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Mary asks:
(updated on Wednesday, May 08th 2019)
Is property investment in Auckland still worth it? I am currently looking at a property in the range of $500,000 to $600,000 with a weekly rent of around $500. With a loan of $500,000, after rates, taxes, and all expenses, I will be looking at a weekly cash flow of around minus $200.
How can I justify such an investment? Is there something I am missing? I always hear talk of people using property investment as a positive cash flow but it seems highly unlikely in Auckland.
Our Experts Answer:
It is unlikely that we will be seeing much in the way of capital growth in the Auckland market for a few years. So it could be argued that simply buying a property at a retail price is not worth it – especially given the fact it is likely to be negatively geared.
However, this market is more conducive to finding a “bargain”. There are also ways to benefit out of property types positively affected by the Unitary Plan although these might be outside your budget. The other alternative is looking outside the Auckland market where you may have better cash flow options which you can consider.
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