Sunnynook Road

  • Purchase Price $740k
  • Sale Price $900k
  • Renovation Cost $80k
  • Holding Cost $10k
  • Agents Fee $30k
  • Gross Profit $40K
  • Purchase Date – September 2015
  • Sale Dates – December 2015


This property was my first investment purchase, and became the first property I renovated to on sell, or to ‘trade’. I knew that I wanted to invest in property and that long term rentals were the path to a sustainable passive income. At the time, September 2015, the Auckland property market had really started to heat up and properties were selling for what I thought to be crazy high prices. I could see that the rental yields you could achieve – they were about a 4% average in the city at the time, wouldn’t bring me a cashflow positive investment. I felt at the time that Trading property would be a safe way for me to dip my toes in the waters of property investment. In hindsight, the boom was just beginning, but I wasn’t to know that then. I felt at the time, that buying a rental house would be more risky. I now know that trading property is much more of a risk than the rental property business, but my inexperience and ignorance at the time helped me into trading without really fully understanding the risks involved.

With some luck and a hot property market the venture worked out for me though, and I was able to turn a profit and gain valuable experience in the process.

This property was a deceased estate. The owners had gone into care some years prior and the house had been tenanted until their children eventually came to liquidate the estate. The house was on a cross lease section and was semi detached, joined to the house in front by a concrete block garage – well it was legally a carport which had a garage door attached.  It was the rear property of 2 on a shared driveway. Weatherboard construction with a concrete tile roof and aluminium joinery.

The house appealed to me because it was in a superb school zone, centrally located in a popular suburb, made of traditional construction methods and had the type of accommodation I felt would have wide appeal with families; 2 living spaces, 3 bedrooms and 2 bathrooms with garaging and outdoor flow.

The house had a pretty unattractive conservatory enclosing what had originally been deck space, and consequently the appeal of the house as you approached was pretty ugly. I thought if this was removed and decking reinstated it would be a much prettier house.This conservatory removal turned out to be a much bigger job than first imagined. The conservatory itself, I sold on trademe, but when the buyer came to inspect, they abandoned the purchase, meaning I had additional cost to demo and dispose. The concrete pad it sat on did not allow for the minimum clearance required beneath an exterior door and so the concrete had to come out. It was very thick and the first attempt with labour hire guys and a jack hammer failed miserably. In the end we had to get a digger in and the costs mounted. The end result was a good one and it was a necessary alteration to get the best sale price, but it was the major cost overrun on this project.

The garage was an interesting consideration at this property. I did consider that the house would become more valuable if it was freestanding, rather than attached to the neighbouring place and I worked through a business case for demolishing the garage and replacing it with a carport on another part of the section. I was inexperienced and this was my first project so I consulted a valuer to advise me. She gave me an as is value and also a post renovation value with some detailed information from me about what we had planned for the property. I was also able to get her advice on how much value she felt would be added to the property if it were freestanding, versus losing the garage – also a desirable feature.  She did feel standalone would be more valuable, but on costing this out and with some expensive power box movement required in the demolish scenario, it was decided the garage would stay. The valuer has gone on to be an important part of my team of experts and I’ve used her services many times since this project.

The rest of the renovation was largely cosmetic. aside from the conservatory, there were no layout changes, simply a cosmetic renovation of what was existing and a partition wall and set of sliding doors between the family room and kitchen which I removed, preferring to open the space up for more modern living. Of course I needed the full compliment of tradepeople to get this project completed, I didn’t really have any particular DIY skill, and wasn’t too keen on doing any of these jobs myself. I knew it would take me a huge amount of time and that the quality of my work would not be at a standard needed to get the best sales price. I needed a team. I had been introduced to a real estate agent who was also a property trader and he very generously shared some of his trade contacts with me. I had also heard of a project management company through my local Property Investors Association who offered a full renovation service. I got quotes from them and compared prices with the other individual tradespeople I had contacted. In the end I settled on a combination of the two and had various companies completing different aspects of the work.

One job I could do was grunt work in the garden. This property was badly overgrown and bamboo featured heavily. With the help of a friend who could operate a chainsaw and reverse a trailer, (Note to self – I must master these skills) we set to work cutting back the jungle of overgrowth and loading it onto the trailer and off to the tip. I came to affectionately call this garden grunt work, which I’ve now done on many occasions ‘the gym of life’. It is hard physical work that has me aching for days afterwards, but it also gives me an excuse to be onsite daily and keep an eye on tradespeople and progress. After the  garden clearout, this house had a much larger yard, another great selling feature for families.

On completion of the work, we were well into November. December is not the best time to sell a house with people winding things up for the year end at work and preparing for Christmas and summer family holidays. Coupled with this the reserve bank had implemented some LVR restrictions on investors in Auckland. 30% deposit was now required and the market had softened. The Real estate agent I had chosen, who had been so helpful to me in setting up my team of tradespeople and offering his experienced advice during the project recommended a sale by deadline private treaty. Most property was being sold by auction at the time, and this was new to me. His reasoning was that at a time where the market had become flat with less buyers around, an auction without a couple of bidders to drive bidding competition may not achieve the best result. With deadline treaty, we would still create the urgency to make an offer with the deadline date, but whether or not there was competition would be largely unknown to any prospective purchaser, who may be more likely to make a strong offer. A deadline date also promoted a multi-offer situation. We would also open up the property to any conditional buyers who may have an interest closed to them through auction.

Within just 9 days I had an offer in writing at 880k and I was disappointed. But I was also critically aware of Christmas looming and the prospect of languishing on the market for a month. This would have upped my holding costs so we worked to negotiate. I had already calculated my break even price and the minimum I’d accept. I was a novice negotiator so relied on the agent and we got the offer up to 900k. Someone once told me your best offer is usually your first. My agent was individuating to me that he didn’t think the purchaser would go any higher. They were cash unconditional and wanted to settle in less than 2 weeks. This was very appealing to me and so we sold.

Now in hindsight, I know the market rallied considerably around March the following year. But I wasn’t to know that then and still feel now I was better to exit with a reasonable profit and move my money on to new projects.


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