On paper, plenty of investors would want this property. But the data suggests you might struggle to find a tenant.
What you can do: Check how many renters live in a suburb before you buy.
The data is hard to dig out of Stats NZ, so I built Area Analyser. It puts it all in one place, and it’s free to use.
If the share of renters is well below the Auckland average, you could struggle to find a tenant.
#2: What you see on the ground
Sometimes you can look at all of the data in the world, but you also need to get on the ground. Your eyes can see what a spreadsheet can’t.
The property team rejected another development because there wasn’t enough parking.
There were double yellow lines along both sides of the road.
And the properties didn’t have enough off-street parking for future tenants.
The tenants would have to park down a side street. That would eventually get clogged.
That’ll make it harder to find a tenant, and then get them to stay.
It reminds me of another house that I was looking at in Christchurch. It was a single-level home with a garage.
The numbers looked almost perfect on paper.
But then on a drive-by, the Opes Property team saw rubbish scattered around the neighbours’ yards.
Good data. Bad drive-by.
What you can do: Before you buy, it’s worth doing a drive-by of the area at different times of day. You can see issues a spreadsheet doesn’t.
#3: Big house. Bad investment.
Then there was the time I was analysing some higher-end properties in Christchurch.
They had a larger-than-average floor plan. The development was close to Hagley Park (the main park in the middle of Christchurch).
They were in a good school zone. The developer had a good reputation.
The developer originally wanted $850,000. After negotiating, the property team were willing to list the property for $50,000 less.
But even with that price drop, I wouldn’t recommend it to client. There wasn’t enough rental income to justify the price.
My analysis showed that you’d need to get the property for around $750,000 to get a high enough rental return.
So even though they were nice houses, I couldn’t recommend them as an investment at that price.
What you can do: Run the cashflow before you buy. This can be difficult, so I built Opes+ so you can do it for free.
Whether you invest through Opes or on your own, you can run these checks yourself.
Look at the renters and the competition, do a drive-by at different times of day, and run the cashflow.
P.S. If you want help investing, you can always book a free portfolio planning session with an Opes Partners financial adviser.
