A scheme has been launched to encourage Aucklanders to buy big new planned Christchurch houses for $640,000, as a financial watchdog reminds investors about seeking independent advice.
Tanya Kwasza, a licensed real estate agent of James Law and Newmarket's Domain Consulting, is projecting a 9.7 per cent yield on the scheme for four and six-bedroom houses which would house post-earthquake rebuild workers.
She hopes to get about 100 "foundation investors", leasing the houses to contracting companies. She is planning to hold promotional events in Auckland and advertise here.
The first promotion is scheduled for January 31 at the BNZ business partners' centre in Highbrook, Kwasza said.
The Financial Markets Authority advises people to be objective about all investment offers and take time to consider what type of product is on the table. It says it has noticed a rise in these types of offers, but says independent expert advice from qualified professionals should always be sought before people parted with their money.
"We are aware of the growing number of investment opportunities being offered to people as the Christchurch rebuild gathers pace. Our message to potential property investors who are being targeted by advertising to attend property seminars is that they should seek legal and financial advice."
"Investors need to understand fully the costs of property ownership and debt servicing and the risks of losing assets used as security. While property investment in itself is not regulated by the authority - as opposed to proportionate ownership schemes which are - investors should seek advice from an authorised financial adviser," an authority spokesman said, directing investors to the authority's website.
Kwasza said her scheme was aimed at helping Christchurch recover and investors were needed to buy the houses.
"Domain Consulting are actively seeking foundation investors to build quality permanent homes that will transition into family homes after the rebuild," a promotional document said.
"A restraint to the rebuild is finding accommodation for the 15,000-plus workers coming to rebuild Christchurch and 20,000 houses need to be built." Floor plans were shown for properties with corporate lease for 3 to 5 years at 9.7 per cent yield.
"Your chance to financially benefit from the construction boom. Use surplus rent to reduce debt," the material said.
"We have two kinds of homes: six-bedroom, three-bathroom homes that can easily convert into a four-bedroom home after the rebuild and a four-bedroom, four-bathroom executive home. The location will be central CBD, also in Wigram and Silverstream Estates in Clarksville."
How it works
*House purchase price $640,000
*10 per cent deposit, borrow $576,000
*Fixed three-year term. Interest rate 5.9 per cent
*Three years, paid off $93,000, owe $482,000
*Five years, paid off $166,000, owe $411,000
*Estimated rental income at end of 5-year lease: approx $800/week or $41,600/annually
[Source: Domain Consulting promotional document]