Safe as Houses: Property Investment 101
Cityscape caught up with Harcourts property guru Mary Turnbull for the lowdown on investing in property.
What’s the local investment property market like?
It’s an attractive market for both seasoned and novice investors as there’s a lot of property available, giving the investor the chance to buy well. Interest rates remain low and the outlook for the city is extremely positive both from an immigration and rebuild perspective. If you add these elements together it’s definitely a good time to consider investing, and I believe this climate will be maintained for the next 18–24 months.
What are the key considerations?
Potential investors need to build their confidence, and this centres around accurately establishing the return a property would give you prior to purchase, maintaining that figure if possible, and being able to shoulder changes such as interest rates increasing. They also need to be comfortable with the location they purchase in, remembering that this will also determine what sort of tenants they will attract.
What should first time investors look out for?
The biggie is not doing their homework about the property, area, returns and requirements of being a landlord.Where are the hot locations? Real estate is all about location, location, location. The north/west of Christchurch has always been a safe area for investors, meaning it holds its value and attracts quality tenants.
Apartment or house?
There are different appetites for different investors. Investing in both houses and apartments is popular. It is important to know what you are getting yourself into, as apartments can often have additional costs – for example, body corporate fees and rules which may not appeal to everyone.
What yield percentage should be aimed for?
This all depends on the investor’s strategy, whether it is focused on cash flow or capital gain in the future. There are a lot of properties in the market that have a gross yield between 5 – 7 per cent. Anything above this is a complete bonus. Generally higher returns have higher risk. For example, ‘as is where is’ uninsured properties can offer a higher yield; however this comes with higher risk.
Property manager or DIY?
This is a personal choice; however, there is a benefit in using property managers, as they are experts in looking after landlords, maintaining their rights and obligations just as they do for tenants. That role can be difficult when handled personally.