Where to buy?

Question from sam updated on 23rd May 2014:

I live in Auckland and have $450,000 to invest in a capital gain oriented property. This will be my primary property as I havent bought a home yet. I am single and am renting a two-bedroom place in Remuera for $280 per week. Am I best to buy something small in Auckland, Wellington or Christchurch? Or should I buy in a smaller town like Tauranga, Whangarei or Te Awamutu in a 'future growth' area and rent it out at healthy yields while living in rented Auckland flat. Appreciate your thoughts. Sam

Our expert Ron Hoy Fong responded:

Hi Sam, you live in Auckland so definitely stay in the Auckland area for investing. We are only halfway into the current property boom and property values have yet to double from October 2012 (use the CV as a bench mark). I anticipate there will be a big catch up in rents coming in desirable inner suburb areas due to the peak 10 year immigration trends recorded recently.
If you are happy with renting a two-dedroom unit in Remuera for $280 per week then I suggest you stay there because you will find the average rentals for the area should be around $400 per week.
If you are looking for the "capital gains" orientated property then stay within Auckland central suburbs and avoid the lower socio-economic areas, which are usually more for immediate cashflow. If you take action quickly your $450,000 can still get you into good parts of inner central suburbs of Auckland and still be cash flow neutral. Remember long-term massive wealth is achieved through capital growth, cashflow however will buy you a cup of coffee and a holiday.

Ron loves to share his passion for property and his coaching course provides one-on-one mentoring and support that will empower you with tools, strategies and valuable insights so you can achieve investment success and become a property master.

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