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Passion For Property

Passion For Property

After unexpectedly catching the property bug seven years ago, Whanganui investors Dan and Allena Timmins have built up a high-performing portfolio and now they’re keen to share the secrets of their success, reports Miriam Bell. Photography by Mark Brimblecombe.

By: Miriam Bell

31 March 2022

It’s always fascinating to hear what constitutes a life-changing experience. For Dan and Allena Timmins it was the week they spent working frantically to complete the cosmetic renovation of their first rental property in Rotorua.

They couldn’t afford to have the property empty so they had to get it tenanted as soon as possible. That meant Dan had to take a week off work, while Allena rushed over after her shifts or on days off to get the renovation done. While they managed it, it took 10 to 14-hour days for them to do so.

Still, the couple enjoyed staying in their new rental on an air bed, eating pizza and having fun together, figuring out what they were doing as they went along. In fact, the experience triggered a desire to do it again and, within a short time, they had well and truly caught the property bug.

Fast forward seven years and Dan and Allena have built up a strong 19 property portfolio, largely based in Whanganui which is where they now live with their two young children. Motivated by the desire to build wealth for the future, they are passionate about the powers of property investment and keen to share their knowledge with aspiring investors.

Catching The Bug

Their story begins back in 2013. At the time they were living in Tauranga. Dan was a sales manager at HRV Bay of Plenty while Allena was an ED nurse.

They managed to build up some savings, and sold their cars and used the money as a deposit to build their first home in Tauranga.

But Dan’s boss, who was his role model, told him he should be investing his money in something. “He introduced us to his accountant where Allena and I spoke with a financial adviser to discuss what we could be doing,” Dan says.

“It prompted us to start looking for an investment property and shortly after we bought that first rental in Rotorua.”

The property was a three-bedroom, 100m2 property. It was in a nice area and on a quiet street, but had been vacant for some time. They bought it for $166,000. After doing their speedy cosmetic renovation, they rented it out for a few years and then sold it for $400,000 in 2019.

The whole experience was a turning point in their lives. Before they met with the financial adviser, they had never considered investing, Dan says. “Neither of us came from wealthy backgrounds and we didn’t have anyone in the family that was investing. We were fairly typical young people just living life.”

‘You make your money when you buy, so if you can find a property that hasn’t sold, work out why, and see if that’s an issue for you, or if you can fix it then you are off to a good start’

But that soon changed. Over the next year, they bought two more rental properties. One of these properties was for Dan’s mother who had been renting; the couple wanted to make sure that she was living in a nice, warm, and healthy home.

“It was at that point that we really got the property bug,”
Dan says. While the Reserve Bank’s introduction of investor focused LVRs in 2016 held them back a bit, they have been steadily building up their portfolio ever since. They have bought 23 rental properties over the years and, of those, they’ve sold just three.

These days they own 19 properties (18 rentals, one owner-occupied). Of those, one is in Tauranga, one is in Rotorua, and 17 are in Whanganui. The value of their portfolio is just under $5,000,000 with an average gross yield of 9.8%. Their portfolio is cashflow positive on P&I repayment.

Finely Tuned Strategy

By buying right, in decent areas and then adding value they were able to quickly build equity to keep buying. But when they first started out thencouple didn’t know much on the strategy front. That meant they made some emotional decisions.

“Yes, Allena and I made some purchasing decisions based on if we liked the look of the carpet, or the colour of the house,” Dan laughs. “Things like that can put you off properties that might actually be a great deal. You end up overpaying for a place you would love to live in yourself and the numbers don’t work. Once that happens you can get stuck quickly.”

They have learnt from their mistakes, however. And they’ve simply adjusted their basic formula and had another go. Their primary strategy has always been simple: buy, add value, have the property revalued, then borrow against that new equity to buy again, then repeat.

While they have stuck to their primary strategy, they’ve fine-tuned it to incorporate their learnings. “These days we try to work on a gross yield/ positive cash flow basis,” Dan says. “We also believe you make your money when you buy, so if you can find a property that hasn’t sold, work out why, and see if that’s an issue for you, or if you can fix it, then you are off to a good start.”

Even a simple cosmetic renovation can add a lot of value to a property, he continues. “You can forecast what your expectations are of the revaluation, which can give you the next amount of usable equity. This allows you to be thinking two to three properties ahead and think of the bigger picture.”

Their strategies have worked well for them, he says. “But we have also worked a lot and made many sacrifices - including moving to a city [Whanganui] where we didn’t know a single person, chasing career advancement.”

Given 17 of their properties are in Whanganui, that particular move has paid off for Dan and Allena in the investing sense. It’s allowed them to get to know the market inside and out. This enables them to pounce on a deal when they see it and to develop relationships with agents who can alert them to deals early.

In the Whanganui market, which is increasingly popular with out-of-town investors, that’s a massive help these days, Dan says. “The market was very flat for a long time, but that’s changed. For example, four years ago, we bought a property for $65,000. It’s now worth $250,000.

“The relative affordability and lifestyle attractions of Whanganui mean more people are moving and buying here. That means it is getting harder to find deals: when we were first buying here there was nothing under 10%, now some investors are accepting yields of 6%. It’s still possible to find high yield deals, but it’s harder and you do need to know the market.”

Hits & Misses

Over the years, the couple have been fortunate and not had much go wrong. On one occasion though, they purchased a property from a friend. There was a sitting tenant who their friend knew and felt bad giving notice to, so they went against their usual practices and kept the tenant on.

This turned out to be a big mistake: the tenant had gang affiliations, immediately racked up rent arrears, and proved difficult to get out. It was the only time they’ve had that experience,

Dan says. “Otherwise, our biggest issues would be non-purchase regrets. Deals you are looking at always feel expensive at the time and some you pull out of. Then five years later you look back and feel a bit gutted!”

The Covid-19 prompted level four lockdown caused them a few small headaches. They had three properties vacant during that period: two were due to bad timing with the tenants vacating right before lockdown.

Dan describes the other as bad timing. “Our tenant rang and said they’d moved out. We were rather perplexed by this as he had not given notice and we were in level four lockdown. But we have a cash buffer for times like this so it was just inconvenient rather than worrying.”

‘It’s still possible to find high yield deals [in Whanganui], but it’s harder and you do need to know the market’

Easily countering such issues are Dan and Allena’s array of good deals. The most successful of which was the purchase of a Whanganui property which had been converted into two, twobedroom units in the 1970s. The property had been on the market for a long time and not sold.

“When I looked into why it had not sold, there were some issues which had been putting buyers off,”
Dan says. “I called the local council and discussed the issues with their property/building team. I discovered that the issues in question were not actually a problem.“

"By knowing this we were able to negotiate a great price. We purchased both the units for a total of $150,000. At this time, a single two-bed unit was selling for around this price so we were getting a real bargain, two for the price of one.”

They carried out some renovations, which included a new kitchen and bathroom. In 2019, they had the units revalued and the valuation came back at $455,000. That amounted to a $275,000 equity gain in a little over 12 months.

Another of their best deals is a block of six units they bought in the city centre of Whanganui last year. They paid $615,000, which was a good price, for it. In the nine months since, they have gained $253,000 in equity without any renovations. And it has a yield of 15%.

Dan and Allena actually beat out 12 other offers on this one. The multioffer situation came about as the vendors wanted offers over $450,000.

“But because we knew the market so well and knew what it could achieve in rent, we were able to make an offer which we knew would be a bargain if successful. We make many other offers which are unsuccessful, but that’s the process you have to go through to get good returns.”

Future Plans

Going forward, the couple plan to continue growing a cashflow positive portfolio. Dan says they would love to create some generational wealth for their children.

“If we can set them up so they don’t have to exchange their time for money it will provide them with the luxury of chasing whatever it is they are passionate about, without needing to earn a living from it. Ideally, they too will want to get involved in property and can repeat the process for their families. But if they don’t, that’s ok too.”

An important part of their future plans is continuing to provide renovated, healthy homes for people in their community – which they get a real sense of pride from.

“One of our important values is showing respect to our tenants as we know that the place they are renting is their home. Having a good relationship with your tenants is an important part of being a successful landlord as they are more likely to show respect and look after your investment.”

Additionally, Dan would love to be able to help people who are getting into property investment. “I’ve been approached by a number of people now to ask for help on where to start and what to look for. I have really enjoyed doing this and I love seeing other people being successful, it’s so rewarding.

“I’d like to be able to do more of this. An old boss of mine once said something to me that I’ve always liked and try to live my life by ‘I base my success on how successful I make others’. Now, that’s motivating!”

Dan & Allena’s Investing Tips

• These days everyone likes to have an opinion, but don’t let other people’s fear (of the market, risk, the unknown, making a mistake) create your reality - and prevent you from investing.
• If you are going to get opinions from people, make sure they are successful investors themselves.
• It’s important to understand what you want to achieve and what you want to get out of investing. Then you can research markets and create a formula of what a good buy is to you.
• Don’t get too emotional about a rental purchase. If you do, you’ll end up over-paying for a place you would love to live in yourself and the numbers won’t work.
• Buy houses that need a simple cosmetic make over. These are fast and easy and usually provide a quick return to buy your next property.
• You need to take the good with the bad: sometimes you will make a profit and do great, other times you will have a loss and need to learn a lesson.
• Have a three to six-month cash buffer for vacancies, repairs, any unexpected issues (like Covid-19). A cash buffer helps to remove the emotion and lets you focus on the “business”.
• When taking on a tenant search their social media accounts, look through their friends list and photos. The posting content, friends and photos quickly highlights whether or not they will be suitable tenants.