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  1. #1

    Default Four Flat property in Wairoa. What to do?

    I have a four flat property with adjacent land in Clyde Rd Wairoa. Frankly its a dog of a property. It was bought sight unseen in 2006 on the numbers which seemed favourable. Have since visited and it seems a sturdy property with potential - maybe for short term accommodation. Have enquired with one motel chain but have since been warned off the motel industry.

    Purchased in 2006 for $210k. It was fully rented for $450 a week. Two one bedroom properties and two two bedroom properties, all adjoining. It's concrete block. The four flats are on one lot with the adjacent lot beside a shared driveway. The property is next to a church and opposite a domain so the location is not undesirable.

    Since Feb 2008 it's been sporadically rented or empty. Thieves took two hot water cylinders in FEB 08 for the copper. This caused a huge amount of flooding damage in the two units. This has now been rectified with new carpet.
    Problem 1. Cap value currently $205k. Rates in 04/05 were $3674. Rates the current year are now $7111. I have asked for rates reduction but didn't get anywhere with this. Should I get an RV to argue for a reduced cap value?

    Problem 2. The flats are dated. The bathrooms are unpleasant with exposed concrete block and composite floor. We want to drywall and put down lino and get new fittings. At the same time we want to fence the flats individually so they appeal to families. Property currently is unfenced.
    I got a reputable Napier builder to look at this and he said there wasn't enough work for an out-of town builder and he recommended finding a local carpenter. We're out of town so don't know a carpenter.
    Previous tenants have generally been single males who work in forestry and at AFFCO

    Problem 3. The property manager is hopeless. She appeared to be ticking the right boxes along the way and had the property full in Feb 2011 briefly before we left NZ to emigrate to the US. Now every month I have her up, she says tenants are mainly looking for 3 and 4 bedroom properties. I need a new property manager but don't know another one and there are no listings in Waroa. Will start ringing all the other real estate agents and town councillors to get in their ears about the rates and try and track down a contractor.

    Q: Can anyone recommend a general contractor and a proactive property manager in Wairoa. Any other thoughts?

    Have approx 60-$80k NZ to throw at the properties to bring them up to scratch We could sell the properties and take a bath to the tune of $50k but would rather take the opportunity to add value and turn them into decent rentals. Rough calculations indicate ongoing rental income would need to be $150-$170 a week to break even.

    The other option is a total reno and the addition of a meeting hall on the adjacent land a further four rooms for short term accommodation to get the visitor traffic and conference market. We haven't explored this further as it's a massive project to manage from the US and I'm currently trying to get two other houses built in Wellington. I'll start a new thread on this separate project.
    With regards to Wairoa, we want to get this property back on track and not rule out other options for the future.
    Last edited by CaliAngel; 03-12-2012 at 07:15 AM. Reason: additional info

  2. #2
    Join Date
    Jul 2011
    Location
    Tauranga
    Posts
    2,769

    Default

    Not sure there would be a big demand for conferences in Wairoa?
    Whats the job market like there at the moment?

    I stayed there once by accident and wouldn't do it again (I didn't know the area) there is a gang problem there. If shops need garage doors on them when they close I find its better to give the town a wide berth.

  3. #3

    Default

    You're not wrong. It's basically the mongrel mob capital of New Zealand and the Council is completely impotent, which we realized after we bought the property. They do do a rugby tournament and some Maori cultural events like a film festival. The visitor night stats aren't stunning.It was a buy and hold for the land to see if the visitor nights improved and there was more baby-boomer tourism. Instead the dollar has gone up and the crime rates in New Zealand has gone gangbuster, so to speak.

  4. #4
    Join Date
    May 2012
    Location
    Wellington
    Posts
    518

    Default

    There used to be 2 property managers in the town, which one are you using ?

    Been though what you are going through there, sold out about 2004 and did very nicely on CG. It was very difficult to manage remotely, much of rental collection has to be done by knocking on doors and getting the cash.

  5. #5

    Default

    Quote Originally Posted by Nice View Post
    There used to be 2 property managers in the town, which one are you using ?

    Been though what you are going through there, sold out about 2004 and did very nicely on CG. It was very difficult to manage remotely, much of rental collection has to be done by knocking on doors and getting the cash.
    Am using McIntyre Real Estate.

  6. #6
    Join Date
    May 2008
    Location
    Torbay, Auckland
    Posts
    3,887

    Default

    Take the 50k bath now.
    Why spend money now to turn the white elephant into a lemon.
    Good money after bad ??

    Take the hit, use your money and your smarts and your time to buy something decent and make a profit on that.


 

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