6 Reasons You Should NOT Invest in Auckland, New Zealand Apartments
Six reasons you should not invest in Auckland New Zealand apartments. My name is Max and today you will learn a little-known misconception about New Zealand apartments, hidden costs and problems, essential steps to reduce complications if you do decide to buy them and other practical tips you can implement today. And we are starting right now. And we are starting right now. If this is your first time here and you want to learn more about New Zealand property investment tips then subscribe to this channel. Your house is your castle. You want to be safe where you sleep and live, right? New Zealand experiences over three hundred apartment fire incidents per year. The fire trucks here have a seven metre high ladder which can reach only up to five storeys. However, New Zealand is constructing taller and bigger buildings that will house a lot more people. More residents mean a bigger chance of an incident due to a human error. Some of the apartment buildings are over fifty storeys high. If there is a fire and you live on the floor number forty five, then, unfortunately, you have a long walk down the stairs to reach your safety. If you invest in the long term, this will be a very common issue in the near future because apartment living will be more common in the future and families, students or another person living in apartments will consider safety more often. Therefore, if you buy for yourself or your family or you want to have good tenants, then you have to think about it and consider safety features like this. I would be interested to know what do you reckon about it? Do you think of these things when you buy or invest in the apartments? The second reason is the body corp rules that you may not be even aware of. While you are the owner of the apartment, you have a lot of rules to follow and you have a little control. For example, if you like letting your apartment on Airbnb or similar websites to get better returning on investment that will not happen as easy as it was last year. An ever-growing number of body corps include that as a standard rule that you are not allowed to let your apartment on Airbnb or other similar websites because they consider that as a commercial activity. Do you love pets? Want some company in your apartment? Well, some body corps do not allow even that too. It can be due to the noise control or some other reasons. Another common rule relates to your gas cookers. A lot of families prefer cooking with gas, but in many cases, they are prohibited too. If you have done the renovation and your neighbour notices that you have got a gas bottle outside the apartment, they can report you and you may be required to reinstate it to the original condition. Gas bottles can also breach the contract with the insurance company, and if something happens to the building, you may be liable. And we all know that the insurance company will always find or will try to find a way out. If they do not have to pay the claim and you may become liable personally. If you like adding a heat pump to keep you warm during the winter or cold during the summer it took me months to get approval from the majority of the property owners. In their view, that can create additional noise in the building or that can change their view of the property thus reducing the value of the real estate. So, they have to be very careful with what they allow and with what they do not allow on the property which is fair now. The next body corp rule also relates to renovations. For example, if you want to change windows or doors in your unit, then you also have to get the approval. Even though if that is to improve your insulation that still can change the look of the building. Thus, you have to get a majority to agree with what you are trying to do. Basically, you buy something, but you have limited control over what you can do in your own apartment. I would like to know did you come across any similar rules in a body corp? What is your least favorite requirement? Mention it down in the comments below. The third one I would call off the record meetings. There were numerous articles on the Internet where people witnessed body corp meetings. They decided not to write down sensitive information. This is because any sensitive information can potentially reduce the capital value of the real estate. Meaning, if you do decide to buy any apartment or unit title property for example, a townhouse, you will not know the hundred percent truth. Even if you ask all copies of the body corp meetings for the last three years to avoid this, you may actually want to go directly to the tenant, ask them if there was a builder on site, and what they were trying to find in the property, where the tenants notified about any repairs. If you plan to invest or buy any property with half a million dollars or more you have to do some extra groundwork. If you rely only on your solicitor to check the paperwork that is not enough. I appreciate if you hit the thumbs up button if you find this information useful. This encourages me to bring you more content like this and invite other guests with different industry knowledge. Reason number four. Think apartments offer you good return on investment? Think again. Currently, people buy apartments because they attract higher yields. But you possibly have noticed that the Auckland council started to charge higher rates if people let their apartments on Airbnb or similar websites. You will be slapped with extra fees after you clock up over twenty eight days of letting your apartment on Airbnb. If you do it, the council will charge you with the back taxes. Also, do not forget about the insurance costs. There is a lot cheaper rate for residential insurance if you do a regular long-term rental and agreement with your tenant. However, if you do a short-term rental like on Airbnb, then the insurance will consider it as a commercial activity and they will charge you in some cases hundred percent extra fees or two hundred percent higher rate. Reason number five. Body corp fees are highly volatile. From my personal experience, your annual rates can double with little notice. For example, if the roof of the building has to be replaced even though you live on the ground floor, you still have to share the responsibility. Another example, if the lift has to be replaced you are gonna pay part of the costs. This is another reminder to check the paperwork and make sure that the body corp fund has allowed for long-term maintenance. But, in saying that, there will be a lot of unforeseen things that will break and everyone has to share the costs. Reason number six. Off the plan apartments, new apartment costs can get out of the control. Recently buyers of the five hundred unit Orakei Bay Village gave up after many delays and escalating construction costs pushed up the prices by thirty percent. In the meantime, you lose one or two years of waiting while the property prices are going up. You miss the potential capital gain which can be anywhere between fifty to hundred thousand dollars you will not get. Time is money especially when you are dealing with the real estate. I will give you another bonus tip regarding the weathertightness and new earthquake requirements. Unfortunately, there will be another wave of poorly built apartments, townhouses and buildings. This all happens because of the labor shortage. When you have pressure and tight deadlines, people in many cases, unfortunately, cut corners and you as the owner of the property deal with that later. A new consideration has come to light about new earthquake standards. It has been reported that this new requirement also includes not just commercial properties but also buildings that are two or three storeys high and consists of three or more units. This is for buildings mainly that were built before 1976. If you are looking at buying or investing in an apartment of the old building you have to check with the body corp or your solicitor if it is required any major repairs to meet the requirements. If you enjoy this information, please subscribe and hit the like button and I will talk to you later.