Have heard of a report indicating that Tokoroa and some other NZ town are likely to be a ghost town by 2026. I have not read this article and so am not aware of the logic given for why this will occur by this particular year. There must be some really clear strong indications that this is going to occur though…… Ones that will predictably occur over a two decade cycle.
The reasons I think this is absolute cr*p are:
1) Bunnings, warehouse, Macca’s, Hungry Jacks etc etc do research before placing their stores in locations;
2) Any place I have ever seen on the highway does not mean people go straight through, rather the opposite, that highway exposure, rest stops, and other attractions gain more attention and development;
3) A retiring baby boomer population means some of these people are going to look for places to retire where they can downsize in cost, and enjoy a lifestyle that is more affordable;
4) Tokoroa is close to major tourist attractions and places of nature that are beautiful, such as Taupo, Lakes of Rotorua, Tongariro etc; Taupo is already very expensive so it would make a lot of sense for people to be close to these places without the high cost of being in them;
5) Over a two decade cycle, the population is likely to increase, age % to total population will increase, older people are likely to move out of cities to quiter places; overall higher population is likely to place pressure on all places, cities and towns alike;
6) The idea that the town is a “one mill town” seems ridiculous to me; it is as if people who think this are stuck in the past 20 years ago;
7) The exposure of Tokoroa to so many Australians is unlikely to mean it is going to go away in a hurry as a place to invest; so at worse case scenario there are plenty of cheap rentals for people to live in;
I could go on – it just urks me that a report goes public declaring a NZ town to be a ghost town in 20 years, what kind of credibility, logic, and demographical statistical analysis has been done on this, and how have the results of this been correlated with other comparable situations, in what ways were the local town planning authorities engaged in how they should accept this report and commence a downgrade of their infrastructure and facilities!!I say poppycock!!
Tim
P.S. I openly state my interest in Tokoroa as a satisfied investor.
Hi Tim,
My thoughts exactly. I like you have not read this report; I did not believe I could waste valuable time on it. [baaa]I own a Real Estate Company in Tokoroa, so am at the coal face of people whom invest here We own our home in ^Tokoroa, and invest in properties all so. The buyers we have range from our locals whom are buying to upgrade, down size, or invest. I deal with overseas investors from Ireland, England, Germany, USA, France, India, Fiji, Japan, all over the world, and of course all my Aussies.
[exhappy]
I deal with some of New Zealand’s leading developers who see huge potential in Town, and are looking at future projects.We have many people from the above-mentioned places, and New Zealand whom are coming to Tokoroa to Retire or live.
We are central North Island, Dave and I have a boat moored in Tauranga, its an hour away, my family get the benefits of the ocean for a weekends fishing or diving [snorkle][snorkle]without having to pay coastal prices to live there, and it takes us only an hour.
I love living here, no traffic jams, parking meters, exhaust fumes etc. We are two and a half hours from Auckland, 1 from Hamilton, and 40 minutes, Rotorua, and ¾ and hour from Taupo. Which is why prices having been steadily rising for the last 18 months. There is a huge demand from owner-occupiers wanting tidy homes to live in. The bigger centers are pricing themselves way to far out of reach for “the average ma and pa†to quote mini, so they are moving here, can visit family cheaply, and live a very comfortable lifestyle. Many who have moved away for a few years come back to live. Tokoroa is a very friendly Town; in bigger centers you miss the smiling faces, people talking on the streets, [gossip]and just the relaxed atmosphere in general.
I keep telling people who have listened to all the negative talk about the mill, just come here and have a look. We are not reliant on one employer; I get quite angry [cigar]every time I hear this. Mini and Muppet, Del, you guys all know who you are, have been wonderful at exploding all the BS that gets published about our little town.
Tims previous comments
I could go on – it just urks me that a report goes public declaring a NZ town to be a ghost town in 20 years, what kind of credibility, logic, and demographical statistical analysis has been done on this, and how have the results of this been correlated with other comparable situations, in what ways were the local town planning authorities engaged in how they should accept this report and commence a downgrade of their infrastructure and facilities!!I say poppycock!!
Tim
P.S. I openly state my interest in Tokoroa as a satisfied investor.
Your final comment Tim, many others stand behind you on this one.
Cheers Jenny LambertonJenny Lamberton
Hi Jenny
As you know I have been to Tok and I really liked it.Seems to have some great opportunity there.It has really friendly people that would do anything for you,that’s if you take the time to get to know them.I think the town and some of the homes need a little TLC there lies your opportunity.I guess everyone has their own oppinion and we all look at things differently.Look forward to catching up soon Jen.
Lisa[biggrin][cap]“It has really friendly people that would do anything for you,that’s if you take the time to get to know them.”
well, aint’ that the truth! For many towns in NZ.
I just found, the slower pace of life means that everyone has more time for everyone else, which is so refreshing when you’re used to the fast pace of Sydney. You could say that about any country or regional towns, like in Aus, but I have been to them too, and until you go to NZ and experience it yourself you won’t get the true ‘thing’ that NZ has goin; on which is so unique.I don’t have so many personal relationships in Tok as I do in other towns in NZ because they are sorta by way of my local investing and spotting compadre, however
speaking of said source of all knowledge of Tok, she is very excited about Tok at the moment – VERY.what can I say!
Hi,
Your comments have been interesting reading because I received an offer to invest in Tok 2 days ago but was a bit concerned based on the demographics. The following is a section from the Council of Tok Census.
Population
At the 2001 Census of Population and Dwellings:
* The census usually resident population count for Tokoroa Central1 was 927, a change of -10.7 percent since 1996.
* In comparison, the South Waikato District’s population has changed by -6.2 percent and the population for New Zealand as a whole has changed by 3.3 percent since 1996.Numbers of people counted
Tokoroa Central South Waikato District New Z
Males 474 11,790 1,823,007
Females 453 11,682 1,914,273
Total 927 23,472 3,737,277
Change since 1996 Census
-111 -1,539 118,974This reflects the situation from 1996 to 2001. Does anyone have any more recent figures that are proven and documented to suggest that this trend has changed. If so I would be grateful as I would like to explore Tok as an investment further.
Thank you and best wishes
pr
pr
You could try http://www.quotable.co.nz
This site gives a free national demographic profile but you have to pay a few dollars for a localised one.The other site is http://www.stats.govt.nz the last census was 2001, the next is 2006
Cheers
JeffHi all
a question for Jenny Lamberton in Tokoroa
would you buy in Tok at these prices?
All the smart money that was buying in Tok in 2003 has been selling. At the prices being achieved there are better markets in NZ.
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
Hello Western
Yes, Dave and I have just settled on a home last Friday, and our previous purchase was just prior to christmas, both in Tokoroa. Can you please let me know where the better markets are, as we are always on the look out for +cf.
Jenny Lamberton
“All the smart money that was buying in Tok in 2003 has been selling.”
Westan,
look you know I respect you utterly and think you’re a top friend and everything like that, BUT!
that is a bit unfair, because it makes it seem like you think that ‘if smart money is selling’ only dumb people buy there.
Look, I would have said the same about Invercargill, but you know, I didn’t, cause for one, I respect people who bought there such as yourself and my close buddies, not to mention people who flicked many clients CF+ve properties there such as yourself. Now CF+ve is only CF+ve if you get a tenant – and I know of loads of vacant properties, problem properties, and people who sold at a loss there after holding for a year or more – which – call it gut instinct- is why I never bought there myself even though the numbers seemed to stack up.
But I am the first to admit that places change, you know the market better than me, and it only needs one key announcement to make yesterday’s lame duck tomorrow’s hotspot. so lo and behold the town is now apparently going through a renaissance, and it’s all good. but now let’s get back to the subject of Tokoroa.
Smart to sell out? Sure, if you bought a cheap place for 20k, did nothing, and a year later you have grumbling tenants, you’re mad at your property manager, they’re mad at you, because your place is substandard, and a maintenance trap to boot, and your house is not competetive any more because meanwhile there are a lot of fresh, clean, nice prettied up places who are stealing your tenants, so it’s vacant, and you have doubled your money or more, and now that you see the cash that you’re going to be getting out fairly shortly, you’ve spied something else you want to buy instead.
sure, I GET that it’s smart to sell that sort of property. I also happen to know that a lot of the properties that the so-called smart people are selling are exactly that sort of property.
However, for the next person, it’s a bargain to buy someone’s cast-off – and even vacant – dog box, and sort out the problems, turn it around, add value, and get a fantastic passive income source.
And last but not least, possibly the best deal I have EVER come across in my entire career is on the table in Tok right now. Jenny, you’ll know exactly what I’m talking about! The “smart money”, believe you me, is going to BUY this deal and unlock the vast profits to be had in it.
And that’s all I can disclose about that!
cheers-
MiniHi Tim & Jenny,
We were in Tokoroa last week, (we arrived home from NZ about an hour ago) [blink] and there were investors everywhere! I don’t see prices dropping in Tokoroa for a long time – if at all!! We will buy there again when a good deal comes along, unfortunately there wasn’t much for us last week…
All I can add about Tokoroa, is that we have had some EXCELLENT, LONGTERM, SPOTLESS tenants there, and we made some reasonable profits when selling. What more could you ask for? [biggrin]
Go there and judge it for yourself! If you have the money to invest in property, then you have the money to go there and check it out for yourself. It is called DUE DILIGENCE!! [buz2]
Make sure that you do your numbers though and don’t just buy, “hoping” that you will get a capital gain. If the numbers stack up with interest rates at their current rates, then don’t let other people’s ignorance deter you from investing there.
There are a couple of streets in Tokoroa that we wouldn’t buy in, but the majority of the town is as good if not better than a lot of towns in NZ.
Happy investing,
Del
Hi Guys
Jenny, just be careful when you mention that Tok is cash positive. As you are well aware there are many people buying in Tok at 10% returns, these are the ones i’m telling “be careful”. In the words of one Tok real estate agent “lots of Australians are going to get burnt in tok”. I’m an Aussie living in NZ, i’m just warning my country men.
Let me get things straight i’m not slaming tokoroa, i’ve got good friends that live there its just that its not the best place to buy an investment property in NZ. It may well be a wonderful place to Live.
Now this is why a 10.4% returning property isn’t cash positive.Lets look at a property for $65K that rents for $130pw. Say you put 20% down and finance the rest at 9% (the variable rate).
Lets assume the home is let for 50 weeks at $130pw
Total income $6500.But lets now look at the costs
Rates $1,100
Property management 7% plus gst $ 520
Insurance $ 330
Repairs $ 300
Total before interest $ 2,250Interest on loan 80% loan on
65K property is $52,000
at 9% interest $4,680
TOTAL Cost $6,930
Therefore we have a loss of $430 per year
Not my sort of cash positive !!
Even if you went for the fixed rates of 8.1% its still not cash positive.So clearly you don’t by a property showing a 10.4% returns for cash flow. Given there is no cashflow to make money you have to buy for Capital growth.
Now Jenny to answer your question where do you buy in NZ, well clearly you need at least a 12% return for it to be cash flow +. If you can by them in tok then thats good , go for it.
Better markets in NZ right now are
Christchurch, Hamilton, Gisborne, Dunedin and Invercargill. Yes Mini i said Invercargill. I know you don’t vibe it but the growth hasn’t even started yet. Just out of interest have you been there in the last few years ?
There are plans for Billions of Dollars to be spent in the Southland region, What effect will that have on a city of 50,000 ? I’m not even sourcing properties there, I’m busy with the USA. I’m just trying to give you guys the head start. But hey i might even start sourcing properties there ???Happy investing
regards westanWe find cash positive deals showing 15-25% Returns in the USA email me at [email protected] to join our database
Hi Westan,
Yes I agree with you about buying on 10% yields in this RE market… After taking insurances, maintenance costs, vacancies, etc..etc.. it is definitely NOT cashflow positive anymore on NZ’s interest rates. Many people seem to be ignoring this fact! [buz2]
We would not be buying in NZ at the moment in any town unless the yields are over 12%. Tricky, but not impossible…..You just have to buy well!!!!
Instead, with under 10% yields, I would rather stick to areas of Australia where there are still good regional deals (lots of good commercial ones)… offering 8-9% yields with tenants paying all outgoings, and longterm strong leases…..
Just my 2c worth,
Del
Hi del
yes fair comment about the commercial deals, i’d suggest that commercial in NZ could also be a great way to go, but you need to be a lot more switched on about things, making it very difficult for Aussie buyers.
Commercial deal could be the way to go especially when outgoings are paid by the tennant. My brother was looking at one in Gore showing a 12% return, he was all keen then the seller took it off the market.
regards westan
We find cash positive deals showing 15-25% Returns in the USA email me at [email protected] to join our database
Hi All
Having just returned from NZ yesterday and spent some time in Tokoroa and Invercargill. I can comfortably say that neither Tok nor Inver are going to be ghost towns anytime soon, if ever?
After reading all the posts I can see that both Minimogul and Westan are correct on certain aspects.
Mini I think you are really on the ball with the rental situation and the fact that earlier investors have done nothing to improve their properties since the day they bought them. These investors are now starting to wonder why they can’t rent out their properties.
We have 2 houses in Tok that are not that bad luckily, although we spent a few hours with the help of Muppet, washing the walls and ceilings on one of them to make it more presentable. I will go back and paint the inside within the next year or sooner if I have too depending on when Jenny can find me a tenant.
I see a different problem facing investors in Tokoroa the lack of enough people wanting rental properties. When I was there all the real estate agents had heaps of houses on their books to rent and a shortage of renters. It does not matter if your property is 10% CF+ or 20% CF+ if you can’t rent it out you are 100% negative. You can’t expect to take bus loads of investors into small towns and buy up everything in sight and expect to rent them all out.
Invercargill is exactly the same so many houses for rent and no people wanting to rent them, although you have a better chance with a bigger population base. Again it boils down to how nice your property is and if it is appealing to a tenant. I was really surprised by the amount of vacancies in Invercargill as I was there in Jan 05 and there was not a problem. We decided to see why there was such a problem and if there was a reasonable answer to the problem. We simply went into a couple of real estate agents and said we wanted to rent a property, chose a few random houses got the keys and went and had a look. Again Mini was proven correct, the places were barely fit for human occupation. This boils down to the fact that too many investors are buying property straight from the internet based on a few photos and believing everything the agents tell them.
Westan is also correct in the fact that you have to have a 12% gross return to make a property CF+. This is not easy to do now in NZ the big returns are not that easy to find, anyone who still thinks you can simply find the 10% net returns anywhere are kidding themselves. Again I came across the investor who was all cashed up making offers well below asking price. Of course if their offer is accepted they can end up with a property that returns 12%+. The big draw back with this strategy is you buy the property then and there with no builder or valuation report. This is a big risk and these buyers deserve to find themselves with a lemon, you simply have to be a moron to forgo Due Diligence.
NZ is still a great place to buy for the astute investor, but you may have to start thinking out side the box to get the good returns.
Kerwyn.
I could go on – it just urks me that a report goes public declaring a NZ town to be a ghost town in 20 years, what kind of credibility, logic, and demographical statistical analysis has been done on this, and how have the results of this been correlated with other comparable situations, in what ways were the local town planning authorities engaged in how they should accept this report and commence a downgrade of their infrastructure and facilities!!
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