Buying an investment property in Rotorua? There is a checklist, say local real estate agents. The aim of the investment game is to make some sort of return on your rental property. But there are a few things to consider when investing in property such as the type of property and its location. Property reporter Zoe Hunter breaks down the doors of the city's suburbs to find where you will get the best bang for your rental buck. Real estate experts also share their take on what to look for when investing in Rotorua's property market.
The Rotorua suburb of Fordlands is where house hunters will get the best rental return for their buck, according to new figures.
And the worst returns? Lake Tarawera.
Data by analysts OneRoof/Valocity showed the estimated median property value in Fordlands was $215,000 with a weekly rent of $376.
This gave investors an 8.39 per cent return of $18,048 based on 48 weeks' rental income and leaving four weeks' aside as a buffer for expenses.
For those wanting to buy in Lake Tarawera, the median property value was $875,000 with a weekly rent of $631 and a 3.46 per cent return of $30,288.
OneRoof editor Owen Vaughan said first-home buyers and investors were equally active in the market, with investors making up 50 per cent of new mortgage registrations.
"There is an appetite for rentals in Rotorua with good yield. Investors can make the numbers work for them, especially in the more affordable suburbs."
However, Vaughan said people targeting the upper end of the market will find it a squeeze.
"The time to buy there was a couple of years ago," he said.
Simon Anderson, chief executive of Realty Group which operates Eves and Bayleys, said Rotorua had a shortage of rental properties.
"Demand for traditional rental areas such as Fordlands is stronger than elsewhere, which puts pressure on rentals."
There were a lot more property owners in places like Lake Tarawera and a different type of rental for shorter stays such as Airbnbs, Anderson said.
Callum Razak, general manager of the rental department at Professionals McDowell Real Estate Rotorua, recommended buying property in the mid $400,000 to $500,000 range somewhere close to town and nearby good schools.
"That is going to attract the right respectable tenant," he said.
Razak said buying a property that may not have the highest yield from day one could be a stable, low-risk investment over time.
While he said there was some uncertainty in the market as longtime landlords moved out of the market, it was making room for the next generation of investors.
"If they are prepared to spend money in the short term, they could see some long-term gains."
Rotorua Property Investors Association president Debbie Van Den Broek said there were lots of people wanting to invest in Rotorua's property market.
Van Den Broek said a 6.5 per cent or 8 per cent gross yield was what investors were looking for in Rotorua.
"There is a juggle getting good rental yield and good, quality rental property that will attract quality tenants," she said.
"The higher the yield, the less desirable and the higher the risk."
At the other end of the investment ladder, Van Den Broek said people investing in the upper end of the market usually invested in a holiday home to rent as an Airbnb.
Van Den Broek said 2015 was a good year to invest but now it was much harder to find a good investment.
"Prices are high and yields are low. People just need to choose carefully."