Davo Tries Again

[muppet]

What!!!!, tomorrow?????

[Davo36]

Yep, just keep asking me and I'll keep saying tomorrow...

[freezinhot]

Hi Davo,

Know the site well!

Look forward to seeing it complete (live in Papakura) and with new tenants. The council have recently spent 6.4 million upgrading the town centre and parks and the transformation is excellent, more and more businesses are now starting to arrive which is good for the town, you will also see just down from your building a new development site, not yet started but is being developed for restaurants & takeaway.

With Dick Smith just across the road you are in pretty good company Id say, its funny I pass your building almost daily and sometimes wondered why there was no new business starting out there.

Good luck with the transformation. Have you other commercial property or is this your first venture? When can us bricks & mortar investors expect to to get to this level.

FH.

[Davo36]

FH, it's funny how many people know this building.

I used to go to meetings there when I sold real estate in that area around 9 - 10 years ago. I used to meet with Annette Black of the Papakura District Enterprise Board as part of a little committee called the Takanini Straight Steering Committee. Phil Jones was on that committee too! We used to try and tidy up the straight, improve it's look, the ease of doing business there etc.

The building used to be really nice. But the current owners has badly let it go. The whole upstairs has been empty for around 9 years. And the downstairs has kind of been used as a Spa Pool shop but only half heartedly.

FH, there's nothing really difficult about what I'm doing and any keen residential investor could do it (provided you have a bit of capital behind you). I have never owned residential, but I've owned several smaller C&I properties, and just kind of done them up, increased the rent over time etc. I should have held on to them but sold them a couple of years ago when I thought there was going to be a downturn I sold them. So I'm building up capital again with this one hopefully.

David

[Perry]

I guess there's downturns and there's downturns.
As the comments depict in other PT threads, pick-
ing things right was never easy and now has never
been harder.

And given the diversity of the real estate topography
and general demographics, what works in one area
wont in another, with vice versa and everything in
between.

Almost like picking tenants. Once all the appropriate
due diligence is done, it finally ends up being a seat
of the pants judgement call.

[Davo36]

So I settled for this property on Monday.

Now I'm thinking about what I'm going to do with it! I am still probably going to go along with my original plan of turning the upstairs into residential apartments and returning the downstairs to 2 shops. However, I'm taking a bit of time to think about what else I could do:

• I can put another level on this building, although I probably don't have the funds to do this. I suppose I could try and get funding or take on a partner etc. Not sure if the foundations are strong enough, or if earthquake strengthening would be required either.
• The building has no parking. There's an all day council carpark immediately at the rear of the property which everyone uses. It's only 12 parks big and so there's lots of competition for it. I'm playing with the idea of using part of the ground floor at the rear (which is not particularly valuable space) as a garage. I may be able to get 5-7 parks in there. I've been doing some drawing (long time since tech drawing at school!) to see if it's feasible. Meeting the architect there tomorrow to get a more definitive answer.
• I could leave the upstairs as offices and just refurbish them. The thing is demand for office space in Papakura is pretty low and it could sit empty for some time. This would be a lot easier and cheaper though. Just some new paint/carpet/aircon/cabling etc.
• The canopy around the building is pretty rusty. I need to check out whether it can be repaired and repainted or if it needs to be totally replaced. So I am looking into things like what sort of canopy I'd want (flash ones with glass and steel look cool but I bet they're expensive) and if I can have decks on top of them for tenants up there to use.

So lots of things to think about. Quite fun really, although sometimes lots of choices just makes things confusing and daunting. Which way to go?

I'll keep posting here with my acitivities/decsions if people are interested.

David

[drelly]

Wouldn't you need parking if you're offering apartments?

[Dean@Massiveaction]

Papakura is my stomping ground too Davo. The apartments at the other end of the main street are always rented. Definitely a better idea than more offices. Plenty of them vacant now.
Going up also a great idea, you could do either larger apartments or more of them. They'd rent like hotcakes being right in town.

[fudosan]

• The canopy around the building is pretty rusty. I need to check out whether it can be repaired and repainted or if it needs to be totally replaced. So I am looking into things like what sort of canopy I'd want (flash ones with glass and steel look cool but I bet they're expensive) and if I can have decks on top of them for tenants up there to use.

Glass-and-steel type is the "in" thing these days, at least in CBD. However, constant cleaning is required or the dirty look will be very obvious.

[Davo36]

Drelly, yes. The requirement is apparently 1 car park per apartment in this zone. But of course there are various issues around this, like:

• The council owned this building 9 years ago and had it as a library and offices. The number of people going there would be huge. So now that they have sold it, they can't really turn around and say I need to provide parking.
• Secondly, at some point building permits were issued for people to put up that building. So prior to it being a library/offices it was shops/offices and permission was given for that to be done. And it has been utilised as such since then. Now the carparking requirement for offices would actually be higher. Around 11 parks would be needed for that top level alone - and there could easily be 20 people working upstairs. Now with say 4 apartments, that's 4 carparks and say 8 people up there and mostly after business hours too. So I can argue that I'm actually helping the parking situation in that area by going to apartments.
• Also, there are historical usage rights for the shops since they have always been used as that. I might put a cafe in there (1 possibility) which apparently has a nil parking requirement in this zone because they want to encourage them in the cbd.
• And of course you can always ask to be let off the standard parking requirement anyway. I guess there must be lots of cases all over Auckland where older buildings like this right in the middle of town have no carparks. What are the councils (soon to be one, yay) going to do? Have these buildings vacant and run down? Sometimes you have to pay money in these cases. In Papakura you used to be able to buy carparks for $6k each. The money would just go towards the council providing carparks elsewhere.

Dean, yeah I might do a brief look into how much it might cost to go upwards. I imagine that sort of stuff is pretty pricey though. I'm sure apartments will rent well - especially if I can provide secure parking.

David

[drelly]

Hey Davo,

I was thinking about parking more from a practical point of view rather than as a legal requirement.

[Davo36]

Glass-and-steel type is the "in" thing these days, at least in CBD. However, constant cleaning is required or the dirty look will be very obvious.

Yeah I noticed this. Same with ones that have that clear kind of plastic corrugated sheeting. It all gets covered in lichen and mould etc.

I walked down Ponsonby Rd today and looked at all the awnings there. Man is there a variety. You can build these things in like 100 different ways. And it depends on the tenants a bit as to what sort of awning you would have.

With nice retail and/or bank/offices type stuff you would have a nice clean, solid awning. For a cafe/restaurant you may have something out of wood with iron above. For a funky trendy place you may have the glass/stainless steel type stuff.

David

[Davo36]

Hey Davo,

I was thinking about parking more from a practical point of view rather than as a legal requirement.

Yeah right. They're much easier to let if they have a carpark than not.

There is the council carpark right behind, so you could tecnically park there over night (it's unlimited time). But people like to have their own park, especially a covered/secure one. It is South Akl after all!

So I would very much like to have parking available to tenants. The apartments would work just so much better that way. And the shops too. Having 1 carpark per shop is way way better than none. Makes them much easier to let.

David

[Perry]

This may seem like a fatuous question,
but what are the awnings for, exactly?

[Davo36]

To keep pedestrians dry, so as they walk around the cbd, they have a nice time. And they are compulsory for that reason.

I guess people also use them for signage, maybe extra lighting at night etc.

David