In order to get the best deals you need to know an area inside out. You can’t just walk into any old area and expect to find a good deal. You need to know your area like a local – after all if the deal is that great then why haven’t the locals bought it?
Once again your area will come down to your strategy and your target market. Don’t make Remuera your area if you are looking for cash flow positive properties. You may notice in my blog I don’t talk about the North Shore at all; this is because I don’t know a thing about it, I also don’t usually talk much about the cities inner city suburbs, this is simply because they are far too expensive for me or the average investor. I prefer properties under $450 000 in city fringe areas.
By becoming an area expert you need to know the best streets of your area as well as the worst, what’s desirable and what is undesirable, why would people want to live in your area, and why others may not.
What are houses worth in different sub areas, streets, parts of your street (take Don Buck rd in Massey, I looked at a house here and everyone asked me if it was before or after the hill, as the bottom of the hill is fine, the top is a bit dodgy)
What do people in your area do for work? (is there any point having a huge garden for a full time working professional couple with no kids.)
What is the median income? (This allows you to know how much people can afford/ surplus income)
What are the houses renting for, what sort of houses are they? (I once thought about turning my 3 bedroom house into a 5 bedroom house, the problem being, what sort of a tenant is looking for a 5 bedroom house in the Bay of Islands) What are the vacancy rates of the area?
The only way you can find all this out is by spending time on the ground, attend open homes, talk to the agents, talk to local shop keepers, check out www.stats.govt.nz, go into the library and research the areas history (That property may look like a bargain until you find out it was an old saw mill and is contaminated by arsnic.)
When assessing your area you need to know who it is that will be buying/renting your properties, this allows you to maximise your attention for detail towards the target market. This creates competition and pushes the price/rent up.
For example, I am looking at a property in Otahuhu, for buy and hold. My tenants are most likely to be Indian. Through my research I know I should: Plant money trees by the entrance for Feng Shui, create a vegetable garden, but also put in marigolds for hindu ceremonies, create an area in the garage where it would be possible for them to cook (Indians don’t like cooking inside as it stinks too much.) I know that when I do the tenancy agreement that there is going to be a large family renting so to allow for an extra couple of people to live there (Grand parents), as it is a large house no doubt it would be inhabited by Mum, Dad, 2-3 children and possibly Grandma, Grandpa. The property is across the road from Otahuhu college so no doubt they will have teenage children. The house is close to town and public transport so car parking isn’t a major concern, although it does come with space for 3.
Every property has its optimum market and by having the right property with the right people for the right price then you will maximise your profit.