James Goren owns a company, called The Renovation Team, which conducts renos for Auckland investors. And on occasion the team is called in for Goren’s own renos; a good perk of owning a building company.

A few years ago, Goren was looking for a project that would help him generate equity for a larger development he was planning. He’d specialised in smaller projects – blocks of flats or unkempt units – but wanted to try his hand at a larger property in a prestige suburb.

He discovered a property in the heritage Auckland suburb of Devonport that was crying out for love. The three-bedroom “Kiwi-style bungalow” had been vacant for years, the vendor having unrealistic price expectations. The house had moved through four real estate companies (and the owner had turned down $1.2 million). Goren decided to investigate further.

The house was a cross-lease on a 1000 sq m section. The insides were in poor condition, but the exterior issues were dramatic.

Cladding Issue

Goren discovered the cladding was a product called Weatherside – an 80s relic that was recalled in the 90s – a tempered hardboard made from wood fibres glued together. Moisture caused the glue in the cladding to fail, leading to cracking and damage. It would then swell, delaminate, and turn into what is nicknamed “wheatbix”.

Rather than running away in horror, Goren was excited. “I am always looking for houses that make other people hesitate; for me the worse the house, the more potential to create equity.”

But that wasn’t the only problem. The house had traces of meth, stability issues where the house was dropping and needed levelling, and framing rot.

The house was sold via online auction, and Goren shared his findings with the other bidders. “Caring is sharing,” he laughs. The information was enough to rein in the aspirations of other bidders.

While it was valued at $1.3 million, Goren ended up buying the property for $1.05 million, a steal in this exclusive suburb.

Goren is extremely systematic around renovations and conducted a detailed analysis on what level of value he could create via renovation. He came up with a figure of $1.7 million, which would create net equity of $450,000 after expenses, although his renovation strategy was rather different.

While some investors might have just done a quick paint job, he started the project with extensive research.

“I went to real estate agents and did market research to find out the most sought-after configuration. I usually add extra bedrooms to create equity, but for this house I changed things a bit. In this area people want luxury, so that’s what I gave them.”

Touch Of Luxury

The house had one bathroom and three bedrooms, with a dedicated laundry. Goren knew the laundry was not an essential for people looking for luxury.

“An en suite is more important for the Devonport population, so we developed a floor plan that converted the laundry into the main bathroom, shifted walls, and attached an en suite to the master bedroom.”

There were consents required for much of the work, and Goren used the time in between purchase and consent to demolish the interiors. “I took my wife, daughters and their friends and we demolished the entire place – it was super fun.”

After consents were granted, the cladding and windows were removed and a timber specialist brought it to check the framing. Parts that were rotten had to be replaced and the new frames were treated with anti-rot and anti-borer.

There were some scary moments; the build was undertaken in the middle of winter and storms at night meant there had to be trips to the site to ensure the framing was protected. Pine weatherboard was used for cladding, in keeping with the suburb’s traditional colonial style. Aluminium joinery was used on the windows, which were all double-glazed. Once the exteriors were complete it was time to focus on the interior. Luxe was the order of the day – heat pumps installed throughout, bathrooms lined with aqua-GIB, and floor-to-ceiling with tiles.

Flooring Key

The en suite has a walk-in, floor-to-ceiling glass shower, underfloor heating and a high-quality vanity mirror. The kitchen is also high-end; fitted with Bosch appliances, the cabinetry had a laser edge finish, and there were soft-closing drawers.

Good quality flooring can make or break a home. Thick carpet has been laid in the bedrooms, and fitted wardrobes installed.

Goren loves to “treat” his tenants with finishing touches that other landlords may not consider. Outdoor areas are important to Aucklanders, so he replaced the deck with a new one that wraps around two sides of the house.

“We took our own outdoor furniture to the house, which was still in great condition, for the tenants. It gave us an excuse to buy some new furniture for ourselves.”

As a finishing touch, Goren installed LED spotlights outside that allow tenants to enjoy the exterior space after dark.

“My electrician said it was too much, but I said ‘You sit out there at night, and you’d be super happy. It looks amazing at night. I want to spoil my tenants.’ ”

The renovation took about seven months, and the house was rented immediately after completion for $850 a week. The tenants are extremely happy with their rental property and have now been in the home for nearly two years.

Goren acknowledges yield on the home would be considered low-value by some investors, but cashflow is not Goren’s priority – he wants to create equity. And the valuation post-reno came through exactly as Goren had predicted, at $1.7 million.

And with nearly $500,000 equity created, he was able to move quickly on to his next project – and create more wealth for the future.