Colin Comber - from Amway to multi-million dollar apartments.
By Richard Woodd.
Property investment was never Colin Comber’s natural calling.
By his own admission Colin, as a young adult, had a ‘glass half full’ outlook on life and lacked self- confidence. However, coming across a book, “The Power of Positive Thinking’ by Norman Vincent Peale enabled Colin to start looking at life from a different perspective and give him the confidence to start plotting his own life’s journey.
He worked in local government as an environmental health officer and transitioned, through extra-mural studies into town planning. During this time Colin developed an interest in entrepreneurship and wealth creation, coming to the realisation that the 9 to 5 job routine was not going to deliver the financial goals he had developed. He tried network marketing which taught him a wide range of people and business skills, reinforcing the world of self-worth, personal initiative and private enterprise.
It was Amway in the beginning and now it’s big multi-unit residential tenancies in New Plymouth and Palmerston North and it’s all happened in a very short time for Colin and his wife Margaret.
Colin was the guest speaker at the TPIA’s most recent monthly event at St Mary’s Peace Hall. He is well known to many in the property investment sector and has held virtually every position in the local association, plus a three-year stint as national secretary of the NZPIF.
Their first purchase was in Standish St New Plymouth in 2002, next door to their own place, literally Party Central and the neighbours from hell, Colin says. They now own three adjoining places there and are planning a three-townhouses development with G J Gardiner Homes.
They went on to buy other properties in NP including Othello House in Mt Edgecumbe St, 22 furnished studio flats, in a mortgagee sale, taking several months to negotiate the purchase. This was quite tricky because both the owner and the owner’s lender were in receivership; there was a lien over the furnishings and chattels and they feared the creditor would seize them for auction prior to settlement. This would have meant having to re-chattel every studio at about $5000 a pop (it didn’t happen). They also had to jump through hoops to borrow the purchase loan money from a Waipukurau legal firm, which invested East Coast sheep farmers’ money for their clients. This required Colin and Margaret to meet the principals face to face and convince them they were a low risk.
Then in 2014 they went into partnership with Bruce Wallis and bought in Palmerston North a two- level block of 18 furnished studio apartments close to the hospital. Colin says he and Bruce were as different as chalk and cheese in many respects but had similar outlooks and complementary talents when it came to property investment, they soon discovered.
“Buildings have stories attached to them and this one was reputed to be leaky,” says Colin. “A previous prospective purchaser had had a leaky building report done and got cold feet. We bought that report for half price, identified the problem as a failed balcony weather seal which was leaking into the ceiling below. We had that fixed, put in new carpet and furnishings and even a smart tv for each. Bruce and I became well known at the local Briscoe’s, buying everything from bedding to cutlery to re-chattel the property.”
Next was The Mews, on Tennent Drive opposite the Massey University main entrance. This was a very big investment of over $4 million in 2015; three blocks each of 26 studio apartments. It wasn’t actually on the market but was being managed by the owners. Bruce knocked on the door one day to swap notes about managing multi-unit properties; a further series of visits and discussions led to purchase.
Half the tenants are post-graduate international students and the occupancy rate is very high overall. A contracted full-time manager attends to tenant management including an element of pastoral care to ensure all tenants feel right at home. While rental income is around $18,000 a week, outgoings are high, including a $30,000 annual insurance premium. The insurer agreed to spread the initial payment over some months, but they had an unexpected setback just after settlement date, when Bruce decided to spend a night there. He woke to fire alarms, three fire engines outside and all the tenants standing around.
It turned out to be a saucepan that a tenant had left in the sink with a tap running. Sink overflowed into the flat below, setting off an alarm. The insurer would accept a claim but wanted the premium paid upfront first.
“The Mews was another building with a story attached and it was threatening our valuation. It had a bad reputation for cheap plumbing pipes bursting and the valuer wanted to state this in his report which would of course have frightened the bank off. However, it happens that the owner was a qualified plumber turned policeman and he had replaced all the dodgy pipes at a cost of about $180,000. This information was disclosed by the vendors when we were doing our due diligence. We obtained a signed statement to this effect from the seller and the valuer accepted it.”
Colin and Bruce have a policy of buy and hold. They endeavor to buy below market value, financing out of equity and leveraging forward to the next purchase, but always looking to be cashflow positive.
“We want the cashflow to service the debt. This way, you make your profit when you buy, at or below market value,” Colin says. “Getting into these larger scale investment deals is not for the faint-hearted. We endeavor to do our due diligence well, evaluate the risks and we’re prudent, not at all speculative.”
Valuer says big challenges lie ahead for landlords
By Richard Woodd.
Earlier, Mike Drew representing the evening’s sponsor Telfer Young Ltd (valuers, property consultants and building surveyors) talked about the company’s enlarged role and the challenges facing landlords under the revised Residential Tenancy Act.
Telfer Young, anticipating rapid growth in demand for property inspections, now has a staff of 17 including seven valuers and has just taken on two experienced building inspectors.
Turning to the local real estate market, Mike said listings had livened up with the onset of spring. There was a shortage of residential sections currently but some good developments in the pipeline that would come on the market in 18-24 months probably priced at $220,000-270,000. Build costs had risen.
Rental housing warrants of fitness would pose real difficulties for landlords, with an increase in official red tape. There was already talk of insulation having to meet current building code standards and it was possible that rental houses would need a grading system for wofs similar to earthquake-prone buildings.
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