JP sealed a deal last year, but recently sold it as he saw an opportunity to swap it for a property that offered subdividable opportunities.
To best understand the reasoning behind JP’s moves for 42 Holyoake Place, Chatswood, Auckland, it’s important to understand his journey. Let’s delve a little into this, now.
Recently, JP had been looking more into the North Shore for flips. He works closely with an agent who got in touch with him about 42 Holyoake Place a couple of days prior to it going to auction.
Because of the COVID lockdown and a whole lot of uncertainty going on at the time, this house was not getting a lot of interest at all. JP, with the experience needed to take charge of such a house in dire need of renovations, was able to grab this property undervalue.
He did his research and the numbers stacked up. Properties around the Chatswood area were all going for around $1.1 million, so even as he bought it for $945,000 at auction, he was making a profit. His intention was to do it up and flip it off for the cash.
But as time went on and circumstances changed, JP decided to live in this property whilst working on it. He lived here for about a year, meaning that he sidestepped a huge tax bill after selling and overall spent less on the renovations.
As always, he painted the exterior. JP has found that buyers often look at old listings and are immediately drawn to obvious changes that they see. A good coat of exterior paint piques interest. He also repainted the interior, changed the carpet, light fitting and gave it new curtains and blinds.
A spiral staircase was removed to alter the floorplan to provide a second, separate dwelling on the first floor. JP saw the immediate value in this move and it paid off as he enjoyed $300,000 in profit after he sold it to make room for a development opportunity in the works.
JP lived here rent free, renting out the other rooms for a total of $800pw. He bought the property for $945k, spent $3k on due diligence and legals and only spent about $40k on renovations, a little less than he would otherwise do.
What’s great about this deal is that by living here, he hacked the system. By selling the property a year later, he got the profits tax free, which would have otherwise been upwards of $100,000.
JP owns another property down the road that he is now moving into, having sold this one. These two properties are mortgaged with main banks, but he could not fund and service a third, a development opportunity, that is in the pipeline.
This is with a second-tier lender, so by selling Chatswood, he is now able to move this subdividable opportunity to a main bank with more favourable rates.
But, why doesn’t JP simply retain these properties and recycle the equity?
JP is renowned for his ability in seeing potential in property, his connections that enable him to make confident moves in property where other investors are nervy and his skill that allows him to buy undervalue. To capitalise on this, he wants the opportunity to buy undervalue and receive the instant equity.
Chatswood is an area that cannot be subdivided. It is designed for owner-occupiers and JP was able to target non-developers and first home buyers by flipping this property. Although he could be disadvantaged by not being able to align the sale and purchase of another property to move into, this wasn’t that case for JP.
Everyone’s situation is different. JP saw the value, an opportunity to buy well and give himself an advantage and an option to live here whilst renovating for tax free bonuses that worked in his favour.