Innholdsfortegnelse for No 147 Feb 2016 i NZ Property Investor

HAVE YOU BEEN SEARCHING desperately for The One? The perfect investment property that is. The one that doubles your deposit in a day and has a sky-high yield? You are not alone. Many investors spend their spare time trawling real estate websites, answering phone calls in their lunch breaks and inspecting properties after hours. But what if you could dedicate yourself solely to seeking out the best deals? A group of professionals called property finders do just that. They spend their working week seeking out the hottest of properties, or those ripe for development/ renovation and for a cut of the purchase price, they present contracts to eagerly awaiting clients. Their clients are privy to the kinds of deals most investors only dream of landing. But how can you get…

REINZ HOUSE SALES: DOWN Sales volumes were down nationwide in December. However, the decline was most dramatic in Auckland. INTEREST RATES: DOWN Interest rates are still at record lows. OCR: DOWN The Reserve Bank cut the OCR to 2.50% in December. IMMIGRATION: UP Migration continues to hit record highs, according to Statistics NZ’s latest data. BUILDING CONSENTS: UP Building consents were up nationwide in November, says Statistics NZ. However, Auckland building activity needs to pick up further to address the supply shortage. MORTGAGE APPROVALS: UP Reserve Bank data shows lending strengthened in December, after a dip in November. RENTS: RENTS UP Rents were up slightly in markets nationwide in November. This included Auckland – but SuperCity rents are still not keeping pace with prices.…

 BEN MITCHELL WILL DO ANYTHING for a dollar. He's worked as an apple-picker, a waiter and a boxer. He’s bought software that picks winning racehorses (not reliably) and considered all manner of franchises and shares. MY MUM WAS A SOLO MUM, LIVING IN A STATE HOUSE, WORKING THREE OR FOUR JOBS TO PUT FOOD ON THE TABLE.MY COUSINS WERE THE ‘ONCE WERE WARRIORS’ TRIBE. A WEALTHY LIFESTYLE WAS A FAR-OFF DREAM, BUT WE WERE WEALTHY IN SPIRIT. He’s refreshingly upfront about his attitude to money: he likes it and he’s prepared to work hard to get more of it. Mitchell says the kind of people who won’t admit money’s important are usually those who’ve never had to go without. “My mum was a solo mum, living in a state house,…

1 Comprehensive due diligence on the property and your planned project is key. 2 Understand the local market and its cycle when you embark on a development. 3 Work out relevant costs comprehensively before embarking on a development. 4 Understand all the rules and requirements applicable to your property. 5 Engage with the Council from early on in the process. 6 Put together an experienced team of professionals. 7 Always abide by your feasibility study. Don’t get carried away and try to punch above your weight. 8 Approach the development as a business. 9 Plan for failure as well as success: it is necessary to think through all potential problems. 10 Don’t over-capitalise for your market.…

IF ECONOMIC CONDITIONS ARE FAVOURABLE, THE RATE COULD GO HIGHER THAN PEOPLE EXPECT – SANDY RICHARDSON INTEREST RATE TRENDS ARE providing further stimulus to New Zealand’s property market through reduced borrowing costs. The Reserve Bank of New Zealand’s precautionary decision to cut the official cash rate (OCR) to 2.5% early last December indicates anxiety over economic outlook. Since April 2009, when the OCR was first set at 2.5% in the wake of the global financial crisis (GFC), the RBNZ has struggled to increase its key interest rate again. The December OCR cut was the third time in recent years the RBNZ has had to go as low as 2.5%; it has not pushed the rate up further than 3.5% over the same period. Ironically, given the RBNZ’s long-stated worries about…

EVEN IF YOUR RENTAL PROPERTY IS SNAPPED UP BY TENANTS, YOU STILL NEED TO KEEP ON TOP OF THE MAINTENANCE – AARON TUNSTALL THE FIRST WEEK OF FEBRUARY is the absolute peak of tenant demand all over New Zealand. It’s summer, it’s a new year, the holiday is over – the perfect time to move. Many people are relocating, changing jobs or starting a new training course; Auckland’s apartment market is at fever pitch as the universities begin to buzz with students. That demand has been reflected in rents, which have climbed significantly over the past 12 months. Renting a two-bedroom 40m2 Volt apartment (furnished) – our yardstick for the Auckland CBD – would have cost you $420 a week in early 2015. Now, though, you’ll be paying $500 a…

MARKET COMPOSITION The rental market in North Shore and Hibiscus Coast is dominated by houses with flats relatively common and apartments more sparse. In fact Albany, with 40%, is the only area with a decent percentage of apartments and there are only five (out of 14) other areas with any apartment representation. East Coast Bays comprises just over 30% flats, while Albany with only 4% and Wairau Park/Glenfield North at 8% are the only two areas with less than 10% made up of flats. Wairau Park/Glenfield North boasts the greatest percentage of houses at 92%, while Wellsford/Warkworth/Helensville is just shy of 90% houses. Three other areas have more than 80% houses – Torbay (84%), Orewa/Whangaparaoa (83%) and Glendhu/Glenfield (82%). RENT AND YIELD Median rent across the region generally sits around…

NORTHLAND NEXT MEETING: Wednesday February 24, 2016, 7pm at the Kingsgate Hotel, 7 Riverside Dr, Whangarei. TOPIC: Janet Hetaraka, tenancy mediator, Ministry of Business Innovation and Employment. Janet is a Mediator in Tenancy with 25 years’ experience. She is located in Whangarei and deals with tenancy mediations face to face and over the phone. MEMBERSHIP: $180 single or $210 couple, includes subscription to the NZ Property Investor and NZPIF discount card, plus local trade discounts. Email npiacontact@gmail.com for more information.PO Box 1640, Whangarei. AUCKLAND NEXT MEETING: Tuesday February 9, Dorothy Winstone Centre, Auckland Girls Grammar School, 14 Howe St, Freemans Bay. No late entry after 7.30pm. Free for APIA members and $75 for non-members. Prior registration essential. TOPIC: Seeking opportunities finding growth – Martin Dippie on the intersect between core…

We asked our readers what they looked for in an investment property. YOUR COMMENTS Chris Cauzer: I ask myself would I live here. If I wouldn't then I won't buy it. Some say that's not the way to think about a rental but I think it's important. Royce Nordlof: Firstly, the return, followed by adding value, then location. We don't look at whether we could live there as we have no plans to. Brent Matthews: How fast can I get my money back to do it again. We asked our seasoned investors, what one nugget of advice would you give to those looking at property investment? We received lots of great responses. YOUR COMMENTS Keshav Maharaj: The best time to invest is now. Working with a mentor will save you…

AUCKLAND IS A UNIQUE CITY surrounded by water. From a planning perspective, much of the inner city has been protected. In the past land supply was limited and what was built (in terms of higher density dwellings) was either ugly or lacked integrity, or in a lot of cases, both. Until recently land supply was a critical issue. But under the Unitary Plan land will be available for higher density development. This should help keep prices from getting further carried away. The existing arduous process of gaining consent for projects will be simplified to give developers more certainty around both timeframes and costs. With more land supply and more certainty over what can be developed, there is hope more margin will be passed through to the developer (rather than the…

Trying to find a way to buy in your local market? Consider going into a joint venture with friends. “There’s no urgency to buy your own house, and there’s no reason you can’t start in Hamilton or somewhere like it” Get comfortable talking about money. “Lean into it – money has value and you need it if you want to experience life to the fullest” Don’t think you need a degree, or you’re too stupid to understand finance. “Just because you got Cs and Ds at school, you’re not a failure to society.” Mitchell used books and seminars to learn the basics. Once you’ve done your research, take action. “Eighty percent of this game in my humble opinion is psychology, lots of people do all their due diligence but won’t…

A Glendene, Auckland, property was passed in at auction because buyers were too scared to touch it, Steve McMenemy says. The vendor’s solicitor had put an aggressive clause in the sale and purchase agreement which noted some unpermitted work and referred to water penetration - enough to alarm even the most relaxed buyer. But in fact the truth was far less frightening. Water penetration was merely a leak into the garage caused by a section of garden backing up behind the structure; at times of heavy rain the moisture ran under the back door. The unconsented works, meanwhile, had been done before 1991, an important date due to changes in the Building Code at that time. With this information in hand, and with the frustrated vendor moving overseas, McMenemy was…

THE GRADIENT OF GOOD TO BAD DEBT IS VAST. THEREFORE, BEFORE YOU TAKE OUT MORE, IT IS IMPORTANT YOU EVALUATE AND RANK YOUR CURRENT DEBT. – NICK ASHFORD HAVE THE OSTENSIBLY “CHEAP” interest rates made you think about taking on debt, even though you may not need it, or have not yet figured out what you will use it for? You’re not alone; the continual decline of interest rates has encouraged clients, friends and family to question if they should borrow. Many are not sure of their reason for borrowing, but are certain they shouldn’t miss out on what seems to be the deal of the decade. As an accountant there are very few topics on which I am questioned more, other than interest rates. Thanks to the Financial Advisors…

THE CONSTRUCTION CURRENTLY GOING ON AROUND OUR LOCATION AND ALSO PLANNED FOR THE CBD THIS YEAR TELLS ME WE WILL BE INUNDATED WITH TENANTS – SAMANTHA VENNING I AM CURRENTLY IN THE MIDDLE of an extensive renovation in the Wellington region, another in Queenstown and I’m about to furnish a brand new property for rent in Christchurch. This last one is located in the Leicester Apartments complex across from the Margaret Mahy playground built by Four Avenues Property Group and it’s looking great. It’s also the easiest thing on my plate right now as I juggle the North Island renovation and my interior design business along with three very active children who are still off school. CONTINUAL CHANGES I decided to get involved in the Christchurch property market two years…

NATIONAL RENTAL PRICE MOVEMENT This map represents change in the average rental price between the months of December 2014 and December 2015, based on figures from the Ministry of Business, Innovation & Employment. RENTAL SNAPSHOT Median house rents of the dominant dwelling type for the area AUCKLAND - CITY WELLINGTON - CITY CANTERBURY - CHRISTCHURCH NEW ZEALAND EXPLANATION OF STATISTICAL TERMS No. of Properties: Total number of residential properties No of Bonds: Total number of bonds lodged in last three months Median Rent: Weekly rent based on the bonds lodged in the latest three months Rent Quartile Range: Inter-quartile range of weekly rent based on the bonds lodged in the latest three months Median value: The median value of properties in the group based on estimating the current market value…

MORTGAGE INTEREST RATES ARE AT HISTORIC LOWS, MIGRATION AT HISTORIC HIGHS, AND THERE IS A SUBSTANTIAL SHORTAGE OF HOUSING IN AUCKLAND – JONNO INGERSON DRAMA SURROUNDED AUCKLAND’S property market throughout 2015. Record-breaking price growth went hand-in-hand with predictions of doom and increasingly stern official measures. This meant few observers were surprised when the market started to cool. As the year drew to a close, opinions were divided over how much the market would slow, or fall, and for how long. Now, as the first sets of December data to emerge show a third month of reduced pace, the tone has changed. Auckland’s slowdown is accepted, but there are divergent takes on the national prognosis. Subdued end to year To ring in the new year, Realestate.co.nz released their December 2015 data.…

KRIS PEDERSEN Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies. Phone 09 486 4719, www.krispedersenmortgages.co.nz MARK WITHERS Mark and his team specialise in advising on property-related transactions, valuation and restructure services, and tax planning. Withers Tsang & Co Phone 09 376 8860, www.wt.co.nz RON HOY FONG As a successful property investor and mentor, Ron has built an impressive portfolio and a wealth of investment strategies and experience. Contact Ron today on 021 888 298 or ronhoyfong@gmail.com BERNARD PARKER Bernard is principal of Quinovic – Kapiti-Mana. Quinovic’s outstanding people and systems provide the most professional, effective and reliable residential property management service in the NZ market for over 26 years.www.quinovic.co.nz KRISTER SAMUEL Krister specialises in selling high yielding apartments for…

Vesna Wells is passionate about property. She is Realestate.co.nz’s national property management specialist and a buy and hold property investor. She is currently working on a small development. The property is an 870m2 section with a two-bedroom house at the front of the section. Wells purchased the Porirua property in 2012 for $257,000. She liked the fact it already had a sub-division application on it and there was a driveway access to the back of the section. Back in 2012, Wells completed some quick renovations and rented it out immediately. “But we knew it was perfect for a small development in the future. We always wanted to build some sustainable and sensible housing on it, which would add to our property portfolio” Initially, one further dwelling was planned for the…

 WELLINGTON IS PRETTY MUCH geographically in the dead centre of New Zealand and is often referred to as windy Wellington. Only those who have spent some time there truly know that you can’t beat Wellington on a good day. As an ex-Cantabrian, I am convinced the wind and weather is worse in Christchurch or Auckland, so I don’t believe the tagline. I HAVE GENUINELY BEEN SURPRISED AT HOW LONG IT HAS TAKEN INVESTORS TO FINALLY PUSH WELLINGTON HIGHER UP THEIR PRIORITY POLE AS AN INVESTMENT LOCATION -CAMPBELL VENNING Putting provincial or one-eyed views aside, I have been saying Wellington is a great investment location for two years now and it is finally living up to that prediction – so my crystal ball does work; it’s just a bit slow to…

SPEAKING WITH PROPERTY INVESTORS ABOUTTHEIR EXPERIENCES AND INSIGHTS CAN PROVIDE YOU WITH INVALUABLE FIRST-HAND ADVICE. – SARAH DAWSON AS WE KICK-START 2016, many people add property investment to their list of goals and financial plans for the year. It can be overwhelming entering the world of property investment because of the sheer volume of information surrounding the topic, but magazines like this can help put you in good stead. Owning an investment property requires significant work and savings. All investors want to maximise their investment. Here are some tips to ensure you make the best investment choices: DO YOUR HOMEWORK Understanding the basic terminology and principles of property investment will go a long way. This may sound like common sense, but doing that extra bit of research could help you…

WHILE THERE IS POTENTIAL FOR A RENTAL PRICE INCREASE IN THE UK, IT IS ALMOST A CERTAINTY IN NEW ZEALAND ANDREW KING NEW ZEALAND IS NOT THE only country where people think rental property owners are forcing people to be tenants. The UK Government has introduced tax changes aimed at forcing people out of owning rental property (termed buy-to-let in the UK), with the aim of reducing competition for first home buyers. The UK applies a stamp duty to property buyers’ purchases. While it currently applies to all UK property buyers, from April this year it will increase for buyers who own fewer than 15 rental properties. (That's right, if you are a large or institutional investor, the higher stamp duty will not apply.) As Paul Emery, real estate tax…

THIS PRACTICAL WORK IMPARTS ADVICE BASED ON YEARS OF SOLID EXPERIENCE. A screen actor who sees his work repeated sees increased royalties for no extra work and so it is with an author whose works are reprinted. This edition of Brian Kerr’s largish coffee table slab is well worth the reprint. It is indeed more a manual as noted by Kerr and other correspondents but it draws the reader, the would-be investor and potential landlord into an intriguing way of life. It is ‘how to’, ‘the complete guide’ and ‘books for dummies’ rolled into one satisfying whole. It is as much an action plan as it is a book - a really good book. The cover says it all: ‘includes 2010 residential tenancies act amendments’ and ‘how to deal with…