Wellington is Dead! Long Live the Capital City

Wellington is Dead! Long Live the Capital City

Or is it?

How many of you read that headline and felt your buying opportunity spidey-sense kick in?

Wellington has been stuck in a property market time warp for the last few years, stuck on
pause, waiting for a jump start. Government job cuts and a lack of confidence have ground
the real estate market to a near halt at times. But at some point, you start to think - when
properties are selling well below their intrinsic replacement value, it has to become a target,
right?

For every generation, people find it hard to start investing at the time and then easy in
hindsight. People look back at the GFC (2008) and think “gosh, houses were cheap”,
forgetting the global financial system was collapsing around us.

The people who did best from that cycle weren’t the ones who picked the exact bottom. They
were the ones who bought during the quiet years and could afford to hold on until the next
boom came.

It takes courage to buy when others are fearful. But in times like this, it pays to pause and
think - what would Buffett do?

Here’s what we are seeing at ground level:

• Water rates have come in, raising costs for landlords, but at some point, these costs
  are going to be passed on to tenants, as they are in other markets already (like the
  Kapiti Coast). Investors need a good deal right now because of the holding costs
  involved, but those deals are out there, and we take the costs into account when
  sourcing opportunities for you.
• Older investors are looking to cash out of their portfolios, expecting the market not to
  plateau for some time, and wanting to free up cash for living life. This presents an
  opportunity for new investors to secure what has traditionally been tightly held real
  estate in central locations.
• After a tough year, rental demand is picking up. Property managers are reporting
  reduced vacancies, more fixed-term tenancies and more demand in general.

Long story short, if we look back in 10 years' time, would you regret not buying in Wellington
in 2027?

Best Current Strategies in Wellington

We have always believed that cashflow is the number 1 strategy to pursue, no matter what
the markets are doing. If you are receiving positive cashflow now, any gains or losses on
capital value are only realised when you eventually sell.

The strategy hasn’t changed, but the market has certainly changed over the last few years.
Those investors with cashflow properties can ride out the current property value declines of
around 30%.

The tactics I look at when searching for a good deal in this market are generally about what
REAL value I can add to the property to increase the rent. Yes, the location matters a lot and
the experience to understand which suburb or street can be very beneficial to the
future of your long-term investment.

There are many ways to add value, so we approach all opportunities with an open mind and
recommend the most appropriate tactic to take.

Those investors buying now in Wellington and getting a positive cashflow are extremely well
placed to take advantage of future capital gains when they finally come knocking……AND THEY
WILL!

Deals available right now:

• 2 x 2-bedroom, single-level units on separate titles. Buy both for $750k at a 7% gross
  yield.
• Wellington
  Mid $ 500s
  Estimated rent: $800 - 900 per week
  Multi-income investment property at a first-home price, currently vacant but ready to
  generate something near an 8% yield. Rent it out immediately or complete a
  strategic makeover to reach the top of the estimated rent range and increase your
  weekly return.
• Lower Hutt
  Low $900s
  $1,400+ per week (current rents).
  Plug-and-play multi-income investment property at an 8% yield. Well-maintained and
  fully rented. Solid buy-and-hold opportunity.
  

Recent sales:

• 2 x 3-bedroom flats on one title, walking distance to CBD, sold in the low $800s, 8.9%
  gross yield.
•  3-flat property in Kelburn, sold for $1.36m. Gross yield 8.5%

Get involved in the future of property investing

Property investing, being a landlord, providing a home for people to live in – no matter what
you call it or how you describe it, it’s a great business to be in. Sadly, it’s also a political
football, and the usual suspects are setting out how they would make life hard for landlords.

Labour’s capital gains tax, Opportunities land tax, the Green Party’s everything everything tax. Rent controls, a landlord register... the threats are endless.

The only way to tackle these threats is to support the only group speaking up on behalf of
property investors: the NZ Property Investors Federation. This is the group that successfully
lobbied Labour to give up on removing interest deductibility, and persuaded ACT to
campaign on removing rental loss ring-fencing.

NZPIF can only do this work if we support them. It costs money to do the research, develop
policy and visit Parliament to talk to MPs and Ministers. Supporting them is easy and cheap.
You can join NZPIF directly, or join the Wellington Property Investors Association, which
brings extra benefits. You will not get a better return on investment.

Without your support, our voice in parliament will fall silent. The people that want to tax and
punish private landlords will win. Don’t let that happen. Join today.