Hello,
Welcome to the second edition of the West Auckland monthly Residential Landlords Newsletter.
I am a landlord myself and have been for over 30 years. I currently own rental properties in South Auckland, North Shore and West Auckland. Being a high preforming Real Estate Agent (top 1% in New Zealand) for over 25 years and always working in West Auckland I know the real estate market and the rental market very well.
In this and ongoing newsletters I hope to provide ongoing up to date information relevant to landlords who own rental properties in West Auckland.
Regular features will include:
- Current sale prices
- Current mortgage rates
- Current rents
- A monthly suburb spotlight review
- A relevant feature article each month
I hope you will find it useful. I am available for free advice and opinion on any residential real estate matter.
|
Sale Prices |
|||
| Suburb | Median selling price April 2014 | No sold | Days to sell |
| Titirangi | $ 613,500.00 |
16 |
26 |
| Hobsonville | $ 524,450.00 |
4 |
48 |
| West Harbour | $ 705,000.00 |
23 |
25 |
| Glendene | $ 521,250.00 |
8 |
25 |
| Henderson | $ 528,000.00 |
56 |
34 |
| Massey | $ 465,000.00 |
32 |
29 |
| Royal Heights | $ 541,000.00 |
5 |
32 |
| Ranui | $ 453,750.00 |
8 |
28 |
| Sunnyvale | $ 438,675.00 |
8 |
25 |
| Green Bay | $ 745,000.00 |
7 |
32 |
| Te Atatu Peninsula | $ 616,250.00 |
22 |
24 |
| Te Atatu South | $ 518,000.00 |
17 |
39 |
| Glen Eden | $ 455,000.00 |
39 |
29 |
| Kelston | $ 480,000.00 |
4 |
36 |
| New Lynn | $ 536,000.00 |
32 |
28 |
|
Current Mortgage Rates 22/07/2014 |
|||||
| Float | 1 yr fixed | 2 yr fixed | 3 yr fixed | 5 yr fixed | |
| ANZ |
6.49% |
6.05% |
6.49% |
6.65% |
7.15% |
| ASB |
6.50% |
6.09% |
6.40% |
6.65% |
6.99% |
| BNZ |
6.49% |
5.99% |
6.39% |
6.59% |
6.99% |
| Westpac |
6.24% |
6.09% |
6.39% |
6.65% |
7.40% |
| Kiwi Bank |
6.40% |
5.99% |
6.29% |
6.29% |
6.95% |
| Best of other lenders |
5.64% |
5.75% |
5.80% |
5.85% |
6.79% |
|
Current Rents |
|||||
|
Jan 14 – Jun 14 |
|||||
| Glen Eden | Average Rent | Bonds Paid | Ranui | Average Rent | Bonds Paid |
| 2 Brm flat | $ 306.00 |
18 |
2 brm house | $ 354.00 |
12 |
| 2 brm house | $ 343.00 |
26 |
3 brm house | $ 394.00 |
68 |
| 3 brm house | $ 413.00 |
94 |
4 brm house | $ 483.00 |
8 |
| 4 brm house | $ 514.00 | 18 | Royal Heights/Massey | ||
| Glendene | 2 Brm flat | $ 331.00 | 14 | ||
| 1 Brm flat | $ 308.00 |
8 |
2 brm house | $ 360.00 |
24 |
| 2 Brm flat | $ 325.00 |
15 |
3 brm house | $ 412.00 |
149 |
| 2 brm house | $ 365.00 |
19 |
4 brm house | $ 467.00 |
33 |
| 3 brm house | $ 412.00 |
69 |
5+ brm house | $ 597.00 |
5 |
| 4 brm house | $ 485.00 |
17 |
Te Atatu | ||
| Henderson | 1 Brm flat | $ 275.00 |
10 |
||
| 1 Brm Apartment | $ 282.00 |
7 |
2 Brm flat | $ 334.00 |
21 |
| 2 Brm Apartment | $ 377.00 |
9 |
2 brm house | $ 377.00 |
12 |
| 3 Brm Apartment | $ 405.00 |
6 |
3 brm house | $ 450.00 |
50 |
| 1 Brm flat | $ 287.00 |
17 |
Te Atatu Peninsula | ||
| 2 Brm flat | $ 330.00 |
48 |
2 Brm Apartment | $ 399.00 |
6 |
| 1 brm house | $ 256.00 |
6 |
1 Brm flat | $ 267.00 | 7 |
| 2 brm house | $ 374.00 |
46 |
2 brm house | $ 379.00 |
19 |
| 3 brm house | $ 431.00 |
224 |
3 brm house | $ 455.00 |
68 |
| 4 brm house | $ 512.00 |
90 |
4 brm house | $ 512.00 |
20 |
| 5+ brm house | $ 613.00 |
11 |
Titirangi | ||
| 1 room | $ 296.00 |
8 |
1 Brm flat | $ 318.00 |
14 |
| Kelston | 2 Brm flat | $ 363.00 | 9 | ||
| 1 Brm Apartment | $ 283.00 |
19 |
1 brm house | $ 271.00 |
6 |
| 2 Brm Apartment | $ 383.00 |
5 |
2 brm house | $ 382.00 |
21 |
| 1 Brm flat | $ 271.00 |
15 |
3 brm house | $ 465.00 |
74 |
| 2 Brm flat | $ 326.00 |
13 |
4 brm house | $ 579.00 |
22 |
| 2 brm house | $ 354.00 |
20 |
West Harbour | ||
| 3 brm house | $ 425.00 |
57 |
1 Brm flat | $ 313.00 |
6 |
| 4 brm house | $ 461.00 |
16 |
2 Brm flat | $ 331.00 |
8 |
| 5+ brm house | $ 607.00 |
5 |
2 brm house | $ 375.00 |
11 |
| 1 room | $ 165.00 |
7 |
3 brm house | $ 444.00 |
93 |
| New Lynn | 4 brm house | $ 562.00 |
35 |
||
| 1 Brm Apartment | $ 260.00 |
22 |
5+ brm house | $ 672.00 |
15 |
| 2 Brm Apartment | $ 322.00 |
14 |
Western Beaches/Rural | ||
| 1 Brm flat | $ 268.00 |
13 |
1 Brm flat | $ 258.00 |
6 |
| 2 Brm flat | $ 330.00 |
62 |
1 brm house | $ 261.00 |
5 |
| 3 Brm flat | $ 391.00 |
12 |
2 brm house | $ 382.00 |
32 |
| 2 brm house | $ 374.00 |
31 |
3 brm house | $ 458.00 |
52 |
| 3 brm house | $ 435.00 |
84 |
4 brm house | $ 516.00 |
25 |
| 4 brm house | $ 502.00 |
20 |
5+ brm house | $ 575.00 |
5 |
| 5+ brm house | $ 575.00 |
5 |
1 room | $ 170.00 |
6 |
| 1 room | $ 196.00 |
8 |
|||
|
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|
Te Atatu South |
||||||
| Date | Median selling price | 5 year gain % | ||||
| May 1994 | $ 137,000.00 | |||||
| May 1999 | $ 187,000.00 |
36.5 |
||||
| May 2004 | $ 280,000.00 |
49.7 |
||||
| May 2009 | $ 340,000.00 |
21.4 |
||||
| May 2014 | $ 565,000.00 |
66.2 |
||||
| Over 20 years |
312.40% |
|||||
|
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|
Glendene |
||||||
| Date | Median selling price | 5 year gain % | ||||
| May 1994 | $ 152,000.00 | |||||
| May 1999 | $ 215,500.00 |
41.5 |
||||
| May 2004 | $ 293,500.00 |
36.5 |
||||
| May 2009 | $ 380,000.00 |
29.5 |
||||
| May 2014 | $ 570,000.00 |
50.0 |
||||
| Over 20 years |
275.0% |
|||||
Rental Property or Shares?
There is absolutely no doubt in my mind that residential property investment has consistently outperformed investment in NZ shares. Almost every financial advisor and fund manager has an agenda to earn an income from management fees and commissions. They will continually advise their clients to either totally invest in shares or have a “balanced” portfolio of shares and property. Not put all of your eggs in the one basket!!
In my view if the safest basket also gives the best return, why invest in the other more volatile / risky / lower return basket at all. The new mantra is put all your eggs in one basket and carefully look after that basket – your rental investment.
You can find numerous articles written by fund managers, share brokers and the like portraying the returns on shares compared to rental property. Many are very misleading because they compare the return on shares with property capital gains but conveniently ignore the rental income. Here are some investment figures:
NZX Asset class Performance Annual Returns for 10 years June 2003 – June 2013
Listed Property 8.3%
NZ Shares 5.8%
In other words 8.3% – 5.8% = 2.5% difference
2.5% = 43.1%
5.8%
Property performed 43.1% better than shares.
|
Price Trend for Auckland property over the last 10 Years |
|||||
|
2003 |
2008 |
2013 |
10 Yrs |
||
|
West Auckland |
$ 223,919.00 |
$ 380,414.00 |
$ 448,847.00 |
100% |
|
|
All Auckland |
$ 324,651.00 |
$ 491,810.00 |
$ 567,716.00 |
78% |
|
If shares are such a good investment why will the bank not fund 80% of the money you may want to invest in the share market? The banks will if you have other collateral. What is collateral? – Why real estate of course. Banks will lend 80% on rental properties which means you can use the banks money to leverage your return massively.
Suppose you have $200,000 to invest. With shares you invest $200,000 and receive at that time $200,000 worth of shares. Using the NZX figures they would be worth 105.8% x $200,000 after a year = $211,600 a profit of $11,600 less brokerage fees.
If however you brought two rental properties valued at say $475,000 each and paid the 20% deposit ($95,000) on each, allowing $5000 for legal valuation and incidental costs. After a year the rental properties would be worth:
108.3% x $475,000 each = $514,425
A profit of $514,425 – $475,000 = $39,425 each x 2 properties = $39,425 x 2 = $78,850
In the first couple of years there may be some further outgoings that are not fully covered by the incoming rents but the net result is still likely to be well ahead of the shares income. After a couple of years as rents rise there will eventually be a net income over and above the capital gains.
Gearing has made the superior return possible. With shares you receive income on the $200,000 you invest. On rental property you receive capital gains on your $200,000 invested PLUS the banks mortgage of $750,000 to you which is offset by the tenants rent. Which would you prefer? As safe as Hanover Finance share investment or as safe as houses investment?
Until next time,
Best wishes,
John
Licensee Agent REAA 2008
thelegendofthewest@gmail.com
021945140
09 838 8895