Sorry to go off topic, but does anyone know of a good resource to locate data on upper quartile, median and lower quartile price ranges for NZ properties?

thanks

As odd as this sounds to some, I would never buy a tenanted CIP. I just believe there is not enough room to maximize income-thus the captalized worth of the property. I view investing in vacant CIPs as buying wholesale, because the market views it as having no inherent value other then the land and building replacement cost considerations; they are more focused on the usages of it. It is therefore my contention that all one has to do is find a high income tenant and you have immediately transformed a wholesale CIP into a retail.

nice to be back

Hi there,

So far most of the rental increase ideas have been based on the assumption the tenant is already in the premesis. I hope more discussion goes into ideas for how to increase rent during vacancies. As for those who think creative value-adding and subsequent rental increases are untenable or immoral, I disagree. The market rent for your property is the rent that people are willing to pay, not what your neighbour is paying with the same structurally designed house. However, I do agree that tenants are not very gullable and need to be assessed, and given a very plausible reason if you are to justify increasing rent at the end of their contracts. (If you have a tenant who you believe is on the brink of deserting, don’t raise or only increase a little; yet if your tenant treats the dwelling as if they owned the place and truly love it, then they would naturally be more amenable to your creative ideas and wouldn’t put an objection or threaten vacancy.)

This leads to my belief that it is best to make as many justifiable value-adds as possible during the course of a vacancy. Why sit crying for 4 weeks with no rent when you can be smiling at the future increased yield of your property if you add a carport for $5000 @ a capitalization rate of 5% which will raise your overall property value by $25,000. The opportunities are endless. Through experimentation, discover whether tenants are readily embracing your value adds and rental increases, and if not, amend them until you find your MO. I recommend you read the Dolf De Roos book: *101 ways to massively increase the value of your property* – for little or no money

Dr X.

thanks for responding;

My figures were very tentative and I have no set figures I go by as I have never LO’d before but am seriously considering it; although I do have a limit of CoCr which I would stick by when going into LOs. My figures were just used to illustrate my concern that you may be giving up too much profit for the sake of the potential homebuyer.

I am learning from others posts here as I go. What I want to ask is, what is your goal with the LO?…..I don’t really understand the investor benefit of using an LO for positive cashflow if it is only a yearly lease or a five yearly lease. To me, I would want a wrap/LO to last at least 15-20 years as I would then be able to apply compounding interest to the recurring pos. cashflow by investing it into other high yielding and also high capital growth ventures with balanced risk levels. This is opposed to the idea of seeking to receive unrealized cap gains of only approximately 50,000 after 1 or 5 yrs, and then having my purchasing power further diminished by only being able to re-finance on that growth at an 80% LVR, while also suffering the burden of increased interest rates on my new loan/redraw. It seems to me you seek to profit primarily from a pre-set option cap gain, am I right? please correct if i’m wrong. I understand the logic in a stagnant market of locking in cap gains. But my philosophy is that positive cashflows and cap gains can be made creatively in any micro-market regardless of the property cycle. Perhaps I am too optimistic

regards, Yidn