Some say that an investor’s job is not to buy a yield it is to create it. Whether or not you want any part of this approach to property investment, this approach has meant many investors are still buying investment properties that stack up, while others look at the returns as quoted on Trade Me and have long since given up. Creating a yield or adding value in some other way is a simple concept, but once you look into the details of any project it can be overwhelming, which is why businesses like ours that make creative deals accessible exist.

Property's Different

To me, property stands out as an investment because of two key factors.

1. Leverage: You buy it with other people’s money and can get it improved and managed with the help of other people’s time.
2. You can improve your asset. Here are some common ways investors can take advantage of the second factor above: 1. add more bedrooms and/or bathrooms 2. add another dwelling alongside an existing one
3. develop the site entirely
4. renovate a property
5. subdivide the property
6. zoning changes
7. change of use.

Opportunites

Exactly what you can and should do with a site depends on several factors.

1. Cashflow and/or equity return: Simply put, are you going to come out better off after doing the work?
2. Suitability for the area: Adding bedrooms is a popular strategy, but six bedroom/two bathroom “student rentals” don’t work as well 20km from the nearest university.
3. Time to complete: If you require resource and/or building consent you need to be realistic about timelines and the time that you may not be able to do other projects.
4. Level of complexity/difficulty: Sometimes a project might be technically possible and the numbers might look good on paper, but the work might come with a lot of risk. For example, adding a second storey to an older house.
5. What other opportunities you might have: Is a high value-add project that will take two years worth taking on, if it means you cannot do anything in the interim?
6. Availability of the right people (and in 2021, materials): How many projects have come to a halt because someone forgot to check an architect was available and they’re booked out until next winter?
7. How it suits your goals: You might be able to add equity but if your future lending is constrained by lack of cashflow should you have focused on cashflow instead (and vice versa, this is probably an entire article in itself).

Optimal Approach

The thinking process is quite nuanced. I guess if it wasn’t everybody would do it. Working out the optimal approach requires a mix of strategic thinking, the right advice, financial understanding, clarity of purpose, while accepting that this opportunity is worth the commitment.

I think this is where a lot of investors give up on the idea of doing a “complex” deal; it is easy to become overwhelmed by the moving parts. For me, this is when property investment becomes fun and I love to lean into the complexity and chew over an opportunity with my team.

It is one of those things that becomes easier with experience and also the realisation that the potential short and long-term gains from pulling off a wellthought- out property deal dwarf the cost of any expert advice on the way through. At the same time, the potential short and long-term costs and risks from getting a property deal wrong also dwarf the cost of expert advice!

iFindProperty specialises in analysing opportunities and knowing whose advice needs to be sought to make a deal safe and profitable as possible. If your investing goals depend on your getting outside of your comfort zone then get in touch.

iFindProperty is a licensed Investment Property Agency and our clients tell us we are great at helping investors find, analyse and buy great properties to build an awesome portfolio. Our team of Property Finders operate all over New Zealand and each are successful investors in their own markets. Successful investing satarts with you and your property goals, so contact us today to talk about what you want to achieve and we will put a team in place to make it happen. Contact: info@ifindproperty.co.nz or 0274 866 146.