Fortune Favours The Bold
A training course with a top property coach has paid dividends for a couple’s first renovation in Whangarei.
30 September 2022
Jacob and Shannon Power have been bold with their first renovation in Whangarei. Working alongside property coach Ilse Wolfe from Opes Accelerate, they’ve transformed a three-bedroom into a five-bedroom home (plus a single bedroom cabin), and added an additional bathroom.
In the process they added a few hundred thousand to the value and increased the yield significantly.
The couple had been interested in purchasing an investment property for a while, but felt they lacked the confidence and experience to make it work. So, they signed on to a training course with Wolfe and learned all they could about the art of property investment.
They owned their own house (bought in 2016) and had saved a deposit for an investment property, and by this year were ready to go (using the deposit, plus the value in their home as leverage). Wolfe has several of her own investment properties in the Whangarei region, so she recommended they looked up there. Shannon then started trawling through Trade Me in search of a property they could “improve”.
“We wanted a house that we could add a bedroom to,” she says. “The property we found was on a 780m2 section, which could be subdivided, and had a big floor plan. We thought it could work.”
FULL GUT JOB
It was in a bad state. “It was being rented by a single guy and was in quite a state,” says Shannon.
Built in the 1960s, it had no extractor fans, the carpet needed replacing, and a full gut job was required.
“The kitchen was rotten, the bathroom was mouldy, it was pretty bad,” says Jacob.
It had been languishing on the market at $675,000 for a while, so they decided to be cheeky and “chuck in an offer of $517,000 on the place”.
This was accepted, but after a builder’s report found some major issues they negotiated down to $510,000 and the purchase went through in March.
They had an extended settlement of three months, during which time they planned the renovation timelines, sorted the consents, and found tradies to do the work.
But things never work as planned when it comes to renovations. “On D-Day the builder couldn’t start, then the roofer wasn’t available. So, some stuff is still being finished off now.”
Finally, the reno began. The house had three-bedrooms and a sunroom, which (once the builders started) was instantly transformed into a fourth bedroom. The kitchen that was located in the corner of the house was moved to the centre and a new bedroom created in its place.
And with the extra bedrooms, an extra bathroom was needed. The laundry, which had been located next to the entry, was moved and a new bathroom created in its place.
As the carpet was in extremely bad repair it needed to be replaced. Carpet and vinyl, from Deans Flooring in Whangarei, was used.
The new kitchen was provided by Cabjaks. Jacob (an electrician) installed it himself. The kitchen led to a funny conversation with the bank: at just $5,500, the bank manager didn’t believe it was possible.
“They said that they had just had a kitchen installed for $25,000 and they didn’t think anyone could do it for five grand,” Jacob laughs.
He had to provide a detailed quote to convince the bank it was legit.
The exterior of the house was repainted. It was weatherboard, built from a strong native timber, and the walls were strong, but some of the wood had been exposed so a repaint was required.
Wolfe suggested the couple offer the property to social housing providers. After chatting to someone she worked with in this sector, she discovered there was a great need for six-bedroom homes, so the Powers decided to add a cabin to the section.
Sourced from Titan Cabins (“it’s a good looking cabin,” says Jacob) the cabin is ideal as a sixth bedroom for an older family member.
The renovation cost the Powers $105,000 and the house is now valued at $740,000 (conservatively). It is bringing in $755 a week and there is the possibility of further developing the section.
But for now the couple are happy to take a break. They have two young children (aged one and four) and Jacob spent a lot of time commuting up and down to Whangarei for weekends. “It was pretty full on,” says Shannon.
They say Wolfe has been great: “She gave us confidence that we could do it, provided a sounding board, and had great contacts.”
Signing up for a coaching programme was just what the couple needed to make their first foray into property investing. And given the success of this, it’s likely they will repeat the formula.