From Jacob (Profit Rentals):

I am a property investor myself, and went through a painful learning curve a few years ago.  Here are some tips you may find useful when buying property in Invercargill:

1. Avoid houses older than 30-40 years. In older houses, the plumbing is likely to be of galvanised iron or lead which will be on the verge of choking with salt deposits. This leads to reduced pressure in the taps resulting in expensive replacement. Also, are there large trees in the vicinity of the drains? This could lead to choking of the drains by the roots and expensive repairs later.  Please also have the inspecting builder check the age of the hot water cylinder which costs around $1800 to replace, if faulty.

2. Avoid old weatherboard, weatherside and stucco homes. Tenants love to hate such houses. They are-high maintenance, cold and draughty. The piles may be sinking in parts.

3. For an older house your insurer may want to know if the house has been re-wired, re-piled and re-plumbed.  For certifying this you may want to contact a qualified professional(s). If they are unable to issue a good certificate, avoid this house.

4. What is the condition of the roof, the piles, the studs and the window frames? Engage a pre-purchase builder to do an inspection of the house and council files. Spending about $800 for pre-purchase checks (builder/plumber/electrician) could save you thousands in future repairs.

5. What is the neighbourhood like? A good house in a neighbourhood full of old seedy houses and car wrecks will not attract good tenants. A picture of the house on a website rarely tells the whole story.

6. Do the returns look attractive? If the house is a dump, figures that look attractive may be true only for the present. The tenancy may be a short term deal with the sole purpose of making the returns look attractive. Over a period of 3-4 years the returns may turn out to be cash negative, with rental dues, tenant damage and high maintenance costs.

7. Before you finally decide, please obtain a LIM from the council. Read it carefully to ensure there are no consents pending to be signed off in the council records.

You can buy property anywhere in Invercargill. There is always a demand, although as at the time of writing this (Oct 08), houses are taking longer to rent. Many new 4 bedroom homes with internal access double garages and double glazing are being built in South Invercargill and are renting around $270 p.w. This could lead to an oversupply and softening of demand.

IF YOU WISH TO CONTRIBUTE TO THIS PAGE, please e-mail office@profitrentals.co.nz. Your views are always welcome.