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View Full Version : Residential Rental Property Current Yields - Help Please :)



Lizard
16-11-2007, 08:49 AM
Would like to have any information on typical current yields for residential rental property transactions? Particularly interested in suburban Wgtn area, low maintenance and assume appropriately rented. TIA :)

Arbitrage
16-11-2007, 09:41 AM
Try the Dept of Building and Housing website for the latest rentals

http://www.dbh.govt.nz/market-rent?Region=8

OldRider
16-11-2007, 11:22 AM
Have you seen this article
http://www.stuff.co.nz/4275367a13.html

Lizard
16-11-2007, 02:58 PM
Thanks, the rent information is pretty easy to get. I really need some more idea on yields. The Stuff article helps, but I'm not convinced that 4% yield is current reality?!?

Any comments from current property owners or likely investors on the kind of yields they would be willing to transact on this type of property as either a potential buyer or seller would be useful. Real estate agents seem to give out different guidelines to buyers and sellers, so just interested in getting some more opinions.:)

Jess9
16-11-2007, 07:31 PM
6.1% gross on a recent buy in PNTH, in a quality area.

Serpie
16-11-2007, 08:55 PM
Anything over 6% on current valuations is pretty good.
I'm getting 6.1% on a couple on the city fringe in ChCh, but that's based on purchase price of 18 months ago.
I'm getting 13% yield, based upon purchase price on another one, but if you use the current valuation it drops to 5.1%.
I wouldn't consider buying rentals at the moment because of the low yields. 4% wouldn't surprise me in some areas.

David Hardman
16-11-2007, 09:47 PM
3 bedroom, brick and tile house in Takapuna, Auckland

Last years rent - $23,400
Paid $265k in 2002
Current value - $560-580k

Current yield around 4.1%

Selling the property early next year.

Arbitrage
17-11-2007, 09:24 AM
Current yield on city fringe apartments in auckland is hovering around 4.5-5.5%. This should improve as prices stabilise and rents increase over the next few years.

Lizard
17-11-2007, 08:25 PM
Thanks for the comments. All very helpful. :)

Jess9
22-11-2007, 08:40 PM
Rents to increase on the radio today - about 6% pa for the next several years. Broad brush of co****, but of some comfort to landlords, especially if it happens in your street ; )

Arbitrage
04-12-2007, 08:47 AM
Just let an apartment yesterday in inner city fringe Auckland. Rent up 10%. Still looks cheap and yield still under 6% so still a way to go yet.

Randy
04-12-2007, 11:58 AM
Westpac predict rental increases of 6% pa over next 5 years with incomes rising 5%

Gross yield to jump from 4% to 5.3%

The Great Gold Guru
09-12-2007, 02:06 PM
I am still on the prowl for good residential property , will be hoping for some good deals early next year. Looking to buy 2 villas in Grey Lynn, Mt Eden, Ponsonby fringes or maybe as far out as Kingsland. Will offer minimum $50k below asking price and hope to find a vendor getting impatient ( or a bank getting impatient with a vendor ) . Am trading property where I live ( Blenheim ) for around $25k profit each time , with profits going straight to additional payments off the mortgages on my rental portfolio. Also looking to buy in Te Atatu Sth and Avondale in 2008. Rental income now $10k / month from portfolio and cashflow just positive with one property now mortgage free subsidising a lot of negative cashflow ones. Still think residential property in NZ offers a great way to build one's wealth over the long term.

PS. Wouldn't touch apartments with a barge pole .... not until prices fall at least another 25-30% and the govt opens the immigration flood gates again !!. Buy nice period villas in good suburbs in Auckland and over the long term you won't go wrong .... ( also like Wellington, Nelson , Blenheim, smarter suburbs of Dunedin and small towns like Ashburton , Havelock Nth and Matamata ) ...

Fix rates at anything under 9.25% ....

Arbitrage
09-12-2007, 04:05 PM
Are you sure you want to go down the villa track? While capital gains have been large in the past, they have major issues with maintenance. Also you won't find one in good condition for under $700k even with a 50k discount.

Don't underestimate apartments. They have stopped building them in Auckland and as demand increases with supply diminishing you could see some price surges in quality precincts and building over the next few years.

The Great Gold Guru
10-12-2007, 08:44 AM
nah , only villa's for me my friend , capital gains have far outstripped anything else over the last decade , can't see that changing. I have heard that Auckland is getting a "new tallest building" on the Victoria St site where the reverse bungy in located , just down from Sky City. Going to be apartments from what I have heard . That's the problem with apartments , as soon as developers see prices rising they go and knock up another 200 units and the market momentum is halted ... you can't just build another period villa in Ponsonby or Grey Lynn ... the old demand/supply chestnut !!

Simple economics really ... villas should outperform apartments over the long term.

maintenance costs vs body corporate fees ... no contest as well !!!

George
10-12-2007, 08:47 PM
Hi Guru
Agree with Arbitrage a bit, I work on older houses doing them
up and painting etc. and some of them are in bad, read discraceful
condition. I am convinced the different owners held them for capital gains
only and just let them go to rot and hoped eager buyers would
not look too closely.
We bought a 1920's villa in Newington Rd Henderson with views
and great location to the town and rail station but the owner
had done zilch in his 11 years. We knocked him down to 312k
but wish it had been lower as there was months of work to do.
New gv is 315k whether that means much as I have added 30k at
least.
What's your view on the likes of Henderson over the next few
years, I see new carparks in unlikely places next to the rail
line and feel that things will keep moving ahead in the big
cities while the provincial towns retreat a bit.

STRAT
11-12-2007, 08:33 AM
Are you sure you want to go down the villa track? While capital gains have been large in the past, they have major issues with maintenance. Also you won't find one in good condition for under $700k even with a 50k discount.

Don't underestimate apartments. They have stopped building them in Auckland and as demand increases with supply diminishing you could see some price surges in quality precincts and building over the next few years.Hi Arbitrage. Not sure I agree. There are a huge number of second-rate apartment buildings in Auckland erected to cater to overseas students. This industry is in decline and so is the demand for apartments. As long as a high NZ dollar keeps NZ from being competitive in acquiring overseas students they will stay empty which will keep rents and values down.

Arbitrage
11-12-2007, 12:17 PM
Yes Strat you are right but to call the apartment market in Auckland one market, is like the media talking about the nz housing market.
Sure there are some multi storeyed ant heaps in central Auckland. Not sure what the long term prognosis is, possibly demolition, or someone suggested to me that redevelopment eg amalgamating adjacent small apartments into bigger more liveable ones.
However there are also some really nice high quality apartments in great locations. Look around the viaduct or high court precincts. Prices here are relatively independent of the student accommodation. I am a great believer that demographics will increase demand in those locations. A lot of baby boomers won't want to be mowing a large section or vacuuming an empty large house into older age. So flog the suburban albatross, buy an apartment, keep the beach house, or travel. Something for us all to look forward to. Now if only the sharemarket would improve...