Investing in Auckland
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Articles by Salesh Chand.
While some people are still concerned about the property market and are cautious about investing, it is my opinion that now is a great time to invest in Auckland. Why do I say that? For a number of reasons, which I outline below.
1. Low interest rates
Interest rates are at record lows, and chances are they will stay that way for some time. This makes it easier for investors to fund their borrowing, and helps to produce higher rental yields.
2. The market is stable
Over the last 12 months or so, we have seen price decreases in some suburbs of Auckland, but the market now appears to be stable/flat. There are still discounted deals available, particularly from vendors who are under financial stress. Due to Auckland’s growing population, high employment, higher wages and supply-demand imbalance, I don’t see any major indicator causing further price reductions (unless we suffer a left-field global economic event).
3. Rents are increasing
Increasing rents means improved cash flow for Auckland investors, so buy-to-hold yields are starting to look better.
4. Shortage of rental properties
Due to a significant shortage of rental accommodation in Auckland, rental properties are in very high demand. This means you are able to get good rent and have no shortage of good tenants.
To illustrate, I recently had to give tenants in one of my properties 90 days’ notice. I believed this would give them plenty of time to find alternative accommodation. On the day they were due to move out, I went to the property to say goodbye. Everything was packed up in the car, and I asked where they were moving to. Their answer? “We don’t know. We have been looking for somewhere for the last three months. Every open home we go to, we see the same families who are in the same situation as us.”
This was very hard for me to hear, and illustrates the desperate need Auckland has for good rental properties.
Summary
All of the above leads to the potential for positive cash flow and great investing in Auckland. Clearly, you still need to choose the right sort of property in the right areas, and adopt the best strategy. For example, houses of multiple occupancy (HMOs) and rent by the room can be excellent ways to increase the yield properties produce. You can learn about these and other property investing strategies at our property seminars and courses.
Due to a significant shortage of rental accommodation in Auckland, rental properties are in very high demand. This means you are able to get good rent and have no shortage of good tenants.
To illustrate, I recently had to give tenants in one of my properties 90 days’ notice. I believed this would give them plenty of time to find alternative accommodation. On the day they were due to move out, I went to the property to say goodbye. Everything was packed up in the car, and I asked where they were moving to. Their answer? “We don’t know. We have been looking for somewhere for the last three months. Every open home we go to, we see the same families who are in the same situation as us.”
This was very hard for me to hear, and illustrates the desperate need Auckland has for good rental properties.
Summary
All of the above leads to the potential for positive cash flow and great investing in Auckland. Clearly, you still need to choose the right sort of property in the right areas, and adopt the best strategy. For example, houses of multiple occupancy (HMOs) and rent by the room can be excellent ways to increase the yield properties produce. You can learn about these and other property investing strategies at our property seminars and courses.
Salesh Chand
Partner and Director of Business Services
© Gilligan Rowe & Associates LP
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Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.
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Hi Salesh, I just wanted to send you an email on behalf of GRA to say how fantastic we have found your company to date. As you know, Ben and I joined GRA a couple of months ago and have just found you so amazingly helpful in getting our new property set up correctly and sorted out. We have what I would consider a rather complicated structure as a result and it’s a fantastic feeling to know that we are getting everything done in the best way possible. We have just had approval to put a minor dwelling on the property which will make a massive difference in terms of cash flow and obviously value, something we would never have even thought of without GRA and which we are very excited about. During the buying process we attended a seminar with Matthew and from the outset thought he was fab. We therein signed up for property school and found this nothing short of fantastic. The content was relevant, up to date and comprehensive, but more importantly it was taught in a way that we could actually understand and really get value out of. I wanted to mention also, that everybody GRA have recommended to us has been just so efficient and absolute masters at what they do. A wonderful network of people that we feel very lucky to now be able to call on. From Kris Pederson and Bryan Rist who put our mortgage together to the insurance guys they then referred us to, I’m super impressed. Within GRA, Ellery has probably turned things around for us faster than I’ve ever known before, something which we appreciated so very much when it came to crunch time. She’s always a pleasure to deal with and again, we’re stoked. We’ve just settled on the property today and are about to go and get the keys. I’m pretty pumped and hence this email is probably rather excitable. So, a massive thank you to you Salesh, the partners for such a fabulous 6 weeks at property school and everyone at GRA for their help. May this be the start of our property empire. Thanks again, - A & B - July 2015
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