[SOLD] Mosgiel Under-Rented at 9.1% and Easy to Add Likely $40K Equity
54-60 Murray Street, Mosgiel, Dunedin - $586,303
Great yield already, potential to increase rent, potential to add easy equity, good location, 4 income streams and little work to do. What else could you want?
The holy grail for most of our investors is property with high yield, opportunity to add substantial equity, well located, and the security of multiple income streams. We’ve found it!
• High yielding 9.1%
• Currently underlet – likely potential is 9.4% gross, maybe more
• Resource consent to sub-divide and unit title already in place. Valuer estimates will add around $40,500 equity.
• Great location, near centre of town and all amenities
• 4 income streams to help cashflow
It consists of 4 attached, 3 bedroom, 2 storey ex-government homes. Each has two double bedrooms, one smaller bedroom and bathroom upstairs, with single garages (attached to neighbours garage) at the bottom of their gardens.
The vendor tells me each was internally decorated (neutral décor) and had new carpets and curtains around 3 years ago. 3 of the 4 properties are in good order, although one may benefit from some simple TLC, which I can discuss with interested parties. Each home has a heat pump installed.
3 bedroom houses at this rent and in this convenient location are rare, so there should be good demand for them in the longer term.
The properties are currently rented for between $240 - 270 per week, yielding 9.1% gross. However, they have been appraised at $260 - $270 per week, giving a potential gross yield of up to almost 9.5%, with the halfway figure yielding 9.4%.
There is a great opportunity to easily add equity to this property. It is currently on one title, but has resource consent to subdivide it to four individual ones. The resource consent has already been paid for.
The vendor informs me in order for this to happen, there are works required on separating the drains, also saddle connections and building consents. The quotes to do all this is approx $29,000 inc GST. There will be also be survey fees – I have not got a quote for this but estimate around $4,000 total, and some legal fees. If interested, please discuss this with me and your lawyer.
It has been suggested by a local valuer that the houses sold individually would be worth $160,000 - $170,000. Interested parties should speak to me about this, so the informal valuation can be explained in greater detail.
Using the figures above (ex legal fees) up to $60K equity is created. A rough summary is below and I step you through the numbers and who you would work through to make this a reality.
Purchase price + costs = $619,435
Low valuation = 4 x $160,000 = $640,000. Equity created = $20,565
Middle valuation 4 x $165,000 = $660,000. Equity created = $40,565
High valuation 4 x $170,000 = $680,000. Equity created = $60,565
Mosgiel is within Dunedin city limits, but is over the hill from the city itself and is considered a town in its own right. It is thriving, having pretty much anything one could want amenity wise, including several primary schools, a secondary school, two supermarkets and a good selection of shops. Lack of flat building land in Dunedin, coupled with the Southern Motorway making commuting to Dunedin city centre an easy sub 20 minute run, is driving rapid expansion in Mosgiel, with several good sized subdivisions currently having quality homes built on them. I built my family house there myself. Yield in Mosgiel is usually lower than much of Dunedin, so opportunities for both yield and adding value in this area are hard to find, let alone both.
Note: although there is a similar looking property in Mosgiel listed for sale elsewhere, the location is quite different, and this is reflected in the rental income and ease of renting it.
Mosgiel has several primary schools of which Silverstream is the nearest, at 17 minutes walk, a secondary school (16 minutes walk), and several early childhood facilities.
There are two supermarkets, the nearest (New World) being on the edge of the town centre and a 10 minute walk. The town centre has a multitude of shops selling pretty much everything you could need. There are two theatres.
Dunedin's Octagon (widely considered the city centre) is only a 20 minute drive in peak hours, less at other times, and there is a regular bus to Dunedin departing a few minutes walk away. This increases even further the available amenities and employment opportunities.
Licensed Agent - REAA 2008
027 486 6146