$415K UNDER CV!! 7 UNITS ON SEPARATE TITLES AND CF POSITIVE!

Listing Number:  1335
Posting Date:  04 January 2009






 
Price:$740,000
Listing:$415K UNDER CV!! 7 UNITS ON SEPARATE TITLES AND CF POSITIVE!
Type:Unit/Flat
Category:Private Sale
Bedrooms:6+
Bathrooms:3+
Region:Manawatu / Wanganui
Site Area:320 m2
Address: Login
Building Area:850 m2
Property Image

Description:

Seven Units on 7 separate titles - currently 5 x 1 and 2 x 2 bed units - $455,000 under new 2008 CV! This means buying 1-bed units for $100k and buying the 2-beds for just over $100k!

This block of flats is in the growth suburb of Paraparaumu in the Kapiti Coast

Property Details:
This property consists of seven units on 7 separate titles - currently 5 x 1 and 2 x 2 bed units. The property is currently under-rented in some units however the rental assessment from the property manager assesses the 1-bed units at $155/wk and the 2-bed units at $175/wk.

You can easily convert 3 of the 1-beds to 2-bed units with the addition of an internal wall in the lounge, there is sufficient room to do this as the lounge is enormous, and the cost would be no more than about $2,000 per unit. This would create 5x2 bed units and 2x1 bed units. After this conversion the expected combined weekly rental would be $1,185.

5 of the units are in very good condition and do not really require any work, and are fully tenanted at the moment. Unit 4 should have the bathroom tidied up a bit in between tenants next, which would include possibly a re-paint in the bathroom and the replacement of some seratone in the shower. I would do a little more work to Unit 7, repainting the entire interior, shampooing the carpets, possibly replacing the lino, installing a new kitchen bench top and cupboards, and a new vanity in the bathroom. All units are currently tenanted.

I would estimate costs of $10,000 to renovate unit 7, about $2,000 to renovate unit 4, and around $6,000 to convert the 3x1-bed flats to 2-bed units. Total cost of renovation about $18,000. With new rental rates at $1,185/wk, this would provide a return of 8.1% after purchase and renovation.

The block of flats has 4 carports around the back of the property for tenants to use, as well as room for parking of 5-6 additional cars. There is all new staircasing at the rear of the flats also as back door exits for the flats to comply with fire regulations.

The Area:
Well known for its long beaches and warm sunshine, Paraparaumu is a growth area 49km north of Wellington. Connected by rail, it is a short commute of just over 50 minutes to central Wellington by train, making it a very affordable place to live within commuting distance to the Capital.

Details of the Deal:
New Capital Valuations (late 2008) for all 7 flats total $1,195,000. Broken down they are:

Flat 3: $165,000 (already 2 bedroom)
Flat 4: $165,000 (already 2 bedroom)
Flat 5: $175,000 (1 bedroom that can be converted to 2-bed)
Flat 6: $175,000 (1 bedroom that can be converted to 2-bed)
Flat 7: $175,000 (1 bedroom that can be converted to 2-bed)
Flat 8: $175,000 (1 bedroom that can be converted to 2-bed)
Flat 9: $165,000 (1 bedroom)

Also I believe there is further rental upside in this deal. The property manager stated that at this level he knows he can rent them easily and quickly, however the average rents shown on Tenancy Services indicate a weekly rent of for 1 beds of $170/wk and at least $225/wk for 2 beds see here http://www.dbh.govt.nz/Utilities/marketrent/market-rent.aspx?CategoryId=258&SubCatId=6&SubCat1Id=63&SubCat2Id=71&SubCat3Id=72&ArticleId=53&Version=1.0&TLA=Kapiti+Coast&RegionId=9. Based on these, your yield could be much higher!

Also the advantage to this deal is that almost anyone should qualify for finance, as each flat is on a separate title, meaning you can spread the finance across different lenders. I can also tailor any settlement to suit what lenders may require ie. settle 4 properties now, and the rest in 2 months time or some with one lender and some with another anything is possible!

Based on the numbers below, this property is cashflow positive after tax from day 1 by over $100/week!

PP: $740,000
CV: $1,195,000 (2008)
Amount below CV: $455,000! Or 38% under CV!

Rental Assessment (as 5x2 bed and 2x1 bed): $1185/wk


Please call me on 021 2880119 asap for more info.


Additional Documents:

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Description: Cashflow & Equity Forecast
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