Tauranga
Has shown good growth this past year, however would be more suited in the current market to the capital gain achiever. There is good industry in both Tauranga and up and down the Mt Maunganui strip. There is a big Agricultural sector with the surrounding farming and Kiwi fruit industries and now the Port of Tauranga is the largest shipping port in NZ (with increased business from Shipping lines taken from Auckland).
Residential Area’s like Otumoetai, parts of Matua , Papamoa, Mt Maungnaui and The Avenues have good potential for growth and attract a good amount of owner occupiers. Greerton is a good option for a slightly higher rental yield with capital growth options as well.
Gate Pa is situated close to Greerton and is on the door step to the Tauranga Hospital, some streets in Gate Pa are not considered the best, so be careful where you buy and talk to the agents and property managers about which streets to avoid.
Rotorua
Is gaining momentum with the overflow from Auckland, Tauranga and Hamilton now, and it is less than 1 hours drive from Hamilton, Tauranga, Mt Maunganui and Taupo. Houses in the low 200’s seemed to have jumped $20K or so in the last 4-5 months. For me areas like Selwyn Heights, Western Heights and Pukehangi are the main focus for rental yield and you can find some gems sitting at between 7-9% (these are the North Western areas of Rotorua). These areas are not the bottom end, but seem to sit somewhere in the mid to lower mid range. Western heights and Pukehangi seemed to be predominantly tenanted while Selwyn Heights is a mix of tenanted and owner occupier homes which command a slightly higher premium than these other 2 areas. Houses in Pukehangi are predominantly made of Hardy board/plank construction, while Western Heights and Selwyn Heights are a mix of brick, weatherboard and Hardy plank.
One of the main areas and primary school zoning that is sort after is Lynmore right next to the Red Wood forest. This would give a lower yield but expect a slightly higher capital gain here. Some of the Southern suburbs are higher priced and tend to have a lot of home owners, prices ranging from $300K-450K bracket for 3 bedrooms.
Gang realted areas of Rotorua would be parts of Fordlands(west Rotorua) and Owhata (near the airport)
After talking to a few locals, there is quite a bit local industry in Rotorua and some residents are also now commuting to Tauranga and Hamilton with a drive under an hour for work. Tourism is one of the keys job markets here and recently Rotorua had the highest GDP increase in the country.
Napier/Hastings
Again we have been told by the local agents and property managers that growth is swiftly happening across the board. More out of towners are looking to cash out and settle down for the lifestyle. There is also growth from new migrants and seasonal workers for the orchards and wine industry. The Hawkes bay economy and industry is pushing forward and we are now seeing some more foreign investment in the region, with some new Chinese owned spring water bottling plants being established. New Zealand Dairy products is establishing a new Infant Formula plant to meet up with increased demand for China’s growing population as well as potential construction of the new the Ruataniwha Dam and Water scheme, which could create further jobs with long term.
Many Property Managers are in the current stages of reviewing current rents as some tenants are on old pricing structures and with demand increasing adjustments are being made upwards.
Areas in Hastings with great potential are Akina, Parkvale and Frimley and parts of Mahora. In these areas houses prices are ranging for 3 bedrooms from $240-320K in these areas(depending on the quality/land size). Rents are moving towards the $300-380p/w bracket depending on the quality of the dwellings. Slightly out of town is Flaxmere, this area seems to have very high yielding properties due to it being a lower end suburb. There seems to be two sides to Flaxmere, so it would be important to have a good rental manager or agent to give you a second pair of eyes and ears as to what may potentially be a good buy or not.
In towns like this the difference between streets and areas may not differ too much in price, however adding value to the dwellings will be a good start to increase the rental return. There are many nice villa style houses or weatherboard homes that just need a good coat of paint and perhaps a new carpet. Some of Napier’s sought after owner occupied areas like Taradale and parts of Greenmeadows and Napier Hill will have good gain potential. You may also wish to consider Tamatea as an up and coming which boarders Taradale and Greenmeadows to the west of the City.
Maraenui is a lower end suburb to be careful with as the yield is high but it can be hit and miss depending what street you are in. I would consider the nearby area of Marewa as an up and coming area. Here you can still buy a bit cheaper and it is closer to the city centre and Napier Boys High School. Napier South also has some nice homes and with a bit of a clean-up you can add some real value here to increase rents or capital gain. My pick for Rental potential is Onekawa, Tamatea, Napier South and Marewa here.
Both Rotorua and Napier/Hastings have Clean Air/Air Quality controls in place. Fireplaces that have been installed before 2005 are considered non complaint, new burner units are required in Rotorua for use, unless replaced by an alternative heat source like heat pumps. It is the vendors responsibility to get the Fireplace removed if non complaint at before the settlement date.
Napier/Hastings is under the required limits so some units are still active, however the council is slowly stamping these out for replacement, so they may still have some years of usage left in them before it’s enforced.
Tips
Knowing your Areas within the market you are looking at is important as this can help save you a lot of time when you are on the ground looking, talking to Agents and Property Managers prior to your visit will help you establish a better understanding of the types of areas within each city, whether they be up and coming areas, consisting mainly of tenants, or owner occupiers or perhaps even gang affiliated areas etc. At this stage you will want to discuss with these people, good schooling zones for families and where majority of the industrial sectors are based within the city. Google satellite maps and street view, are also handy tools for assessing the layout of the city you are looking to invest in and any potential schools, parks, shops in the surrounding areas.
When looking to buy ask these key questions:
How big is the Land m2? – You can work out how well priced your buy is vs. houses of a similar size as essentially you are buying land.
How big is the House m2? – This may determine if it’s being advertised as a 4 bedroom however the house size doesn’t warrant or fit the bill as a potential 4th bedroom, you may actual be buying a 3 bedroom and a closet for an increased price!
How much are the Annual rates? – For costing purposes and annual expenses.
Is it Owner Occupied or Tenanted? – This may indicate whether the house has been looked after or potentially not, as some landlords are reluctant to spend further money on their investments.
If it is tenanted, how much do they pay and do they wish to stay on? – If you are buying a house with the current tenant you may still wish to screen them through your property manager and/or they may not be paying current market rental value.
What is the market Rental appraisal? – This will help you calculate potential yield.
