I recently received an email from a real estate agent promoting a townhouse in Christchurch. On the surface, it looks like a solid investment opportunity. But some of the language used raised red flags for me, particularly around how yield and value are represented.
Here’s the full email I received:
Hi Paul
A fantastic investment property in a prime location, offering steady, long-term rental income. Currently tenanted by reliable medical students generating $630 per week, this freehold townhouse provides both security and convenience.The property is Healthy Homes compliant and low-maintenance, making it a hassle-free investment.
The townhouse features 3 bedrooms, 3 bathrooms, one spacious living area, and one car park, with security-gated access for peace of mind. The residence association covers the insurance, reducing costs for the owner. Located inside the four avenues of Christchurch CBD, it is within walking distance to the city center and offers views of the new stadium. This property has high appeal for future tenants and Airbnb guests alike.
At an asking price of $619,000, this property offers an attractive 5.29% yield and comes with a CV of $655,000, giving
the next owner the potential for an instant equity gain of $35,000. Whether you’re looking for a long-term rental or
exploring short-term letting opportunities, this property is a great choice for consistent returns. Don’t miss out on this
great opportunity!
Click here for more details on this property
And call or message me directly for more information.
Kind regards,
My Thoughts
1. Gross Yield Is Not Net Yield
Let’s start with a smaller issue: the use of the term “yield.” The email claims a 5.29% yield, but this is actually gross yield, which means it doesn’t take any expenses into account (like rates).
Even if you were buying the townhouse mortgage-free, there are still ongoing costs. Net yield — the return after expenses — is what actually matters when calculating your real return on investment.
2. The CV vs. Market Value Trap
Here’s the bigger problem: the email claims there’s “potential for an instant equity gain of $35,000,” simply because the property’s Capital Value (CV) is $655,000 and the asking price is $619,000.
That’s a misleading claim.
CV (or RV) is a value assigned by the local council, primarily for rating purposes. It’s updated infrequently (every few years in most areas), and it doesn’t necessarily reflect current market conditions. Buyers often confuse CV with market value, but the two can differ significantly.
Think about it: why would a seller willingly accept $35,000 less than what their property is truly worth, just to be generous?
They wouldn’t. And even if you did buy below CV, that doesn’t mean the bank sees it as a deal. Banks generally treat the purchase price as the market value, at least for the first 6–12 months, unless a formal registered valuation says otherwise.
Final Thoughts
I don’t think this agent was trying to scam anyone, but using terms like “instant equity gain” based on outdated CV figures is misleading at best. It’s a good reminder to always read real estate marketing with a critical eye.
If you’re making investment decisions, speak to a qualified financial advisor — not just a real estate agent.
That’s all from me. Just wanted to get this off my chest.
