In 2015, Kathryn Seque-Roche was named NZPIF Landlord of the Year. She was just 23; a hands-on landlord who managed her family’s extensive student rental portfolio with flair. Nearly 10 years on, she’s still at the coalface, creating opportunities, ensuring tenants are happy, and thriving in the property game.

It’s always interesting to revisit successful investors. They are successful because they can change focus and pivot according to regulatory and market changes, understand risks and anticipate future trends.

Kathryn exemplifies this. She recently undertook significant developments managing the family trust that owns a large amount of student and other rentals. She’s had to navigate the significant challenges posed by regulatory changes (the RTA amendments being particularly tricky), loss of interest deductibility et al.

But she’s used this period of learning to grow and develop her skills and share her knowledge with members of the Otago Property Investors’ Association, of which she is president.

Family Connection

Kathryn was raised in a family of property investors. She remembers Thursday nights in her dad Cliff’s car, “collecting rent in cash” before the days of the internet and online banking.

“Apparently, I said ‘When I grow up, I want to do what Dad does’,” she says. “I can’t remember it, but those car rides with Dad obviously made an impact on me.”

Cliff was an innovative investor who saw opportunities in their hometown of Dunedin. Much of the city’s rental market was made up of grotty student dives, packed with kids fresh from the family home. There was a gap for new, purpose-built rentals that were clean, dry and warm. So, he set about creating those purpose-built rentals that would appeal to students.

They were extremely popular and appealed to international students in particular. Kathryn and her sister helped with cleaning, created kitset desks, and generally assisted with running the rentals. “Some of those desks still exist. They are usually the ones that are broken,” she laughs.

Kathryn purchased her first investment property when she was just 18. “I’d been working in part-time jobs since I was 15 and saved up enough for a deposit,” she says.

This was 2011. The two-bedroom unit she purchased cost $285,000; it’s now valued at $495,000. Shortly after she leveraged the rental income and equity in this property to buy another one.

“It was just a shell,” she recalls. “I purchased it for $106,000 and renovated with the help of Dad and some friends.”

The two-bedroom home, now worth $400,000, has recently had double-glazed windows added, along with new carpet.

Baptism of Fire

In 2014, Kathryn bought a home with a ceiling that was “just mould”. An older woman lived in the home but was confined to one room due to the terrible conditions.

An offer of just $150,000 was accepted, and after a $35,000 reno the house was rented out. The current value is $550,000.

Her final purchase, just before the market took off in 2015, was a tenanted South Dunedin property, which was eventually demolished. This was a baptism of fire, says Kathryn, as the original property contained asbestos (which Kathryn was unaware of) and landed on a neighbour’s property, who contacted WorkSafe.

A significant amount of soil had to be removed and the asbestos contamination remediated. Once this was done a new four-bedroom, two-bathroom home was built for $320,000; it’s currently valued at $780,000. “The property is located in a flood area so the home is transportable and can be moved if necessary.”

Kathryn hasn’t purchased since then, but she has been busy managing the extensive portfolio held in the family trust. She’s been working in this role full time for two years and it’s been a challenge.

As much of the portfolio is student accommodation, she has been at the pointy end of changes to residential tenancies. Students who had 12-month fixed-term tenancies were given automatic right of renewal, but often they would not tell Kathryn of their intention to stay or vacate until the last minute.

This led to many missed opportunities as students looking for accommodation for the coming year were forced to move into flats in far-flung suburbs (the Seque rentals are close to the university).

Another challenge for Kathryn has been the development of nine two-bedroom flats in central Dunedin. It’s been a slow process, due in no small part to a listed heritage building on the site.

Terrible State

Built in 1901, the home was in a terrible state, and had an earthquake rating of just 7 per cent. It had been “accidentally listed” as only homes built in 1900 or earlier should be listed. There was an unsafe extension at the rear of the house which would cost “a few million” to be brought to code.

The project was started six years ago and completed in January this year. The heritage façade had to be developed to ensure continuity of visual amenity in the historically important street.

There are four townhouses at the back of the property, each with two bathrooms, and five at the side and front of the section, with two bedrooms and one bathroom.

At the planning stage, two-bedroom new builds were comparatively rare, but as the process was so lengthy, there has been a glut of developments of this type in the city.

“They are everywhere,” Kathryn says. “But we have managed to get tenants for all these properties, apart from one, which we were going to use as an Airbnb. We have decided against this now, and hopefully will be finding a tenant for this very soon.”

There have been other challenges. These included changes to fire rules between the building and final consent process (“we had to pull down and rebuild the ceilings in one townhouse to make it compliant”) and a weird issue with taps. “On the day of inspection some of the taps weren’t compliant so I had to go and get new ones while the inspector was still there and rush back and get a plumber to install them.”

She says that there is a need for family homes in the area, and she is looking at developing stand-alone dwellings with three bedrooms to add to the family portfolio.

The yields in Dunedin used to sit at around 8 to 10 per cent, but this has dropped to around 5 per cent. She says there is a natural “cap” on what people can afford to pay in rent because there aren’t the high-paying jobs you find in centres such as Auckland. “But we are getting better yields, still, than in other parts of the country.”

The Future

Kathryn is now looking to the future which includes development of a property her husband, Hamish, has bought.

“He caught the property investing bug,” she says. He viewed and purchased a property while she was in a meeting, and it’s another dump that needs pulling down.

“We needed to do a massive clean-up of the place, and we will be building some more two-bedroom townhouses on it.”