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My company has just sold a residential property in Manukau for $280k with a rental of $400/week, giving a cashflow return after rates, insurance and maintenance of 6.35%. Plus it is subdivisible. Rents in Manukau are increasing at 3-5% pa. Even so, it is not worth subdividing at this current time such is the weakness of the market. For those intending to hold for a few years it could be a good thing though. We have taken a good margin and moved on........we have another one showing 6.6% net but not subdivisable.
The good news is that in large parts of NZ you can fully fund a rental property out of cash flow even without even needing the now disallowed depreciation deduction to balance things out, and with the rental market on an increasing trend plus replacement cost increasing all the time the future for investors actually looks OK.
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There have been a number of analyses lately to show that the Auckland residential market is performing better than the rest of NZ in terms of capital and rental growth. That is good news for Auckland investors who can also be confident that there is a strong natural population growth needing a roof over their heads, plus the majority of immigrants go to Auckland. When the next immigrant surge occurs in a year or three's time, prices will move up again.
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I see there is a very tidy 7 brm 2 bathroom house for sale in Ilam rented for over $1,000/week for $439,000. If you could swing a deal at $400,000 that is a 13% gross return and probably around 11.6% net after rates, insurance & maintenance if self-managed and with 2 weeks vacancy factor p.a.
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Nice find, the numbers look great, hard to find a downside... Though managing 7 students could be a bit of a pain.
Are you interested in this one Denpal? I found it on trademe and see it has open day today
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Don't forget the tax on the income plus no depreciation claims any more.
What is the feeling in ChCh about future capital gains on residential property?
In Auckland we seem to be sitting on 5% pa while the rest of the country drifts.
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Hi trackers, I'm not a buyer - as bought a 5-brm in Burnside a couple of months back - but it certainly looked good on the numbers!
Capital gain - should be OK in the solid areas of Chch - building costs are set to increase a fair bit - with good demand I would think in due course for the areas like Ilam & Riccarton North which are close in and good ground. Of course Riccarton South was originally swampy (south of Riccarton Rd).