Experienced investor: Waiuku & Central Auckland

Read our interview with an experienced residential and commercial property investor, who currently has over 20 rental properties across Auckland and Waiuku.

Number of investment properties: Over 20

Property descriptions: Residential, 2 - 3 bedroom units, 1 bathroom

Property locations: Waiuku and parts of Auckland (most of which are in Greenlane, Meadowbank and Kohimarama)

Name of Property Managers at Barfoot & Thompson: Deborah Somervell in Waiuku and Elle King in Meadowbank

When did you purchase your first investment property?

1981

When did you purchase your last investment property?

January 2013

Why do you invest in residential property?

I believe it’s the safest investment and the easiest. If you do your homework and buy at the bottom end of the market, at the lower end, you are not affected by price drops which do happen time to time.

You can always flick one easily, it’s harder if you have a more expensive property.

Which one has been the most successful investment and what has made it successful?

The most important thing is selecting the right tenants. An empty house is better than a bad tenant.

It has been the ones in Auckland, but only because of capital gain. Had to sell a couple as they have been too expensive as rentals. Greenlane/Remuera areas have been extremely good for me for capital gain.

You need to get the money working for you. For quite a few years I was getting a poor rental return but the property itself would be escalating very quickly, so I sold it.

Do you have any other investments, other than residential property? i.e. Commercial property.

Currently no, but I have had commercial investments in Parnell and Hamilton. Office/ Commercial businesses. I didn’t own them outright, it was in a consortium.

Do you have a specific philosophy for property investment (or investment overall) that you follow?

I believe the rent must pay your mortgage payments. That’s why I’m now buying in Waiuku because Auckland prices have risen so much that the return doesn’t appear to be there. Waiuku still gives an excellent return for your money - returns will go up at some point.

You need to keep the maintenance up as it’s cheaper in the long run. If you don’t attend to a peeling roof in the bathroom or rotting boards, it’s just a bigger job further down the track, get a maintenance programme.

Also, with good housekeeping, the odds of getting better tenants are improved. If it needs to be done, then get it done. There are limits, however, to how much you can plug the golden goose egg.

What are the key things you look for when investing in property?

It’s got to be a sound house, good roof, good studs, and aluminium windows - that makes it low maintenance.

It’s very important that the bedrooms are all of a good size - good size bedrooms are a must for renters.

I prefer brick and tile. It needs to be well fenced – this is good if you have children or pets as tenants. You also need good street appeal for resale value.

Do you use a property manager for all of your investments? Or, a variety of property managers?

Yes, I use a few different ones, including Barfoot & Thompson.

What value do you think they add?

It takes away the day-to-day management. Also, if you go away for long periods of time, you need a property manager to manage your home for you. It frees up my time, and when you have a good property manager, they can make your life a lot easier.

What is the most important lesson you have learned during your property investment journey?

I think the most important thing is selecting the right tenants, or good tenants. Don’t just go for the top dollar, if you can get a long term tenant who can look after your property.

An empty house is better than a bad tenant. Tenant selection is obviously the most important thing I’ve learnt, if you don’t research them and check them out, it’s better for your house to empty. Very tricky for someone who only has one rental and this is paying for their mortgage. They can get themselves in more trouble if they don’t select the right person.

For more information contact a property manager or to find out how much rent you can achieve, ask for a rental appraisal.

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