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Although Ian has always been interested in property and even gained a lot of knowledge regarding property investment a few decades ago, he had other plans.
He was more interested in building his business, which he managed until the 2007 financial crisis. Ian has always been about taking risks, in fact, he fudged the numbers in order to buy his first property without a decent deposit, he built a house and he frankly admits he is quite impulsive.
In order to embark on his investment journey, Ian got a job. He needed to to satisfy the bank’s criteria, even though he has shares in a business that is doing its thing and remains of an entrepreneurial mind.
Risk taking has a long tail. It wasn’t until he got entrepreneurship out of his system could he fully commit to investing in property, which leads us to the present day.
5 Sullivan Avenue in Mangere Bridge was bought unseen for development potential and land bank opportunity. The vendors were hoping for $1.8million. It is a 4 bedroom home and income on just over 800sqm of land. The income comes from a 1 bedroom unit, which unfortunately was not on the LIM report. Ian spent a fair bit of time assessing his risk with this condition.
When he first enquired and entered the discussion, the vendor had just countersigned on an offer of $1.6 million and asked for $1.62 million.
This property did not tick all of the boxes. But Ian learned pretty quickly on his journey that the properties that did tick the boxes, were selling for much higher. That there were a whole lot of bidders. Perhaps in a market with less bidders, he will apply his perimeters, but if he wanted property, he was going to have to adapt.
So, yes, 5 Sullivan Avenue was not perfectly flat. It was in a flood zone, being 100m from the storm water. But since the property was built on rock, this wasn’t too much of an issue. He had options that were pointed out to him by a town planner who he has recruited as part of his invaluable team.
Mangere Bridge is predominantly an owner-occupied area so he wasn’t in hot competition with other developers. However, Ian has plans to build 3 sites on the section, with the average house measurements to be a roomy 160sqm.
Even though Ian’s strategy was for land banking and this property is such an opportunity, he bought a property with options to allow a cash flow positive experience whilst he sits on it or a huge payday in the future.
As mentioned before, Ian bought the property for $1.62 million. He needed to present with a 40% deposit for this investment, or $650k.
By building 3 units on this piece of land, he has calculated that he will be able to sell each of these properties for $1.6 million. This sees Ian with a net profit of $1.18 million with the expected cost of each build being around the $432k mark.
His gross yield is sitting at around 4%. He is cash flow positive at around $3200, with so much potential in the works.
Ian secured himself by choosing a property that allowed him to receive rental income whilst he planned out his next move. Should interest rates rise, and they have, he wasn’t getting himself into a difficult position.
By joining the mortgagehq course and learning what he has, Ian preaches these following concepts:
And perhaps most importantly: