Oh dear, I really do try to be polite, but in the end sometimes I feel that stronger and more challenging thoughts need to be expressed. So, i’ll throw down the gauntlet and put myself on the line here: And for the record, Robot is right on, and obviously a ‘smart’ investor:
how often have I heard this, from (my name for them) Auckland Wanker type investors:
“Tok has always been at the lower socio-economic end of the scale.”
Well, Point Piper Sydney has always been at the upper socio-economic end of the scale. Why don’t you buy an investment property there, then? You’ll get a 2 percent yield and it might even go down in value, in which case you can claim the loss as a tax write-off. The average wage of the locals is not on it’s own an indication of which area you invest in, and which property you purchase in that area.
Perhaps you are a snob, and perhaps you just do not understand the numbers of investment? Or is it just not the sort of property you’d want to DIY manage?
Well, in my experience, the comments that you are making tend to be made by people in one or more of those groups.
“There’s just nothing there that’d take you there.”
Correction, there’s just nothing there that would take YOU there, because of your current paradigm as above. Carter Hold Harvey, many big and savvy investors I know, our tenants, the locals, see a different paradigm, and so be it.
In the end, blaming it on Tokoroa the scapegoat town (but anywhere in NZ for that matter) is a red herring.
People are still dissing redfern as an ‘a#$shole of the universe” suburb, meanwhile prices are climbing by hundreds of thousands.
Loads of Highly Successful Investors who i know have made huge money in Tokoroa, and continue to.
people were dissing it then, as they’re dissing it now – possibly even harder back then.
I’ve learned to EXPECT this from the lion’s share of investors who own less than three investment properties, where I was always guided by people who had, i.e. 135 in 3.5 years, if you get my drift!
In the end it is your skill as an investor that will decide whether you will make money or not. What you buy, when, and how, and for how much, and why. What you will do when you own the property and why. Whether you will sell or hold the property and why. And when. What you predict will happen, and your ability to get that result and not another less desirable result. Figuring out what your worst case is, and being ready, but feeling confident that your investment will be a lot closer to best case than it is to worst case.
Gaining confidence in your ability to research the market, analyse a deal, and judge whether it suits your strategy. Having a strategy in the first place! Getting smarter.
Skill in terms of being able to discern a good deal from a bad deal (research, and market knowledge), what the values are likely to do in the future (research, and market knowledge), whether the town is stable, has an upside, or a downside (research, and market knowledge) and the degree of risk in your investment and the buffer you have – and your exit or hold strategy.
it then comes down to how you managed the deal. If you don’t pay your bills and your rental manager doesn’t want to manage any of your properties any more, then no matter what yield you are theoretically getting, you now have a problem – but it’s not the town’s fault.
If you let something slide without reacting, it’s your fault not the town’s.
If you didn’t account and allow for some unexpected maintenance issue and your figures are now out, it’s your fault – it’s not the town’s fault.
If you bought sight unseen without market knowledge and/or didn’t get a builder’s report or an independent rental assessment, it’s your fault – not the town’s fault.
If you believed everything everyone told you who was working for the vendor and therefore biased and with an agenda, and bought solely on that, and didn’t double check, then blame away, but it was your fault – not the town’s.
Okay, i am buying wonderful amazing deals all over nz for myself and clients, and simultaneously there are people buying ordinary, stupid, overpriced, lame or just BAD deals all over NZ, some in the same towns as us.
There are many many reasons why this is the case but most of them come down to the skill of the investor and their market knowledge in some shape or form.
Hi Mini
Another great posting as usual Mini.
Not much for sale in Tokoroa after the big influx of Australains over the last few weeks. However the grass continues to grow and it still needs cutting.
Regards
Pretty heated reply there, Mini, but that’s okay I don’t mind being called names.
You make some good points and if you can make money from property in Tok good luck to you. I wouldn’t got there myself, that’s all.
Dave
Hi Dvane,
I wasn’t classifying you as an A.W. – I used to live there and I have a lot of friends who ‘invest’ in Herne Bay, Matakana, Leigh, Westmere, Ponsonby, – you get my drift – they wouldn’t even touch Henderson, Papatoetoe or Otara much less Tok. Yeah, A.W.’s. And I use that lovingly as I have had many a dinner table debate about what I am doing vs. them! I’ve showed them the figures but they still can’t believe it, because in their paradigm they are still ‘investing’ in the best ‘investing areas’ there are.
They forget that once upon a time where they bought now worth 1m was a trashed dump for 100k and in what was considered then a terrible suburb.
yeah all I can say is that there still are great deals there but not every investor has the skill to get them.
The reason the Tok deals and others in NZ are pretty good in my mind apart from great cashflow so i.e. your Tok CF deals can support other investments elsewhere – are that you can buy under valuation there the same as anywhere – plus, the low entry price means your Tok deal is always going to be more liquid than the equivalent in auckland. Also because the yield is so good the ‘risk’ of holding is reduced, and you are more likely to be able to sell at a time that suits you rather than because you can’t afford to hold the property. the property affords to ‘hold itself’.
cheers-
MiniHang on a minute seems like there’s still a few Tokoroa properties for sale. I just did a search on trademe and over 10 came up.
Robot, there are always properties for sale. Whether you would buy them is another story
Ozi
Yes Ozi
Exactly,I think one in ten would be quite likely a good buy “at the right price” of course, and 9 you wouldn’t even bother offering on. But you sort of have to be on the spot to be able to tell the 1 from the 9, you can’t really do that over the internet – at least without spending a fortune on due diligence.
Hi Guys
I hope those of you looking for property in Tokoroa aren’t relying on the http://www,realenz.co.nz site for keeping up to date with properties for sale.
Harvey’s, one of three Real Estate agencies in town, haven’t got time to keep their listings up to date because they are so busy.
Properties are being snapped up before they can be listed.
I suggest for anyone interested contact the agents directly to be put on their email list and be notified as soon as any property is listed for sale.I will have my digital camera next week if anyone wants more photos.
Regards
Just sold a property in Putaruru (near Tok) for $10k more than the asking price – an unconditional offer from an “A.W.” as Mini describes them.
Watch out Muppet the Jafa’s are coming
Cheers
JeffHi Jeff
I think it is too late to watch out.[angry2]
Two whole cricket teams plus reserves were here a couple of weeks ago with Steve.[biggrin]One agency in town took 40 contracts.[biggrin]
The house next door to ours is on the market. Had a look through but decided I didn’t want a tenant living next door.[shades2]
The section is miles too big for the house on it. Tenants don’t, especially in Tokoroa, like mowing lawns.A house next to one of our rentals has also just come on the market(in a good area). The vendor wants $95k but it isn’t a $190/wk rental. I think the house needs a little work.
There is another house in the same street for $180/wk but they are struggling to find tenants.Two flats that I cut the lawns at, have had the rent reduced from $140/wk to $120/wk to attract tenants.
Regards
Hi Guys
with that sort of interest in Tok, i think its time to take your money and run (sorry Muppet and Mini).
there are better places to invest in NZ than Tok.
regards westan
USA information evenings in Melb, Syd and Brisbane in early April, email me for more info. We find cash positive deals showing 15-25% Returns in the USA email me at [email protected] to join our database
sorry i should elaborate. Those who know the Victorian market will be aware that the Latrobe Valley was very cheap (before 1999), Thanks to Steve heaps of investors from his seminars flooded the area (they weren’t the only ones) and pushed prices sky high (some people were fortunate to sell with this buying interest [biggrin]) today the investors have moved on and the prices are starting to fall. I can see Tok following the same process. Those who have been to Tok and the Latrobe Valley in Vic (Morwell and Moe) will see there are many similarities between these two places.
regards westan
USA information evenings in Melb, Syd and Brisbane in early April, email me for more info. We find cash positive deals showing 15-25% Returns in the USA email me at [email protected] to join our database
Hi all,
We were one of the early investors in Tokoroa, and we have sold out there (a little too early it seems, but ah well), but I wouldn’t be buying in Tokoroa in this sort of frenzy.
Westan, I agree with you that there are better areas to invest in, without some of the hassles. Just because a house is cheaper to buy in Tokoroa, than buying in say regional Victoria, doesn’t mean that you should necessarily snap it up. People considering investing in Tok, should factor in at least 4-6 weeks vacancies per annum when doing your sums. Don’t let the herd drive you. [baaa]
I also see the similarities between the LaTrobe Valley and Tokoroa. Our first property was in LaTrobe Valley.
When the “herd moves on”, there are “new” investors that will get burned!
Just my opinion,
DelI have just read your post MiniMogul good call, Passionate but with stile.[biggrin]
Kerwyn
Westan and Del I think there are still good deals to be found all over NZ, even in Tok. In a town like Tokoroa what I would look for is a lower price and a high yielding property compared to the exact same sort of house in other larger towns, and agree with what Robot said for the other criteria. Basically this principal applies all over NZ.
Hi All Aussies
As a Kiwi investor living in Auckland
What we hear up here is that
Mainly Australians are targeted as kiwis are aware of the downside of Tokoroa.
Sure the returns are great but beware of the
vacancy rates. Small town, one key dependant industry. No major or substantial new growth I am aware of.
I hate to put you off but all I have heard of up here in Auckland is hard luck stories in Tokoroa.
BUT may be if you buy at a discount and can sustain the great returns one can do well.I guess not all Aussies and Steve Mc Knight can all be wrong. Steve what is that you guys know that we at home don’t know. I would be very keen to hear.
What would I know!!. I can only tell you what what I hear from here.
Cheers
TakeActionThe fear factor is alive and kicking it seems.
My point is that we are discussing the town, and it’s not the town per se, there are good deals and bad deals in every town.“Sure the returns are great but beware of the
vacancy rates.”
couldn’t agree more, but if you look closer into it, “vacancy rates” vary with the condition of the property, the number of bedrooms, and the location, and the price you are trying to rent it for. If you don’t believe me, just put a call in to a rental manager and ask them what they have vacant, and why that is. They will tell you it’s because of one of the above factors. All factors you as an investor can mitigate against when you purchase, if you are smart. However I am not saying that everyone is smart. In fact most are stupid, pay too much, don’t do enough checks, and don’t know the market, and then wonder why it didn’t work for them. Then blame Tokoroa!!!“Small town,”
Size has nothing to do with it, Invercargill is way bigger and has more vacancy – I have invested in towns 1/10th of the size of Tokoroa with great success (24 percent CF and 106 percent CGs)
>one key dependant industry.
true, BUT less than 3 percent of the town work or worked in this industry at the mill – and bear in mind the last lay off of 500 jobs was way back in 2003 wasn’t it? And the town just kept on keeping on.
“No major or substantial new growth I am aware of.”
Ah, awareness is a funny thing isn’t it. I daresay the only time you thought about investing in Tokoroa as a concept was reading this thread, right?
The mother of all mills could be being built in Tok. If it’s not there, it will be in Auckland, however I think Auckland will prove to be too expensive, whereas Tok is all set up for it already with the space and the infrastructure and a resident trained workforce.
You may be closer to Tok than I am, so this should be even easier for you to find out – who’s moving into the area? and from what companies?, are they executives? what sort of property are they are looking for? Are they buying or renting? What is this doing to the market?
etc etc
“I hate to put you off but all I have heard of up here in Auckland is hard luck stories in Tokoroa.”
Yawn, heard it all before, and what a coincidence that you’re from Auckland AKA an ‘A. W.’ even (and I use the term lovingly)
“BUT may be if you buy at a discount”
correct
” and can sustain the great returns”
correct
” one can do well.”
correct
“I guess not all Aussies and Steve Mc Knight can all be wrong. Steve what is that you guys know that we at home don’t know. I would be very keen to hear.”
Steve has given his entire strategy away in books and seminars, and there is no magic trick that he has withheld, that I am aware of. Make of that what you will…
cheers-
miniHi Takeaction
Welcome to the forum.
You said:Mainly Australians are targeted as kiwis are aware of the downside of Tokoroa.Ummmmm. Well the stories I am hearing is that is that alot of Aucklanders who are buying in Tokoroa. As well as newbie Australians.
Mainy of the newcomers to the town are retired Aucklanders who have released the equity in their Auckland properties by buying in Tokoroa and having a little nest egg of $350000 left over.
I was held up at an intersection in Tokoroa during the week for about 45 secs.
Today coming out of Auckland along the Southern Motorway managed to travel 20kms in 30mins.
Oh you poor Aucklanders who have to put up with your cr.. roading system.
No wonder so many educated Aucklanders are leaving a drowning city.Regards
Hi Guys
hey mini you keep mentioning Steve and Tok, i could be almost certain that steve wouldn’t be buying properties in Tok at these prices !
Sure anywhere can be a good investment – At the right Price and i think the smart money has been selling out of Tok (eg Steve McKnight, Del etc).
As far as the lifestyle, yes Tok would be an nice town to settle down in, lovely rolling hills around.
Mini just for the record i think Tok’s vacancy rates are way higher than Invercargills (remember Invercargill is 4-5 time the size of Tok).
So Muppet and Mini would you buy a home in Tok at the prices they are selling at today ????? I’d be suprised if you said yes. Once again nothing against Tok its just the returns are no longer there to justify the a purchase, theres better value for money elsewhere.regards westan
USA information evenings in Melb, Syd and Brisbane in early April, email me for more info. We find cash positive deals showing 15-25% Returns in the USA email me at [email protected] to join our database
Well Westan good point, and actually I admit I have never invested in Tokoroa or Invercargill to be quite honest, but I may as well have because where I was investing in ‘town name irrelevant’, people said exactly the same things about.
Also, my business partners and compadres all have properties in Tok and I monitor all the deals we have found clients there of course. Going back at least a year or more. When I first started investing there were CF+ve all over NZ of course and though Tokoroa was very much on my radar I got side-tracked more into a couple of different areas and you know what it’s like, once you have a great team in place where you start buying, you tend to want to grab a couple more, so that’s what I did and never ended up going back to Tok.
Also you know it’s as much about the team after purchase as it is the purchase itself.However my first business partner went over to Tok and sussed it out and vibed it, over many other towns actually. He got us about 5 great deals there which is where it all started. I was in there before AD or even Steve and Dave went there, and before that ‘stamp of approval’ people back then were saying about Tok what they’re saying about it now. And look what happened to those who bought then. Magic. So perhaps people will always be down on the town. Who knows.
The only difference really between then and now is that then prices were lower and yields were higher. So it was at a different part of the cycle. I have the feeling that over the next few years, rents will gradually rise and perhaps in another 4 years you will be getting the 15 percents again. Actually not just a feeling, it’s knowing some stats on Tok as far back as 1991 and typically what happens anyway.
Now as far as deals right now in Tok. I would like 11.5 and a deent house in a decent street, 12 or more if the house was inferior. This is all we’ll offer, but this is harder and harder to ‘win’ in the current market with multiple offers coming in for each deal, and people offering more than us. So all I can comment on is the yields I’d buy on in Tok right now, but am not finding. A couple of weeks prior to the Aussies coming (steve’s group) we found our last great deals in Tok. Once the Aussies arrived prices rose overnight, surprise surprise, so no, we haven’t bought anything there since and aren’t for the time being, basically cause the yields are down and the prices are high. though always watching out of course – and of course we are also selling too this week (because we can -!) at a premium.
We are even selling properties we only bought recently intending to hold as rental properties.I don’t think that it is so much ‘dumb’ or ‘smart’ to sell, or ‘dumb’ or ‘smart’ to buy, in Tok or anywhere, it just depends on your investment – the deal. I know a lot of people would let’s say SELL a house that needs a bit of maintenance etc but has a good long term tenant in a good street, they think ‘hey I made x YZ capital gains and I didn’t have to bother with the maintenance, too easy.’. And that person would be ‘SMART’. However the next person comes along (same house) and says ‘wow here is a great house that needs a bit spent on it, but has a long term tenant and I can buy it on an 11.5 percent return, and then tidy it up and sell it at a 10 percent return, or do the work and raise the rent if and when my tenant moves out. It’s a little cheaper than it should be because of the condition but it’s in a great street and my rental manager says ‘thumbs up, a really popular street’. then you get a valuation and you find out you made a few k on that too, Then that person is ‘SMART’ too. But it’s the same house!
And if a house in Herne Bay Auckland that you lived in all your life and you are now retired and can sell for 750k can turn that into 10 decent houses in Tok, freehold, one for you to live in, and 9 as income giving you $900 a week to live on after costs, then that person is SMART too.
But it is a bit hard to buy smart when there is so much competition such as there is right now.
So we are just waiting for a couple more weeks to see what happens there.Also re vacancy check with a rental manager what is vacant and why it is vacant, there will be a very good reason, in fact (I don’t need to tell you this westan it is for everyone else’s benefit) there is a certain type of property that is vacant which we don’t buy and certain streets and houses in bad condition – that are vacant. Basically the same story as any other town, even Sydney. Even Paddington Blue chip Sydney suburb – price it too high, and it won’t rent! Yes there are certain places in NZ where rental demand is so strong that you will get a tenant no matter how rough your house is, tenants will put up with it because there is not a lot of choice.
But as anywhere, you make your house competitive either in the location or structure, decor, or pricing, and you will get a tenant. And don’t buy the sort that there is a vacant glut of obviously. Hope this made sense.
cheers-
Mini
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