Soaring interest costs are weighing heavily on investors and their cashflow. Property investment coaches, Dani Paim and Ilse Wolfe, are not only helping property investors restore strong rental income, they are now also doing the heavy lifting.
30 November 2022
Nearly half of all rental property mortgages in NZ will roll off record-low interest rates of 2.25 per cent to over 6 per cent, so the cost of holding on to property is “ramping up”, Wolfe says.
“Cashflow, not equity, pays the mortgage, so maintaining the strongest income possible for each rental will be top of mind for most landlords,” says Wolfe.
Introducing Opes Accelerate 360, a new service from Opes Accelerate helping landlords restore cashflow of the glory days, by scoping and project managing fast, renovations-based solutions.
Wolfe is being approached by property managers and mortgage advisers who highlight suffering landlords looking for answers to improve their cashflow, but don’t know how to go about it.
360 is a hands-off service, an approach that utilises the Cashflow Hacking principles, a six-step approach to turbocharge an existing property’s rent through renovation.
WHAT IS 360?
If the BRRRR (Buy, Renovate, Rent, Refinance, Repeat) is the full strategy of our coaching business, 360 is the “RRRR”, Wolfe says.
“This means we solely work with landlords who may be sitting on rental potential they aren’t aware of … then we unlock it for them with our team.”
But Accelerate 360 is different from our main coaching service, she says.
“Instead of working with investors who are actively seeking to build a portfolio using the BRRRR strategy, 360 helps landlords with their own rental properties.”
There is no deal finding aspect in this service. The offer is: Take the keys off your property manager, scope the renovation, then execute.
“It’s still about Cashflow Hacking,” Wolfe says. “But we will come up with the transformation and our team completes it for you.”
We take the keys off your property manager, scope the renovation, then complete it.
VISION AND EXECUTION
It’s not just knowing how to Cashflow Hack a property, it’s also being treated as a priority within the industry to be able to execute the renovation without delay, Paim says.
“We have working relationships with many professionals who have worked with dozens and dozens of investors.”
For one investor, we mapped out quick renovations for all five of her properties, which would increase her total rent income by over $1000 per week, she says.
“This meant she could service a sixth purchase, which was her goal.”
This experience, hard-earned, means Paim knows how to hack your property in a fast and cost-effective manner, which will hopefully sidestep any tripping hazards from council consents.
There are some things you just “know” over time, she says. For instance, how ripping out an internal fireplace may trigger a consent.
“Every change can lead to added complexity and often additional cost. A renovation needs to be completed correctly, the first time.
“There is a relationship between the floor size and the number of bedrooms a property can hold. So we know if your property will withstand another internal bedroom, before even heading to site,” she says.
The BRRRR strategy is extremely specific, and so are our Cashflow Hacking principles, which means not every property will be suitable for this service, Wolfe says.
“This is our integrity as a business, we aren’t going to work with you if we can’t greatly improve the rental return and value of your property,” she says.
“We determine this on a property by property basis.
“We have a process and set of standards in place.”
LEND ON THE FUTURE RESULT
360 operates on a “no cash down” basis, but there is a fee for using our services, Paim says.
Put simply, if you don’t have the cash spare in the bank – that’s OK. There are a couple of lending options that may be available.
The team at Catalyst Financial has designed a specialist lending solution for 360: called Catalyst Mortgages.
“This creates immediate access to the funds needed for the renovation based on the value the works will create,” Catalyst managing director, Peter Norris says.
“It’s a tailored lending option,” he says. “And once the renovation is complete the loan is switched immediately to a long-term lender.
“Catalyst will work with the client in the first instance to see if they are eligible for finance then pre-approve upfront. This is exclusive to Opes Accelerate clients.”
There is otherwise the traditional option of drawing on useable equity within the property itself, if it fits within the loan-to-value maximum loan it allows and lending criteria.
“Future value is the equity created once renovations are completed. Increasing your property’s value is the other key benefit of the BRRRR strategy,” Paim says.
At Accelerate 360, the saying is: “The worst thing you can do is not do anything.”
“Seeking solutions and being educated will equip you with choices to tackle the potential cashflow challenges that the next couple years are purported to bring,” Wolfe says.
“The bonus of this service could be replenishing your current property’s cashflow, then using the value uplift to take on opportunities the property market presents over the Christmas break.”
Check back in January’s edition of NZ Property Investor for a detailed case study.