Real estate market wooing investors

Low fixed-term deposit returns from banks and falling house prices might drive investors to consider becoming landlords.

Andrew King of the Auckland Property Investors Association said rental property was a realistic alternative to fixed-term deposits and other forms of investment but only if people were not looking for immediate capital gains.

Don't seek that for at least three years, he advises.

Investors appear to have more appetite for buying property now that property prices and mortgage interest rates are sliding, he said, and a number of landlords told him around Christmas that it was a good time to buy.

"Landlords are concerned about cash flow and with interest rates down, cash flow is much improved. Many of our members were cash-flow neutral but with falling interest rates, they will start to make money so potentially more people will buy," King said.

Buying wisely and setting an interest rate around an attractive 5.6 per cent is one thing, but finding the tenants to fill places is quite another.

King tracks websites like Trade Me to gauge the number of properties on the market and has found a plentiful rental supply in most areas for many months, particularly after vendors withdrew when they tasted unpalatable offers and rented their places instead of selling.

People thinking of buying a nice little renter should consider many factors, he said, probably the most crucial being choice of location.

To read the full NZ Herald story click here

Posted: 31 Jan 2009

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