Rotorua Market Update March 2021

Last updated: March 2021. Sources: Tenancy services & REINZ.

Rotorua, much like the majority of New Zealand is in a “hot” market. It is common these days for a property to be listed mid-week, open home on the weekend, and then deadlined a couple of days later. An offer with a laundry list of conditions does not stand a chance and if there is an asking price it is almost certain to go well and truly over. How does anyone get a good deal in this market?

Keen investors are using multiple strategies to capitalise on in these unprecedented times.

1. Land:
   They aren’t making more of it… many sections in Rotorua have development potential. Knowing what it will cost for a new build as well as being familiar with the district plan puts you at the advantage. There are other issues and restrictions that are unique to Rotorua I.e., high water tables and geothermal land. Because of potential development roadblocks, having contacts with local engineers and developing companies that can assist ensures a smooth and effective solution to these land issues that can restrict and slow the development process.
   
   
2. Rent:
   • Buy Under Rented Properties:
     Rent prices are continuing to increase. The average rental increase was $19 in the last 12 months. I am finding that many properties are still being rented significantly under market value. I work closely with Rotorua property managers and am able to get a current rental appraisal for my clients. Being up to date with current rental values helps an investor know what price to offer on a property. I am working for my clients to find cash flow positive properties in areas that I expect capital growth.
     
     
   • Social Housing:
     Another way to secure rental income is to engage Housing New Zealand. More Rotorua landlords are beginning to rent their properties out through Housing New Zealand, which is a strategy that works for those that want a hands-off approach, steady rental income and the security that any damages done will be rectified at the end of the tenancy.
     
     
   • Renovate to Increase Yield:
     When I view a property, I can assess what work will need to be completed in order to be more attractive to tenants, to meet healthy homes standards and to increase the rent. I work within my client’s budget to ensure that any renovation costs will increase their long-term cashflow.

Rotorua has been achieving unprecedented capital gains. In the last year, the median listing price has gone up 21%. Historically, Rotorua was the place you invested for cash flow. I have talked to numerous investors who have bought in the last five years that are very happy with their cash flow and capital gains.

Today you can have it all! With interest rates at an all time low, if you can secure a rate for 3 years with principal & interest, cash flow positive, there is likely more capital growth which equates to leverage opportunity. 

If you are banging your head trying to find a cash flow positive property, I would love to help you. Please email or call to discuss our premium buyer's service.