Hi Team
can any body give me some advice on the above, they have an add running with a local radion station here in Sydney (2UE) saying they have property in Auckland which is postive geared ie. unit costs $240.000aus can rent out for $400.00 per week with a 8% yield, spoke to the guy tonight. has anyone had any dealings with these guys, units are off the plan in downtown auckland CBD will not be ready until 2006.
Steve
I can`t give you any advise but I`d be sceptical.
A lot of people are buying in NZ and many have said to me the price increases have been helped by “The Lord of the Rings” come on!.
Will there be tenants prepared to pay this kind of rent?.
Seems like there is a ton of internet investors over there I`d be worried about investing in other countries on the advise of others, a lot of people are getting excited about the prospects over there but all I hear are warning bells.yes I suppose that is where due dilligence is so important
Sounds like a serviced apartment deal to me.
8% won’t pay your costs. You need to be nearer to 10% in NZ.
If it’s downtown Auckland CBD you may have trouble financing it (without additional property as security) and it will be even harder if it is a serviced apartment.
I replied to the advert, and met the Aussie agent for this development. He was very enthusiastic about it..surprise surprise! Completion is in July 2007, and prices are from NZ$250K-$300K (The Kiwi $ is about 90cents) His children, lawyer, accountant etc are all buying. It is smack bang in the centre of Auckland, right next door to a Uni, where current rents are about $500pw – this virtually falls within the 11 second rule. (They are NOT serviced apartments).They don’t even require any money down – they will pay the $1000 deposit bond costs for you. All the figures stack up – AT THE MOMENT!!! The situation at completion is the only concern, mainly with the rental markets – $450-$500 pw seems a lot of money for an apartment. I’m still in two minds.
With a distant completion date of mid 2007 …seems plenty of time for a lot of ‘wot if’s’ to occur in the meanwhile….
Might be a nice little gamble .. but if you want a flutter, ya may as well go to the track and know your fate immediately, don’t you think?
wot if …
Cheers,
A” plays well with others
… but sometimes runs with scissors”Ask to see the exchanged contracts of all his relos and friends who are buying these units. You didn’t mention that he is buying? Ask him why not?
Cheers
MelThe market data we work with indicates capital gains on this type of development in the Auckland CBD should not be a concern – due partly to demand continuing to exceed supply.
As an example, increased construction costs are resulting in fewer projects, which is having an adverse effect on supply – which works in your favor.
As for Conrad Properties, they are one of the more prominant development companies in Auckland, with approximately 1100 apartments completed and another 1200 in the planning phase.
The key is conducting sufficient due diligence and ensuring the developer adheres to strict quality controls, which will ensure your investment continues to appreciate in value – and remains tenanted.
Visit the location. When buying in a CBD you should not purchase OTP without visting the location.
And investigate other developments in Auckland – compare costs, location, tenant rates, etc which will assist in the decision making process.
Contrary to markpatricks comments, there is still significant upside in the New Zealand real estate market – which is why it is our primary focus at this time.
Furthermore, you would be surprised how many inquiries we recieve from investors/buyers [in the US] whose enthusiasm for this market derives from the Lord of The Rings movie.
— Michael
good one michael, thanks for that
cheers-
miniWhen buying off the plan remember to do your research!
Remember Meriton’s Regis Towers in Sydney CBD (it’s turkey time)
This sounds like a promising opportunity. If I was looking at it I would also check how big the development is. If it’s got more than about 50 apartments the banks tend to be wary of them, which can make it hard to borrow money on them. This may not be an issue for you but could present problems if you ever need to resell. I looked at a 200 apartment development in Auckland and was told only one lender would lend 80% on it due to the size of the place.
The apartment size is also considered by the lender, some will accept 40m2 but most won’t be interested unless it’s 50m2 or more.
The 2007 completion date makes it sound like it is a very big development. You should also check out if the developer has “resource consent”. This process can take a very long time and has killed projects in the past.
It sounds like the developer is trying to meet their pre-sales target to get bank funding, you may be able to negotiate some good discounts by buying now.
Michael R.
Do you have anything to do with Conrad properties?
Personally I would not touch an inner city apartment, no matter how much they say it can rent for or that demand exceeds supply. Makes no difference to me if its Aust or NZ.
I cant see how the lord of the rings effects real estate prices in NZ. Hey I love the film – Something about Mary – Hey lets move to Miami.
yack, I reckon you might be amazed at the number of tourists that are flocking to NZ to see where the films were made. I think these people are like the ‘holiday makers’ that go to the Gold Coast and come back having bought a house.
Cheers
Mel“Do you have anything to do with Conrad properties?”
No.
“Personally I would not touch an inner city apartment”
I would not touch SFH’s – I find there is more money to be made in multi-use/apartment developments.
We all have our preferences.
“I cant see how the lord of the rings effects real estate prices in NZ.”
These movies are introducing people to New Zealand and what it has to offer, in terms of unsurpassed scenery and isolated locations.
It has always been, and will continue to be, a common trend for real estate prices to be effected by movies that feature desireable locations – this medium is simply another form of marketing.
— Michael
Hi guys
as a Kiwi (well sorta), i can speak with a little authority. Firstly never heard of this group. and haven’t even looked at Auckland as its very expensive. Having said that rent is really high in NZ.
the Lord of the ring, i have never heard of it mentioned in regard to property prices but as other have said it is hugef or tourism. i expect helen Clark to change her name to Froddo soon.
There are buyers from al;l over the world snapping up NZ i was in Gore (pop 9000) last week and a English Doctor had just bought 7 cheap house, cleaning out the town. Interest from the USA, and the UK is incredible not to mention Australia, But be careful because people are buyingover the net without seeing and paying above market prices, so come over and see the place.
the other thing that is driving the market up, is supply and demand , due to population increases, increasing student need and so on, NZ has always had a housing shortage so rent return is very good.
bye westanI find +ve cashflow deals in New Zealand which I sell to other investors. To be on my database send an e-mail to [email protected]
Hi all as I started this post I think I should fill you in on what has happened since, bye the way thanks for all your comments, I visited withAlastair Browne today part of the Conrad Properties Pty ltd group, they currently are working out of a small very hot office in Sydney, Castlereigh Street, this guy had just moved over from NZ to flod these apartments off, can you believe the bloke was a bit hung over, I could smell it all over his breath, apart from this he was auite nice ( most kiwi’s are).
Heres the deal
off the plan selling, completion date is Jan 2006, prices range from $230,000 – $360,000, consists of 300 apartments situated slap bang in the middle of Auckland CBD, close to Uni, Aotea Centre (similar to Sydney Entertainment Centra) Auckland Centre Point Tower, K Road similar to Kings Cross etc, great location. Auckalnd growing at 5% per year very similar city to Sydney but smaller and not as naughty.
Body corporate fees of $1800 per annum, $400 per week rent, apartments are not serviced, they have agents who will finds tenants for you, on site property manager, swimming pool, gym, shops etc all on site, they say banks will lend up to a maximum of 85% of purchase so by completion in 2 years you must have 15% equity (which they think is no problem) or have avaliable funds. Deposits bonds are avaliable whereby you can borrow from any equity you have in property to close the deal, he didn’t come across to pushy, probably because he was burping and saying sorry all the time, let me know your thought on this one, I respect all your oponions.
SteveSteve,
$1800 annually for BC fees with pool and gym? sounds fushy…
are the 230k properties studios or 1-bed? Do all units have car spaces? How come people would pay $400 for a studio/1 b’room apartment? Their wages must be much higher than ours- you would never get that rent smack bang in the middle of sydney for a small apartment- by the way- what size are they for the cheapest?
And the fact that it’s near to the University means little. 1-bed near new places right near USYD and UTS can still be rented out for $240 a week here.
kay henry
yack, “I cant see how the lord of the rings effects real estate prices in NZ.” so I take it you haven’t seen the movie then? Because otherwise it would be obvious, wouldn’t it?
hehe!!
Steve, you asked me to comment on this thread, but really, it’s out of my league. (but hey, i will anyway!) A friend of a friend made millions as a 20-something year old on buying off the plan in sydney a few years ago (during the big growth spurt) and drives a ferrari now etc, but isn’t doing it now (surprise surprise.)
I think highly leveraged things such as deposit bonds, or anything that relies on cap gain is RISKY.
i don’t know where Auckland is in terms of it’s cycle. It could very well be close behind Sydney, 1-2 years. So i don’t know. I think it’s a gamble. i think Michael R is a legend, he’s in that area, he finds investments in NZ for yanks ( i think) and is an expat Kiwi, and gives good advice, listen to him.cheers-
miniWhat are the deposit and default payment terms – in general, and the rent review period?
The Body Corporate Fee [$1800] is about average for this type of development in the Auckland CBD – fees can range between $1000 to $3000 per annum, subject to the number of apartments and on-site amenities.
The weekly projected rent [$400] is also on par for a quality 1-2 bedroom taking on-site facilities into account.
As for proximity to the University, this can be advantageous due to the number of foreign students attending the University – who are known to pay in the vicinity of $400 or more a week.
However, do not rely on students. If this is a higher-end development the developer/property management will be seeking professionals, and may stipulate rental conditions i.e. quiet enjoyment, which are restrictive on students.
As for the sales representative being clearly “hung-over”, if I were the buyer/investor, this would be unacceptable as it can indicate the standard of professionalism Conrad Properties adheres too. If I discovered one of our sales people conducted a meeting in this capacity, he/she would be seeking alternate employment.
— Michael
“..he finds investments in NZ for yanks (i think) and is an expat Kiwi”
Partially correct. As it appears you [Mini] have been interested in knowing my background, I will provide a general overview.
I am in fact an ex-pat Kiwi who has resided in the United States since 1989. I have been involved in equity-based investment throughout this period, with a predominant interest in technology and real estate.
In the past couple of years I have focused solely on real estate investment and development. We don’t find investments for American’s in New Zealand as such – but we are a venture capital group which raises private equity capital in the United States through a select group of investors.
These funds subsidize projects we conduct in international locations that demonstrate the highest ROR during a predetermined holding period. At this time New Zealand is considered the most profitable market although we do have interests in Australia and other locations.
We specialize in high-end apartment and multi-use developments and target a niche group of buyers who are considered a value-add – this strategy in itself can increase the property’s revenue potential.
As noted in a prior discussion with you, my interest in this forum is to provide comments and opinion which I hope assists members. I also follow closely the members views and opinion in terms of strategies and market conditions – which can be valuable information.
— Michael
You must be logged in to reply to this topic. If you don't have an account, you can register here.
