People in the property industry tend to apply their areas of expertise to their own investment strategies. And Abe, 29, who deals with subdivisions, is a good example and has a sharp eye for spotting a deal.

He found a property in Alexandra, Central Otago, where he could negotiate from $320,000 to $210,000. It was a bit of land with some services already installed, but no sewer or pipework. It was the kind of deal a layperson might not have spotted.

Nonetheless, the subdivision was substantial.

Project Detail

It would cost Abe $140,000 to dig up the driveway to put the necessary pipes and cables in, but a valuation projected the property would be worth $600,000 after he finished.

He stood to make quite a lot of money, and it looked straightforward to begin with. Abe had consent, he could subdivide ... it should have been easy, right? Wrong.

To complete the subdivision, Abe had to get permission from all three neighbours; the trio shared parts of the driveway Abe had to dig up. But when he asked them, no-one was keen to give their blessing. Abe had hit a roadblock.

Plan B

Fed up with waiting on the neighbours, Abe bought another subdividable property. He was sick of seeing the money in his bank account, ready to go. “I wanted it to be doing something for me,” he says.

But, once again, he needed a neighbour’s permission to complete the new subdivision. Having learned the hard way, this time he sorted out his issues with the neighbours before paying.

“I went around to this person’s house with a box of beers to discuss,” Abe said. And the neighbour said go for it.

If Abe hadn’t done this, he might have been stuck in the same situation … twice. But this time around, the day he went unconditional was the day he went to the council for consent.

Abe subdivided and built a new build property next door. The entire subdivision cost about a third of the price of the first one. He’s now renting out one property and living in the other with his partner.

Secret Sauce

It took a year of trying, but he’s finally got the go-ahead from all three neighbours. The secret sauce was offering to service their own personal driveways and not just the part they share with him.

But now he’s struggling to get the finance over the line. By purchasing another property, he’s spent a chunk of his $140,000 budget, and he’s got a bit more debt. It’s expensive waiting too. Even though he’s done nothing to it, he’s paying $250 a week just in interest.

If he gets into a real bind, Abe could sell the rental property from his first subdivision if that means getting his finances across the line. But Abe likes the idea of having the rental. So, he’s not completely out of options yet.

Subdividing Tips

Take your time to do all your due diligence on the property.

This means going to contractors for estimates and finding out how difficult a job it’s going to be. Most importantly, don’t forget to speak to your neighbours if your plan hinges on them giving you a “yes”.

Abe didn’t do that the first time, but he did the second time. “I learned the hard way there, I think.”

Next Steps

Abe’s experience might resonate with some potential investors.

Maybe you’ve hit a roadblock in your investing, or you need advice on how to move forward with your portfolio. ν

If you want to hear Abe’s full story, listen to Ep.1767 of The Property Academy Podcast, hosted by Andrew Nicol and Ed McKnight. Andrew is the managing partner of Opes Partners and a prolific investor himself; Ed is an economist.

Disclaimer: Just remember this is a column in a magazine, going out to thousands of people. It’s not personal financial advice. But, it is an example of what can be achieved with personalised financial advice. If you are wanting to book a consultation, email us through the website at https://www.opespartners.co.nz