Archive for the ‘Renovation’ Category
The last couple of weeks have been a busy time. I’ve been overseeing some of the renovation of my home and also on a rental of ours after tenants left, continuing to project manage infill developments for Fuzo clients and playing an integral part in the professionalism of the Auckland Property Investors’ Association Incorporated (APIA).
Renovating
Great fun from the teamwork, getting the family to help out. At one stage we had 11 people on the project, so that was fantastic. The most interesting thing I learned was when we stripped 3 layers of wallpaper in the living room and dining room, we found that the walls were not straight. So I got a straight-edge and found in fact they were out by 10mm in a couple of places. Not good at all. So a “few” hours wasted in the wallpaper stripping, as we want the house to look great so no more gib in those rooms.
Lesson learned is to get a straight edge. On older houses I would recommend replacing the gib particularly is wallpaper is on it, as gib itself is inexpensive and it is far cheaper (assuming you have no ‘free’ labour) to stop the join in the gib, rather than apply a full skim coat of plaster ready for paint (or wallpaper) finish.
Tenants left a house of ours last week too. Unfortunately the house is tiring now, so time for little plastering, a lot of painting and a modernised bathroom and toilet to maximise our rent.
Developing
My wife and I are having a great year and a lot of fun with renovating and development. In fact, so much so that we are on the look out now for another subdivisable central Auckland property to buy, renovate and sell the existing house, and build a FUZO subdivision new home on the backyard to again create Massive equity.
I enjoyed spending time with a couple of magnificient property investors in Nicola and Greg Loft last week. We toured their Auckland properties, monitored progress of a renovation of theirs, and went on a road trip and had a fantastic seafood lunch at Swashbucklers. Yummy. Some fantastic food and company.
APIA
APIA is in the process of professionalising itself at the moment. About 20 months ago we employed a CEO. This has helped as we have been a volunteer organisation, largely championed by the legendary Andrew King – a tireless worker and influential lobbier and networker in property investment circles. Sadly after 7 years of being the Chairman and President of APIA, Andrew is resigning. I have a really enjoyed working with Andrew and am sad to see him leave the role, but I know that he will still be a passionate APIA supporter. So we will be electing a new President in the next couple of months.
In the meantime I have been elected by the APIA Board as their interim Chairman. I am really enjoying the corporate governance side of this role. My Dad has been enjoying being a company director (mostly) over the past couple of decades so luckily I like this too, and can count on him for support when tough issues need to be discussed.
This year the APIA Board has had a couple of issues of conflict that I cannot go into for professional reasons. They are getting resolved though. This makes for big changes in APIA, but by having job descriptions, and performance expectations and monitoring we will achieve fantastic results for our members. Gone will be the days of being a passenger with APIA, whether on the Board, or in any role. This will be very exciting for all APIA members to see. I know it will acheive alignment of the Board and all staff to the APIA Constitutional objectives, and from there the platform should be laid to grow our membership and have a greater array of services to members.
Author and speaker Martin Hawes is presenting at APIA tonight. We look forward to him sharing his thoughts on planning for the retirement years, a variety of asset classes and property investment strategies to succeed with. Hope to see as many of you there as possible tonight – guest tickets $40, if you become a member your $40 is refunded. Go to www.apia.org.nz for details on how to join and the benefits you receive from being an APIA member. Love to see you there.
PS: With some dubious weather lately what an amazing wimbledon final Federer vs Nadal – so close, by the Fed-express did it again at Wimbledon for 5 in a row there. Next year Rafa!
It’s been a great last couple of days. Had a great dinner and leaving party for a friend I have known all my life (since our parents are great friends). The All Blacks won convincingly vs France 61-10 (although superstar Ali Williams’ jaw may not agree quite so much). And Rafael Nadal one of the greatest ever tennis players on clay beat world #1 Roger Federer in the French Open Final ==> what a game.
We are closing in on a mega trade deal at the moment. You will know my belief that in todays market to thrive that you need to create the deal. So we are seeking to solve another person’s problems.
DIY Superstar wannabes
The problem the vendors have is that they wanted to improve their home, but didn’t want to follow the rules, or know the rules. You need a building consent under the Building Act 2004 whenever you do structural work to a house.
They have put in some extra windows, stairs, ranchslider and a kids playhouse high up off the ground with no handrails. Sadly for them their jealous neighbour dobbed them into the council and the council investigated and found the work required a permit and they have therefore done illegal building work. They then got a letter from the council giving them 6 weeks to remedy this (ie restore it to what it was permitted to be). They did not oblige and even told the inspectors that they have improved it so much any council would be foolish to prosecute, or they will call Fair Go. Well they did this and Fair Go was not interested funnily enough. Unfortunately for them they have been issued a notice to fix giving them 4 week to remedy this or else – be forced to (by a court order). Don’t comply, then the house may be shutdown.
So since they spent their money on an illegal thing (unpermitted reno) they have run out of money to restore it. So these DIY wannabes have failed and because they did not know the rules they are sacrificing many tens of thousands of equity to us (the highest offerers on their property). It needs to be sold before it becomes a big problem, we will simply spend the $7-8k to get it fixed, then build a minor dwelling there too.
So the house goes to auction. We like auctions for non-standard properties as the fact it is different scares most people. There is far less competition and seldom a decent bid.
Also on Saturday you will recall in Auckland that we had some tremendous downpours in the afternoon, and the cold southerly didn’t help bring the punters along to the open home.
So we were the only bidders and true to form were below the vendors. So our agents are in the final stages of crunching a mega deal at the moment.
Most prospective buyers don’t like things with a twist. It is “too hard”, “too cold”, “too wet”, or “too scary” or insert any other excuse why not to buy a property to make you $100K in 9 months.
The morals of the story are:
1) Don’t brag too much to your neighbours
2) Knowledge is power – if doing structural or any building work, speak to a qualified builder or architect
3) Go to auctions when it is a miserable day or the property is not a standard one
There are some great deals out there if you persist and know what you are looking for.
Post-Script:
Auckland based property developer/investor Sean Wood got fined $30,000 in June 2008 for unconsented building works. His company City Link Properties was granted a building consent based on plans to extend an existing house. The company submitted a plan to build an upstairs bedroom with ensuite and a four car garage. Instead five rooms were built upstairs and part of the garage was turned into a living area – leaving room for only two cars. Manukau City Council Compliance and Enforcement Manager Kevin Jackson says he is pleased with the sentencing as the building work was over and above what was originally submitted: “People can’t put in one set of plans to the council then do something completely different and hope to get away with it. I am disappointed that this was an experienced property developer who knew the rules but chose to break them.”
Source: Manukau City Council website and New Zealand Herald
- wouldn’t it have been easier for Sean Wood just to follow the law?
I love property, and really enjoy being able to go along to properties with an eye on how much value can be created, or otherwise simply walking away after a quick chat to the agent or vendor.
Through being at the cutting edge of the property market day in day out, I have found that in today’s market to succeed, you need to be doing something a little bit different to most. You need to add value to the property you purchase – ie. create the deal. In developing where I make my profit can be in a number of steps:
1) profit at purchase (but below value)
2) profit on renovation (do-up)
3) profit on development (obtaining consents, planning)
4) profit on construction (building the plan)
The profit is realised at the sale (if you are trading) or on getting a new registered valuation (if you are keeping it). Sometimes I am happy to buy at retail as I can make enough money from the other aspects. It is always about the overall project, and your buying rules. Getting 3 of the 4 prongs has worked well for me.
Property yields are dropping all around the country a the moment. Talking with the Auckland Property Investors Association President, Andrew King last month, the average Auckland gross yield has dropped below 5%. As a result to keep actively investing you need to create the deal.
We are working with many investors at the moment who are increasingly seeing development as the way forward. Whether you are trading properties or doing a development to create equity and/or cashflow – look at the wonderful opportunities you have with land.
Basically to see my favoured strategy I recommend going to www.fuzo.co.nz, and take a look at the House Trap documentary (TV3) that I filmed last year on minor dwellings with Kevin Biggar (Trans-Atlantic Rowing race winner and he walked to the South Pole of Antartica by foot too).