Auckland is a popular spot for property investors right now. Why? Prices are low, it’s undervalued, and (most likely) the market has reached the bottom.

Our top picks are South and West Auckland, because they have the best mix of capital growth and rental yield. But with so many new builds on the market, how do you figure out whether one is a good investment or not?

Here’s a case study of a development I recently recommended to investors in West Auckland.

What’s The Property?

This development is on Swanson Road in Ranui. It has three bedrooms, two bathrooms and a single-car garage. The rental assessment says it will likely fetch around $690 a week.

This development is unique because – unlike other townhouse developments – none of the units are touching each other.

But don’t spend too much time looking at the pretty visuals. They won’t tell you whether it’s a good investment or not. Instead, you need to look at the following three factors.

This Ranui development has a unique point of difference – the townhouses are detached from each other.

The Price

The most crucial factor when looking for new builds is price. It needs to be a good deal compared to other properties on the market.

This table compares Swanson Road with two other similar developments, all within a few kilometres of each other.

Swanson Road is the largest, and therefore the most expensive of these three properties.

And it can be tempting for investors to pair the cheapest price, with the best deal. But there is a big difference.

A Good Investment?

There Are Two Main Numbers You Need To Know When You Invest In A Property:

• Cash Flow (The Amount Of Money You Need To Top Up The Property Per Week)
• Return On Investment (For Every $1 Invested In A Property, How Much Do I Get Back?)

Let’s Take A Look At How Swanson Road Measures Up.

Cash Flow

The primary way you make money through a new build is by holding the property over the long term. The value goes up as the market appreciates, but you can’t get those gains unless you can afford to hold on to the property.

And like most properties bought in 2023, the rent doesn’t cover all expenses. That means the investor needs to cover the shortfall. Investors call this a “top-up”. It’s also known as negative gearing in property circles.

By my forecasts the investor will need to top up Swanson Road by $187 a week in the first year, and continue to top-up for nine years. (Although the amount will come down as interest rates gradually decline and rents continue to rise).

In this case, Swanson Road had better cash flow than others in the area (Dellwood Ave, and Te Kanawa). Both other properties on this table required a higher top-up for two and three years longer, respectively.

Roi Figures

Everybody wants a high return on investment property.

If we return to our return-on-investment projections, Swanson Road has a return of 333.6 per cent.

This means for every dollar you invest, you’ll get $3.33 back (as well as your initial investment).

For every dollar you put into Dellwood, you get $2.92 back; on Te Kanawa Crescent, you get $2.69.

So, from this financial modelling, you’d say, “Swanson Road is the better investment.”

How Do I Buy A New Build?

If you’re looking to invest in a new build property like this, there are two ways to get one:

1. You can use the information to find a property yourself through a developer.
2. You can work with a property investment company. These businesses build you a financial plan and then find new build properties that fit that plan.

Opes Partners is one example of a property investment company, although there are others.

Property investment companies often don’t charge you a fee. Instead, they get paid by the developer. It’s a bit like mortgage brokers, who usually get paid by the bank.

For my complete analysis on this property, go to opespartners.co.nz/swanson-road

Through Opes Partners, Andrew Nicol works with 97 developers from around the country. He and his team of financial advisers build Kiwi property investors a financial plan and match these investors with new build properties that fit the plan.