Zoning knowledge for the win

Posted 30 Apr '21

by Kunal Mehta on
Article appears under: Case Studies, About Property Investment

The brief

Our client's brief was straightforward - to find a good investment property with development upside to increase cashflow & yield for passive income. Even though our client did not have any previous development experience, they were still up for the challenge and were looking for something easy and possibly a smaller project.

The details

  • Three bedroom home
  • Total purchase price (including iFindProperty fee) = $972,151
  • Gross yield (as-is) = 3.4%
  • Development cost = $230,000 - $250,000
  • Estimated Rents - $625 + $500 = $1,125 per week
  • Gross Yield = 4.7% - 4.9%

The deal

We found a great 3-bedroom property (renovated only a few years ago) on a very quiet street of a West Auckland suburb, Glendene. The property was marketed to sell via auction and it was situated in Single House Zoning (Auckland Unitary Plan). It lacked competition from developers for this reason, and as a result, was passed-on at the auction.

With strong knowledge of zoning rules, we knew this would be a perfect opportunity for our clients to secure the property under a conditional contract and investigate to either build/relocate a minor dwelling on the site as it offered easy access to public stormwater and sewer connections (located on-site). This would allow for both equity creation and cashflow increment by having two dwellings on single title!

As soon we got the property under contact, we worked with our team of builders and development specialists to validate the potential this site had to offer. The property had deferred maintenance, however we put a plan in place with the property management company on behalf of our clients to have this done over a period of time so our client can maintain the rental cashflow during this time. We also introduced our clients to meet with development specialist and build companies to understand the feasibility, process, cost and time frames of the new build.

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Right as the CCCFA changes were starting to bite, an investor asked us to market their 3-unit property in Rotorua. We used our investment experience to highlight the upside potential for the incoming buyer and marketed it to our exclusive database of investors, generated a good result.