From hot Auckland to cool New York

David Whitburn's Auckland clients bought houses in New York state. Photo / Supplied

David Whitburn is a trustee of an entity that owns a portfolio of American properties, bought there because the investor clients felt Auckland rental yields were too low because of very high Auckland house prices in their home city.

His clients also wanted geographic diversification away from their large Auckland property portfolio.

"The entity has four properties in Rochester which is in upstate New York. The properties were bought in 2013 and 2014 for not much - between US$45,000 and US$75,000 and they get around 14 per cent net yields which generate on average US$8000 net a year for each properties or about US$32,000 a year," he said.

"This is for retirement passive cash flow," he said.

Demographia's report ranks Rochester as the world's fourth most affordable city in the world, behind Buffalo, Cincinnati and Cleveland. Its median house prices are extremely low at just US$138,000 yet its median household income is US$52,800.

Mr Whitburn is a professional Auckland property investor, a former lawyer and former Auckland Property Investors Association president.

"We picked Rochester because people in the Property Investors' Federation network said this was a good idea because its cash flow is so high due the house prices being so cheap - you don't have to pay much yet the incomes are good," he said.

"Those properties don't have any debt in the United States.

"We sold in London to help with the purchases. But house price growth has been almost non-existent with major employer Kodak shutting down and a stagnant population - unlike Auckland.

"Rochester has struggled a bit. Most of the time they've been tenanted, although during a great freeze of 2014/2015, they had vacancy issues. It's horrible when a tenant gives notice in the winter when it's literally snowed in ...

"The occupancy rates are not the same as Auckland but it still has been a good investment on balance," Mr Whitburn said.

"The entity which owns it is happy with it, only because it got what it wanted which is cash flow," he said.