|
-
|
|
Mar 2001
|
No
results
|
-
|
|
Mar 2006
|
No
results
|
-
|
|
Mar 2011
|
No
results
|
-
|
|
Mar 2016
|
$1,100,000.00
|
-
|
|
Over 20 years
|
157.5%
|
||
|
|||
Waitakere
|
|||
Date
|
Median selling price
|
5 year gain %
|
|
Mar 1996
|
$255,000.00
|
-
|
|
Mar 2001
|
No results
|
-
|
|
Mar 2006
|
$520,000.00
|
-
|
|
Mar 2011
|
No results
|
-
|
|
Mar 2016
|
$700,000.00
|
-
|
|
Over 20 years
|
174.5%
|
||
Source NZ department of statistics
Renovations
Or Do-Ups – Does It Pay?
The purpose of buying a rental property is:
1. To
obtain rent and also a cash flow return on your investment.
2. To
hopefully enjoy the capital gain when the property prices increase.
As often stated in my earlier newsletters I regard 2 as the
most important. With such a strong market it is very difficult to say the least
to find a property today in West Auckland that is even close to cash flow neutral,
where the rent will match the outgoings of mortgage payments, rates, insurance,
maintenance and perhaps property management costs, let alone be cash flow
positive.
One way of rectifying this problem in the short term is to
buy a run-down property that requires renovation and if renovated properly can
make the property cash flow neutral or even positive by increasing the rent
that can be obtained. This quickly increases the value of the property well
above the cost of the renovations which means an instant capital gain.
There are a number of important points to bear in mind with
this strategy however:
1. Unless
you have particular expertise avoid any do up or renovation that involves
structural work or work requiring council consent. This can be both a lengthy
and expensive process and can thereby lose rent for the period of the work
which may be considerable. The improvement may not add much to the market
value.
2. Because
tenants will be harder on your rental property than most owner occupiers any
renovations and improvements will not last nearly as long as you may hope
before repeat renovations are required. For this reason renovations should be
done with durability in mind and perhaps to a lower level and so less expensive
standard of finish and/or workmanship than if putting the property on the
market for sale where the prospective buyer may want to live in the property
and may well be more discerning. Carpet and flooring is a good example, for a
rental choose a durable but inexpensive carpet rather than a luxury carpet as
you may find it needs to be replaced again in only a few years. Clean, tidy and
durable is what is required.
3. Again
unless you have particular expertise avoid buying monolithic homes with the
hope of recladding or fixing any leaky problems. This is a real gamble unless
you know exactly what you are doing and can buy at a large discount below what
a non-monolithic sound house would sell for. In general terms a full reclad is
removing the monolithic plaster type cladding and replacing it with for example
weatherboards is not as simple as it may seem. This work frequently triggers
council requirements to bring the whole property up to the latest building
code, often meaning more thermal insulation, double glazing and much more. I
say again unless you are an expert in this work it is best left alone.
4. Avoid
leasehold (not to be confused with freehold cross lease) property – full stop!
5. Sweat
equity – you can add equity by doing a lot of the cleaning, decorating and
minor repairs yourself. Don’t attempt work beyond your skills, get a tradesman
to do that but shop around for quotes. Ask your property manager for a list of
good trade’s people. These tradespeople won’t want to lose the property
managers work and so are likely to do a good job at a reasonable price for you
if you say your property manager recommended them.
By following these basic rules it is certainly possible to
add 10% or even as much as 20% to the value of a property quite quickly. If it
costs you $20,000 for renovations and decoration and you add in your sweat
labour it is possible to add as much as $100,000 to the value of a property. Thereby
converting a cash flow negative to a higher value, higher rent earning cash
flow neutral or even cash flow positive property.
If you can get access to the property (if it is empty)
before settlement by having a access clause in the agreement you may get most
or even all of the work done prior to settlement, saving you lost rent and
mortgage payments. Of course you need to know your numbers before you buy a do
up property. What you will need to do to it, what will it cost, how long will
it take, what will it be worth when the work is done and what will be the
increase in rent the renovations will generate?
Done correctly buying a do-up especially if you are able to
invest sweat equity ie you time and effort can be very worthwhile.
Until
next time,
Best
wishes,
John Goodrum
Licensee
Agent REAA 2008
021945140, 09 838 8895
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