This article first appeared in the November 2023 issue of the NZ Property Investor Magazine and is reproduced here with the permission of the owner. Click here to subscribe to the NZ Property Investor Magazine direct or contact us to add the subscription to your APIA membership at a discounted rate.
Connections are the lifeblood of successful property investors. Be they real estate agents, property finders, or other investors, a strong network of those in the know can propel investors to great heights.
Shaun McGivern has used his network of friends, family, property association members and others around him to create an impressive portfolio. His strategies are innovative (sometimes daring), but he started small and has built up his portfolio over time. And he’s continuing to innovate and expand, creating wealth along the way.
McGivern comes from a family of investors. His parents and grandparents used buy-and-hold and renovation strategies to accumulate portfolios, his father has also dabbled in subdivision and working as a real estate agent.
Growing up in Mt Albert, McGivern excelled at cricket and rugby. But, as he explains, property investment was always on the radar. “I loved Monopoly,” he laughs.
His dad renovated houses and when he was old enough, “he put me on the end of a paintbrush”.
“I loved that process of transformation. How the room would change in front of me.”
World of Law
McGivern’s mum was a legal executive in a law firm that specialised in commercial and property law and he, too, was drawn to the world of law. So, after he left Auckland Grammar he moved to Dunedin and enrolled in a law degree at the University of Otago.
He moved back to Auckland after graduation, taking a job at Fortune Manning, a law firm specialising in commercial and property law. It was here he began to garner all the advice he could from property investors he worked with.
“I remember this one old guy, he said to me ‘I can’t buy everything, so I am happy to help’. He gave me an agent’s details and it started from there.”
Fresh from university in 2003, McGivern didn’t have much earning power. Neither did his mate (and future brother-in-law) Andrew (also a graduate). So, McGivern’s dad decided they should join forces and start saving for their first property.
They set up a Loss Attributing Qualifying Company (LAQC), started to save a deposit, and looked for their first venture. “We looked through a lot of crap,” he recalls.
Eventually they came across a mortgagee sale in Manurewa; a former state house that was on the market for $147,000 in 2003. The house had been owned by someone who’d got into trouble during a renovation. It was in such a bad state that no-one was allowed to enter the property, but Andrew and McGivern jumped the fence when no-one was about and had a look.
“It turned out there were actually four bedrooms; it had been advertised as three.”
This changed the equation significantly. They had been basing their yield projections on $240 a week (the price for a three-bedroom home in the area at the time). But that extra bedroom would bring them $300, a significant increase.
Investors needed a 20 per cent deposit at the time, so they each parted with $14,700 and purchased the house.
When they entered the property they realised why it had sold for so little. “Our legs were covered in fleas. There were holes in the walls and doors. It was a total pigsty.”
But it was a house with hidden treasures. On pulling up the (very soiled) floor, they discovered beautiful rimu. Unsightly fake brick board hid brand new weatherboard.
The reno process took two months to complete. “We did it all ourselves,” says McGivern. “We would go after work and on the weekends to complete the job.”
The renovation only cost $12,000. McGivern had read a book suggesting you shouldn’t spend more than 10 per cent of the sale price on a renovation. After the reno it was revalued at $220,000, so they rented it out.
In 2004, McGivern left New Zealand for London, where he worked for a big international law firm. He returned in 2008, keen to purchase a new property with the equity that had been accrued in the Manurewa rental.
Andrew joined him again for this new venture, in 2010. The home they found was another mortgagee sale in Manurewa, which they purchased at auction for $255,000 (well under market value).
The former owner had kept the house very clean and tidy, so they decided to keep her on as a tenant. She did keep the house clean, but there were other issues that ended up at the Tenancy Tribunal a few times.
The following year he was alerted by his father-in-law (another real estate agent) about a property for sale in West Auckland. The Te Atatu house and income was on the market due to a divorce, but he thought it would not be in the right price range.
Later, his father-in-law revealed there had been no takers on the house, so he and his buying partner offered $615,000, which was accepted.
Unfortunately, the tenants would prove troublesome. They had been self-managing, but it turned out drugs were being used in the house and traces of P were detected. They worked out a way to legally remove the tenants, but there were a few hair-raising incidents involving gangs.
“After this, we realised we really couldn’t self-manage any more. We were drowning. We were both busy with our careers and our young families, so we decided to start using managers for all our properties.”
McGivern is a partner (specialising in property) at an Auckland law firm. This role has put him in front of a many property investors with experience in several fields. It’s also brought opportunities across his desk, such as a distressed block of townhouses in Ponsonby identified as leaky and needing significant remedial work that would cost millions.
It piqued his interest, so he took his father, a former plasterer, to view the townhouses and assess the damage. “He had a look and told me he didn’t think the units were as bad as the assessor had said,” says McGivern.
So, he approached the body corporate and explained that he didn’t agree with the original assessment and that he, and a group of associates, would be happy to purchase the units if the price was right. “It was risky because there was a chance that the repairs we had in mind wouldn’t work,” says McGivern. “But they did.”
One of the Manurewa properties was sold to fund the purchase of two of the units. They were made watertight, well under initial cost, and the values shot up.
This strategy that has been repeated by McGivern: finding distressed units or townhouses that have been (incorrectly) assessed as needing millions in repairs; buying well under market value; then repairing and adding significant value.
Using a property finder, he repeated the formula for a block of units in Te Atatu. He is currently working on another group venture, alongside his wife Sarah, in Avondale.
“We used the equity in our house to purchase five units in a block, alongside others in our group,” he says. “She was keen to do something with me; after me doing so many other ventures with Andrew.”
He admits there is a fair amount of risk involved in this strategy, but it’s all above board: “We let people know that we feel the initial assessment was wrong, and let the owners make an informed decision.”
Alongside the Avondale development, McGivern is also looking at a potential greenfields development in Northland.
This will transform an olive grove by the sea into 12 titles, on which he and his friends will build holiday homes. “It’s going to be like a mini commune,” he laughs. “It’s an untouched paradise, found by a property finder.”
Starting with under $15,000, McGivern has amassed a property portfolio of over $20 million. He attributes much of his success to the web of contacts and relationships he has built over the years.
As a long-time member of Auckland Property Investors’ Association, he has found inspiration and support from the network of members. This kind of exposure to other property investors is invaluable, he says, and of great use to those starting their investment journey. He is also keen to support others on their journey.
“It’s like what that old man said, all those years ago: ‘I can’t buy everything, so I’m happy to help’.”