Case Study: Convert a laundry to a bedroom in Christchurch

by Maxine Clason-Thomas on Jun 27, 2018
Article appears under: Case Studies, About Property Investment, Christchurch, Goal Setting, Renovations and Maintenance

Barry and Carolyn, who are from Auckland and have bought through iFindProperty before, signed up to our Premium Buyer Service in March 2018.

The brief was straight forward, a good home with potential to actively and quickly increase value and rent.

When investors have not bought in Christchurch before, it takes time to understand the lay of the land, so I first spent some time sharing different properties in different areas to help them narrow down their criteria, such as price and yield expectations. I think I shared 7-8 different properties from across the city, a mix of units and stand-alone homes, to give them an idea of what is feasible in different areas and help them get settled on a specific area and price point.

Location decided and budget set, we drilled down to three potential properties.

• The first sold for more than the offer we presented, it happens and the numbers wouldn't have stacked up for Barry and Carolyn, so we did the smart thing and moved on.
• The next property on the list was already under offer, however there was a good chance that contract would fall through... it didn't.
• So we then moved on (again) and found another suitable property looked like a good fit and the offer was negotiated and accepted.

Barry and Carolyn decided on this property because of the location (school zones, close to Westfield shopping mall, close to Hagley Park and also the CBD), price and value add potential.

The investment twist I found with the property they bought is the ability to convert the oversized laundry into a fourth room. The kitchen has a good-sized dining area and that meant we could fit the laundry in easily. I arranged a builder to quote the renovation works during the due diligence period, so they had all the numbers in front of them before deciding to proceed.

A property manager went through and their before/after appraisals matched our estimates and during this Due Diligence phase I also helped them to obtain information around the EQC scope and works and to conduct both a meth test and building inspection.

For Barry, it was an interesting experience, not only was he buying in a new city, he was also travelling through the due diligence period!

Even though we covered a lot of ground, it happened quickly and the property went unconditional approximately 1 month after we began working together.

The Numbers

• Renovation cost is approx $15,000
• Rental Appraisal as is, potentially $455 per week
• Rental Appraisal on renovation being completed $490 per week
• Giving around 12% return on the renovation and increasing the value by $35,000
• The property is in Riccarton, a popular suburb just west of Hagley park and close to both the city centre and the University of Canterbury.
• Return on purchase price (including our fee) of $363,000 is potential 6.4%.

As a Premium Buyer we work just for you, to find your ideal investment property, be it on-market, private sale, off-market or pre-market. Contact me today to see how we can help you find your ideal Christchurch investment.