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An Excellent article - South Auck illegally converted garages

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  • Shane D
    Fanatical
    • May 2008
    • 1047

    #1

    An Excellent article - South Auck illegally converted garages

    This is a very good article dissing the latest South Auckland property investing trend of illegally converting garages to extra rooms.

    I must say I totally agree with this gentleman. A well written article.

    read the full article here


    "Prospective investors read books and attend seminars were gurus explain to them how to get rich in property in five minutes and with no effort. These bright eyed souls are the ones who then race around South Auckland seeking to jam as may people as possible into the cheapest property they can find. But what works perfectly in a power point presentation on stage isn’t always what works in real life.

    Typically the victim is a perfectly good full site, road front, and three bedroom home with a double garage. Right now any rental manager with breath in their body could let that property for $380-400 per week. Assuming you paid something like $270-290,000 then you come out with a 7.5 % gross yield. I’ve been in this game awhile now and investment agents will tell you seven and a half has been the average yield for many years. Rents move as the market moves. This property has the widest possible tenant pool and any owner can have their pick of the very best tenants. Moreover, when you go to cash in your investment you likewise have biggest buyer pool, including home owners, from which to realise your capital gain.

    However, you have just read chapter four of “Unlock Your Destiny and Riches Through South Auckland Property Investment” . It has been revealed to you that is was perfectly fine to whack up some internal walls and throw down some discount carpet and bingo-go what was a 2.1 stud, galvanised shed is now perfectly suitable accommodation for a family. With your destiny well and truly unlocked you can call it five bedrooms and get a whooping $540 plus per week. Imagine how wonderful it will be to tell all your mates about your ten percent plus yield investment property."

    Shane
  • Davo36
    Fanatical
    • Sep 2007
    • 8450

    #2
    Yep that's about right as far as I can see. You're actually stuffing up the property, not improving it.

    But wait for the posters here who say

    a) It's not illegal and

    b) Mine's never empty, I always have really good tenants, blah blah blah.
    Squadly dinky do!

    Comment

    • Shane D
      Fanatical
      • May 2008
      • 1047

      #3
      Davo, agree with you there brother.

      A quick search of trademe rentals for Manurewa and Papakura shows a lots these kinds of properties.

      I notice a lot of the traders are pushing these home and "sleep out" properties now as a method of enticing investors with bigger on paper yields.

      Shane

      Comment

      • Davo36
        Fanatical
        • Sep 2007
        • 8450

        #4
        Which is a shame. It's a kind of devolution. Years ago no one lived in garages in South Auckland. Pretty much everyone could afford a 3 bedroom house.

        And if necessary you could get rent assistance from the government.

        Now there just simply aren't enough properties. And our council officials have there heads in the sand making it very difficult to build affordable housing, not allowing suitable properties to be converted to home and incomes (without spending $200k) etc.

        So we are importing people into Auckland, both from overseas and other parts of NZ and we can't add affordable homes. We're also at a time when employment is down and wages are low. This leads to the sleepout and garage type situations.

        And leads to a lowering of yields too. Few properties out there for sale, so they tend to be dear to buy. Which means yields are low, and so of course investors, just do whatever they can to get a higher yield. And some people will live in them because they have no choice.

        This is happening in other cities around the world too. Like London, Sydney etc.

        I know I keep banging on about the councils, but this really could be solved quickly and easily. They just have to drop all their smart growth nonsense and let people build. Remove all the fees and red tape and let people get on with it.

        This would solve 2 problems at once by creating employment and solving the housing crisis.

        It's of absolutely no use to property investors though as it would reduce the value of houses and reduce rents!
        Squadly dinky do!

        Comment

        • Bluekiwi
          Fanatical
          • May 2008
          • 4002

          #5
          I think the article is about right.
          And I have one of these properties myself
          But its more a lined carpeted garage to be used as a utility room or recreation area.
          But when I visited a while back, I found 2 double beds in there.

          It is a clendon property and yields about 11%.
          I dont think its too bad having a few of those, but I am not keen for more.
          Its certainly a better idea having a slightly lower yield and getting into a better area like Shane does.

          But as Davo says.
          If the coucil is going to murder crucify and tar and feather anyone stupid enough to try and develop or build a house (as is their favourite sport), then you may find the rents for said accomation explained in the article, rising to irresistable values.

          Comment

          • DaveW
            Fanatical
            • Apr 2009
            • 1027

            #6
            The only thing that article got right was the fact that garage conversions ike that are illegal.

            For arguments sake let's say the criteria for covering interest payments on property fundings is 1.5 x income.

            Do I need to carry on?
            Profiting from Property, not People

            Want free help on taking your portfolio to the next level?

            Comment

            • Shalodge
              Addicted
              • Mar 2008
              • 934

              #7
              The only thing that article got right was the fact that garage conversions ike that are illegal.
              Converting a garage or building to a habitable space (sleepout)

              The conversion of a garage to a sleepout is not a change of use under Section 114 of the Building Act 2004 and therefore there is no requirement to upgrade the existing construction of the building.
              However, if building alterations are to be carried out as part of the conversion a building consent may be required. Part of this consent would include the requirement to fit smoke alarms in both the new sleepout and in the house.
              Note that it would be sensible to ensure that the building is dry, has ventilation and adequate insulation. If such (building) work is proposed a building consent may be required for this depending on what is proposed.
              A resource consent may be required if there are any non-compliances with the City or District Plan, such as loss of car parking spaces or setbacks from boundaries. Customers should contact a planner to discuss whether the conversion of a garage will require a resouce consent for a car parking shortfall.
              Subject to obtaining a building consent, a toilet or bathroom may be installed in a sleepout but a kitchen may not be installed.

              This an excerpt from CHCH City. Note that it is the kitchen which differentiates between a secondary dwelling and a sleepout. This is consistent with the approach taken by most councils.

              http://www.ccc.govt.nz/homeliving/bu...milyflats.aspx

              Russell

              Comment

              • Shalodge
                Addicted
                • Mar 2008
                • 934

                #8
                Originally posted by Davo36 View Post
                Yep that's about right as far as I can see. You're actually stuffing up the property, not improving it.

                But wait for the posters here who say

                a) It's not illegal and

                b) Mine's never empty, I always have really good tenants, blah blah blah.
                Guess thats me .. Lol. Sorry Davo but its not illegal.

                Russell

                ps.. Just back from AK with a new Dmax I found hidden in the bush north of Bethels beach .. What a buzZ! http://hunt.isuzuutes.co.nz/
                (Jason is my son.)

                Comment

                • DaveW
                  Fanatical
                  • Apr 2009
                  • 1027

                  #9
                  Whether it is illegal or not (I was just covering my butt) the article is otherwise nonsense.
                  Profiting from Property, not People

                  Want free help on taking your portfolio to the next level?

                  Comment

                  • eri
                    Fanatical
                    • Sep 2008
                    • 7621

                    #10
                    well done on the find

                    i see a young family on a camping trip also got saved by some searchers
                    have you defeated them?
                    your demons

                    Comment

                    • Shalodge
                      Addicted
                      • Mar 2008
                      • 934

                      #11
                      Originally posted by eri View Post
                      well done on the find

                      i see a young family on a camping trip also got saved by some searchers
                      Actually not really. That story was a bit blown up .. The family later claimed there was no problem according to the Isuzu dealer at Wingers in greenlane.

                      Comment

                      • Davo36
                        Fanatical
                        • Sep 2007
                        • 8450

                        #12
                        Originally posted by Shalodge View Post
                        Guess thats me .. Lol. Sorry Davo but its not illegal.

                        Russell

                        ps.. Just back from AK with a new Dmax I found hidden in the bush north of Bethels beach .. What a buzZ! http://hunt.isuzuutes.co.nz/
                        (Jason is my son.)
                        Mate the bit you quoted above said a resource consent may be necessary. And in some circumstances a building consent may be necessary.

                        When I made my comment, I was assuming the person converting the garage to a sleepout was not applying for either of these. I think this would be the case in most circumstances.

                        So therefore it might well be illegal in that it may not comply with the district plan or the building code.

                        But hey, if they go through all the processes (doubt many do) then all power to them.
                        Squadly dinky do!

                        Comment

                        • Shalodge
                          Addicted
                          • Mar 2008
                          • 934

                          #13
                          Nope dont agree.. Most garage/sleep out conversions dont require either a resource consent or building permit.. Building permit is only required where structural alterations are being made, adding windows etc. Just lining the walls and ceiling and laying carpet doesn't require BC. RC is almost never required. It would be a rare situation that the garage area was the only area available for off street parking.. maybe in very built up areas?

                          Comment

                          • Shane D
                            Fanatical
                            • May 2008
                            • 1047

                            #14
                            I am almost certain a permit is required in Auckland. And one of the requirements for the permit is the floor must be of habitable quality i.e have a moisture barrier between the ground and the concrete must be of a certain thickness which is thicker than the standard used on most garage floors.

                            Shane

                            Comment

                            • eri
                              Fanatical
                              • Sep 2008
                              • 7621

                              #15
                              ^
                              or is that when you put a kitchen in?
                              have you defeated them?
                              your demons

                              Comment

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