Vacancy Rates in Regional Towns

Hi,

Kiwi Property Investor Magazine does do reports on vacancy rates in towns. It’s a little difficult to get hold of if you’re not in NZ but try here: http://www.propertyinvestor.co.nz/

Landlords.co.nz has a useful article which says you can get the vacancy rates from REINZ:
http://www.landlords.co.nz/article1231.html
The article is well worth reading.

Also be aware that if you are financing, you may have difficulty getting mortgages in towns of less that 40,000 people as banks see this as high risk investment.

Good luck!

Sigrid de Castella & Antony Anderson

http://www.kiwiproperty.biz
New book “The Guide to New Zealand Property Investing – Australian Edition”
Available at our web site along with other NZ Resources for Australian Investors

Hi

My name is Paul and I attended last week. As I mentioned at the seminar I have 23, or 24 now holding a good % of which are in small towns. I can’t say I have any idea on vacancy rates in general BUT:
a) Know yopur apprehension. I had it as well and initially got over this with a clause to say that the property manager had to find a tenant before I went inconditional.
b) Have not experienced any issues with vacancy in these properties indeed much less than cities. Why. It is actually quite simple and is to do with the princiople of scarcity. These areas see VERY LITTLE development so the stock number is low. This means there as actually often more of a shortage than an oversupply. This has been my experience and has resulted in good returns with LONG stay tenants in these areas. People are less transient if they are in a rural town.

I live in Auck BTW. Hope that helps (1 question down 2 to go to do all the homework )

To Sinead

Sorry for the delay in getting back. I had some down time so went back on the site to see you asked me a question directly.

Have I sold

Absoultely.

As I mentioned at Steve’s seminar i discovered most of his rules by accident and then had them confirmed by his book and never looked back.

I have sold a few properties but like you originally brought to hold for ever. Why I sold was always because something hapened or I found out something. It may even been an ineffictive body corp, bad area, or getting more knowledge and wanting to move out of anything on a cross lease.

The difference was i was able to reinvest that money to create a multiplier. This happened somewhat by chance. I would sell a flat in a city and then reinvest in a town.

This meant for example I could turn 150k say at 5% into 150% at 10% by having two properties at say 75k both of which rented at 10%. Why did I have a 5% yeild you ask. Will in reality it was brought at 10% but with the market moves, and rent doesn’t it drops to 5%.

I was lucky as well as i was able to do this because of tye ripple effect. However when the ripple becomes a swamp then it is harder and this is what i’m looking forward to in Steve’s newsletter as to where to from here.

Hi

Re: The clause.

A good point was raised re: The agreement. The key to this is however to have your management team seperate from your real-estate team. This way the propertyy manager will only put someone in that they like. This ddress the concern raised.

You are right about knowing vacancy rates in small towns. However, there is HUGE advantage to small towns in that a lot of the places are run down and operated by absent landlords. Let’s face it to own a property in one of those towns you are unlikely to live there. A lot of people buy and hope to make money rather than doing a place up, which is more forte.

This presents the ethical investor with a huge advantage. If you can buy a property and do it up, certainly my preffered option then you will attaract a good tenant and have the place filled super quick. Why? Because someone will move out of their dirt bowl and into a nice place. If they are on welfare, as many are, then welfare will cover the upped rent. The property managers will in turn encorage it getting their tenants to move into better properties to keep them happy. Yes, you can do this up with the tenant in there. in many cases they will help out!

Small towns have different rules and it is understanding these rules that are crucial more so that the stats.

Hi Westen

Glad to keep this going. In response to your questions:-

Re the clause- often in towns that are smaller there is only a few property managers, sometimes you may not have the luxury of using a different manager to the selling agent.

This is true. Howver, the PM does not want to take on a lemon and it is all about building trust. If an agent sees you as someone who will invest in the area than they are unlikley to do the dirty. This has been a philosophy that has worked well for me. i tend to try and buy 2-3 in an area which then gives me more power in the relationship. I’m actually doing this right now in an area of NZ that i have not invested in previously!

But how do you get the tenant in before settlement and fix up the property after then???? This sounds like a contradiction.

1) Get a rental appraisal of now and if done up.
2) Get a tenatnt in at the old rent and keep the rent stable on the condition you can do it up. Explain you will do it up around them. Most tenants enjoy this as they get scope on THEIR house. Good tenants treat it lke their house and this is a way to get buy-in from the start. i’m going to build a website soon to show properties where i have done just this and get quotes from tenants who are still in there and won’t move as they treat it like their house. my philosophy is make residential like commercial and you do this by thinking about tenants differently.

It’s actually very difficult to improve properties while a tenant is in them, I’d never do that to a tenant, i’d alway wait till the property was empty.

You are missing an opportunity. i have done both and for major repairs i agree. However you will be surprised at what you can acheive if you involve someone else in the decesion. It is all about finding the right solution (TIP: A dishawasher is a bloody exciting inticment!).

In practice what do you find vendors say when they are presented with that on the contract ?

– I’m yettohave any hassles. The agent goes in and says they have someone lined up so they condition the vendor. Everyone wins.

Personally (as a seller)i wouldn’t be that excited to sign a contract like you are suggesting, i want one that give me certainty, unless there were no other offers i wouldn’t accept a contract with that clause (well most likely not), just in case reletting the property was slow.

Understood but if the real estate agent puts you at ease and it is in the time frame for other conditions to be accepted, like builders, LIM etc. then the impact is nothing.

Hiya

I know where you are coming from but seriously give it a try. Give it a bash with an existing property you have and tell me it works?

What repairs
– Often it is an outside paint
– Carpet etc. i agree and often try and get some time between settlement and confirmation to get this done. My secret there is agree to give them some money to cover the insurance during this period, $50 goes a long way for a couple of weeks access.
– When the tenant is there I ususlaly do cosmetic stuff that is non intrusive. this said i have had a bathroom done with the tenant there and that was a big success. more recently turned a back shed into a sleep out, again while the tenant was there.

You are right in that it depends on the nature of the r&m and some is better suited to a vacant property. Sorry if I did not make this clear. however some is actually better suited to the tenant being there especially if you are looking for long stay as they make it there own (so long as they don’t want black rooms!).