While I had some down-time during our latest lockdown, I thought I would take the opportunity to share the story of a recently completed renovation that I project managed in Wellington for my Auckland based investors. This was a deal I mentioned in a previous correspondence that was purchased under the first level 4 lockdown just over a year ago.
My premium buyers were after a property they could add value to. I found my clients a run-down 2 flat property in the popular suburb of Newtown, Wellington. It was configured as a 2 bedroom flat upstairs and a legal 1 bedroom downstairs. I could see the potential in the property to convert the upstairs to 4 bedrooms and 2 bathrooms, and also extend downstairs into the backyard to create another 3 or 4 bedrooms.
My clients purchased the property for $834,000 (including our fee) and then engaged me to Project Manage the renovation. After a lot of work with the Architect and discussions with the Council, the project was split into 2 and we set about converting the upstairs flat into 4 bedrooms and 2 bathrooms.
While this project was running, we again approached council and building consent was granted to extend the downstairs to 4 bedrooms and 2 bathrooms. Both these projects are now complete and both flats are rented, returning a great result for my client.
There certainly were challenges along the way and the final cost exceeded the original budget (as it always seems to do!), but the end result is fantastic and should provide years of low maintenance and good rental returns.
Both flats are rented at $1,000 and $1,090 per week with the rental appraisal at $1,100 per week in peak season (Jan-March). The cost of the remodel, extension and renovation (including holding costs, etc) was $825,000. While spending the purchase price again on a property is unusual, remember that this represents a 6.55% gross yield and around $42,000 positive cashflow (at interest-only of 2.6%) based on the rental appraisals. This is a great cashflow and should add at least $400,000 in equity!
The next stage in the ongoing journey is to refinance equity from the property and find them another great deal!
I am very active in the Wellington market and while potential projects of this nature can be hard to come across, particularly since the market has changed (again) in the last 18 months, I seem to have a knack of finding them. Please get in touch to discuss working with me in Wellington.
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