Out of town investors contribute to community

Appearance and quality of housing stock improves.

Appearance and quality of housing stock improves.

File picture by Louis McKenna

OUT-OF-TOWN investors contribute to the community by providing rental homes and they help increase the appearance and quality of housing stock.

That is the reaction of some real estate agents, a property finder and an investor, after an article last month suggested out-of- town investors were bumping first-home buyers out of the market.

Scott Schrader, 40, was an out-of-town investor from Auckland who bought his first property in Gisborne about three years ago.

The price of the property versus the return made it a no-brainer, he said.

“It was like a retirement plan and I would just sit on it for a year. Buying down here was less than a deposit in Auckland.”

Now he and his partner live here after falling in love with Gisborne. They have bought their own home and added a couple more Gisborne properties to their investment portfolio.

The lifestyle change has been fantastic, he said.

“The fact that it’s the absolute opposite to Auckland: no traffic, no stress, everything so easy and laid back and everyone so jolly nice.”

Bronwyn Kay Real Estate agent Jake Stevens said people like Mr Schrader were the kind of people they encouraged to move into town.

“We need these smart people.”

Refurbishing properties

Mr Stevens said often young out-of-town investors he dealt with refurbished the properties as well, then would contact him again at a later date to ask for a property for themselves, once they realised the great lifestyle Gisborne offered.

Andrew Lush, a property finder with The Property Agency (TPANZ), said out-of-town investors created rental housing within communities, and that was something Gisborne was seriously short of right now.

“They also do up the properties for people who need to rent, and it is done to a standard for the rental market, with insulation, heating and smoke alarms.”

Mr Lush wanted to dispel suggestions that investors bought cheap property, at a cheap price, and then banged up rents to maximise their income.

“They can’t do that. We won’t do that. The tenancy law dictates when the rent can be increased and the market dictates the amount the rent goes up by.”

Mr Lush said of the eight properties he had sold in Gisborne to out-of-town investors over the past six months, 60 percent of them were now being done up.

Not one of them had had any offers from first-home-buyers, “so where are they?”, he asked.

Mr Lush lives in Tauranga and is one of five property finders in New Zealand who work for TPANZ.

“Every person in this company is a fully-licensed real estate agent and in my case an auctioneer as well. We are not just people coming to this market to make a quick buck.”

They have a database of about 2000 registered investors, mainly from New Zealand, but a few from Australia. Most were in their mid-20s to mid-30s and a few were retirees, he said.

“They engage me to seek out property for them that suits their portfolios.”

Mr Lush said obviously it had to work from a business point of view for his investors.

After the numbers were crunched, Gisborne was still an attractive market, offering yields of 7 to 10 percent.

“If investors can’t get a profit out of their investment, then they can’t put money back into the property.”

Mr Lush said the out-of-town investors he worked with fitted into a few categories.

“They are either looking for a do-up with a potential capital gain at a later date, or looking for long-term investment. They are not necessarily a trader who does it up and flicks it on for a quick gain.

“Then we have got the long-term investors of 10 years or more who are looking for a yield out of a property.

“Then we have a bit of both, those who do up a property and sit on it for two to five years, and then move it on when the market is right.”

40 percent deposit rule

But due to the 40 percent deposit required by investors, set by the Reserve Bank of New Zealand on October 1, inquiries had dropped dramatically.

“This will mean fewer rentals available and that means the cost of rentals will go up.

“It’s going to cause problems. You’ve got people in Auckland living in cars because the rents are too high and there is the potential for this to happen in many other towns around New Zealand, including Gisborne”.

Mr Lush said the recent demand for homes here that had pushed property prices up, had also seen investor inquiries drop off.

“Gisborne is at the stage now that Tauranga was about eight to 10 months ago, where the price of the home is not so attractive to the investor.

“People have come into Gisborne from Auckland, Tauranga or Hamilton, thought ‘this is a good place to retire’, and they’ve bought here and got extra funds to put in the bank because they sold in higher markets.

“That’s what pushed the market up. The investor has not pushed the market up because there is no point. It doesn't make good business sense.

“Our investors don’t want expensive houses, they want cheaper houses.”

Mr Lush said Gisborne was a progressive provincial area, driven in part by people leaving Auckland in their late 50s to early 60s and spreading themselves around New Zealand, often buying properties with beach views and putting the balance of the sale of their home in a larger city in the bank.

Mr Lush said the due diligence period of 15 days he required was not to hold up properties but to allow for a meth test, a builder’s report and a LIM report, which took 10 days.

“If I can get all that done in 10 days, that’s great. Then we don’t need 15 days and I go back to the client and ask if they are happy to go unconditional earlier.

“Anyone buying a house should be doing those tests, whether they are an investor or not.”

Gisborne still affordable

Bronwyn Kay Agency real estate agent Dianne Holland said Gisborne was still one of the most affordable places in the country and they were experiencing an active market with first-home buyers and investors.

Tracy Real Estate owner Tracy Bristowe also said the market was “very buoyant” and the best it had been since the last peak about 10 years ago.

“From the past 50 sales analysed by our agency, our data shows only a small portion of sales have been to out-of-town investors.”

Mrs Bristowe said about 10 percent were to investors not living in Gisborne and 85 percent of their sales were to local buyers or those wanting to make Gisborne their home.

“The other 5 percent of sales were to local investors.”

OUT-OF-TOWN investors contribute to the community by providing rental homes and they help increase the appearance and quality of housing stock.

That is the reaction of some real estate agents, a property finder and an investor, after an article last month suggested out-of- town investors were bumping first-home buyers out of the market.

Scott Schrader, 40, was an out-of-town investor from Auckland who bought his first property in Gisborne about three years ago.

The price of the property versus the return made it a no-brainer, he said.

“It was like a retirement plan and I would just sit on it for a year. Buying down here was less than a deposit in Auckland.”

Now he and his partner live here after falling in love with Gisborne. They have bought their own home and added a couple more Gisborne properties to their investment portfolio.

The lifestyle change has been fantastic, he said.

“The fact that it’s the absolute opposite to Auckland: no traffic, no stress, everything so easy and laid back and everyone so jolly nice.”

Bronwyn Kay Real Estate agent Jake Stevens said people like Mr Schrader were the kind of people they encouraged to move into town.

“We need these smart people.”

Refurbishing properties

Mr Stevens said often young out-of-town investors he dealt with refurbished the properties as well, then would contact him again at a later date to ask for a property for themselves, once they realised the great lifestyle Gisborne offered.

Andrew Lush, a property finder with The Property Agency (TPANZ), said out-of-town investors created rental housing within communities, and that was something Gisborne was seriously short of right now.

“They also do up the properties for people who need to rent, and it is done to a standard for the rental market, with insulation, heating and smoke alarms.”

Mr Lush wanted to dispel suggestions that investors bought cheap property, at a cheap price, and then banged up rents to maximise their income.

“They can’t do that. We won’t do that. The tenancy law dictates when the rent can be increased and the market dictates the amount the rent goes up by.”

Mr Lush said of the eight properties he had sold in Gisborne to out-of-town investors over the past six months, 60 percent of them were now being done up.

Not one of them had had any offers from first-home-buyers, “so where are they?”, he asked.

Mr Lush lives in Tauranga and is one of five property finders in New Zealand who work for TPANZ.

“Every person in this company is a fully-licensed real estate agent and in my case an auctioneer as well. We are not just people coming to this market to make a quick buck.”

They have a database of about 2000 registered investors, mainly from New Zealand, but a few from Australia. Most were in their mid-20s to mid-30s and a few were retirees, he said.

“They engage me to seek out property for them that suits their portfolios.”

Mr Lush said obviously it had to work from a business point of view for his investors.

After the numbers were crunched, Gisborne was still an attractive market, offering yields of 7 to 10 percent.

“If investors can’t get a profit out of their investment, then they can’t put money back into the property.”

Mr Lush said the out-of-town investors he worked with fitted into a few categories.

“They are either looking for a do-up with a potential capital gain at a later date, or looking for long-term investment. They are not necessarily a trader who does it up and flicks it on for a quick gain.

“Then we have got the long-term investors of 10 years or more who are looking for a yield out of a property.

“Then we have a bit of both, those who do up a property and sit on it for two to five years, and then move it on when the market is right.”

40 percent deposit rule

But due to the 40 percent deposit required by investors, set by the Reserve Bank of New Zealand on October 1, inquiries had dropped dramatically.

“This will mean fewer rentals available and that means the cost of rentals will go up.

“It’s going to cause problems. You’ve got people in Auckland living in cars because the rents are too high and there is the potential for this to happen in many other towns around New Zealand, including Gisborne”.

Mr Lush said the recent demand for homes here that had pushed property prices up, had also seen investor inquiries drop off.

“Gisborne is at the stage now that Tauranga was about eight to 10 months ago, where the price of the home is not so attractive to the investor.

“People have come into Gisborne from Auckland, Tauranga or Hamilton, thought ‘this is a good place to retire’, and they’ve bought here and got extra funds to put in the bank because they sold in higher markets.

“That’s what pushed the market up. The investor has not pushed the market up because there is no point. It doesn't make good business sense.

“Our investors don’t want expensive houses, they want cheaper houses.”

Mr Lush said Gisborne was a progressive provincial area, driven in part by people leaving Auckland in their late 50s to early 60s and spreading themselves around New Zealand, often buying properties with beach views and putting the balance of the sale of their home in a larger city in the bank.

Mr Lush said the due diligence period of 15 days he required was not to hold up properties but to allow for a meth test, a builder’s report and a LIM report, which took 10 days.

“If I can get all that done in 10 days, that’s great. Then we don’t need 15 days and I go back to the client and ask if they are happy to go unconditional earlier.

“Anyone buying a house should be doing those tests, whether they are an investor or not.”

Gisborne still affordable

Bronwyn Kay Agency real estate agent Dianne Holland said Gisborne was still one of the most affordable places in the country and they were experiencing an active market with first-home buyers and investors.

Tracy Real Estate owner Tracy Bristowe also said the market was “very buoyant” and the best it had been since the last peak about 10 years ago.

“From the past 50 sales analysed by our agency, our data shows only a small portion of sales have been to out-of-town investors.”

Mrs Bristowe said about 10 percent were to investors not living in Gisborne and 85 percent of their sales were to local buyers or those wanting to make Gisborne their home.

“The other 5 percent of sales were to local investors.”

Kiwisaver statistics

An indication of first-home buyers in this region can be taken from the amount of KiwiSaver withdrawals.

All first-home buyers can withdraw their KiwiSaver funds if they have been a member for three years and leave a minimum balance of $1000 in their account.

Figures released by the Inland Revenue Department show for the year ended March 31, 2017 there were 283 withdrawals in Gisborne and on the East Coast. They totalled $5,291,836, which averages out at $18,699 per individual.

On top of KiwiSaver withdrawals, the Ministry of Housing offers a home start grant. These grants replaced the KiwiSaver deposit subsidy from April 1, 2015. The home start grants provide eligible first-home buyers up to $5000 for individuals, and up to $10,000 for couples to put towards their purchase. If you are building a new home, eligible first-home buyers can get a grant of up to $10,000 for an individual or $20,000 for couples.

Since the new scheme began just over two years ago there have been 377 successful grant applications.

Over the past 12 months to March 2017 there were 217 successful applications, totalling $877,000.

Of that, $839,000 was paid towards existing homes and $38,000 paid out for new homes.

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