With the new rules by the Reserve Bank already starting to have some effect in the market, it may be the perfect time to start looking outside of Auckland for your next investment property. Under the macro prudential rule which will apply to the greater Auckland council region, investors will have to put down a 30% deposit or equivalent equity.
We are already getting enquiries and requests for pre-approvals to purchase outside of Auckland. Although the rush has already started for places like Hamilton there are still opportunities in many provincial towns. Here are some things to keep in mind when considering a property outside of Auckland.
- Avoid future ghost towns
Some smaller towns which rely heavily on one or two industries for employment can be susceptible to a downturn. Closures of mills and meatworks come to mind.
- A high yield is only good when the property is tenanted
Some properties can have some great sounding rental yields, however the numbers look very different if it takes 6 months to find a tenant.
- Watch out for bad streets
Unlike Auckland there are many provincial towns which don’t have good or bad suburbs as such. Sometimes it goes down to the street level, a bad lot of residents in a street can totally change the kind of tenants you will be able to place in a house.
- The rental manager is your best friend
If you need unbiased information about a particular property select a good rental manager. Be nice to them, they will often know a lot about the area and the type of tenant they can place in a street.
This article has been written by Hamish Patel, mortgage broker with mortgagesonline.co.nz. Ph: 09 625 4693, Mobile: 021 625 693, hamish@monline.co.nz
