Andrew Zhang: My investment story could be everyone’s

By Christine (Huizi) Li 

Andrew Zhang, who runs the Bargain Chemist Riccarton pharmacy, has taken the plunge into property investment and, at the age of 30, already owns five properties in Christchurch.

How did he do it?

In March 2019, Zhang finished building his first house and moved into it with his wife. He started to pay the mortgage.

“But then I thought we couldn’t live in four rooms by ourselves, so I rushed to get three roommates to help pay the mortgage together. The three rooms were then rented out, which meant that I only had to pay NZ$50 a week to pay the mortgage,” Zhang recalled.

That’s less than what it would cost to rent a room for himself. That realisation was the catalyst for him starting to take an interest in rental property.

One day on a podcast programme, Zhang learned that the practice of renting out extra rooms to pay off the mortgage was called “house hacking” – meaning living in your own house for nothing and letting tenants pay the rent against the mortgage. This is a great option for young people starting out with their first home.

Zhang subsequently became a regular listener. One day, the host of the programme said that his daughter was soon to be born. He had put a deposit on a house for her as an investment and rented it out – the rent received was more than enough to offset the mortgage. In fact, he expected the house would be completely paid off by the time his daughter turned 18, and she would have a property to start with before she reached adulthood; all for the price of a deposit.

“I didn’t feel much at the time when I heard it. I just thought, wow, this dad can do it, and then …… I was surprised to find out that I am going to be a dad too, and have a daughter too! I thought, ‘Is God telling me to buy a house for my daughter too?’” Zhang said.

Zhang and his wife didn’t have much money left at the time because their own house had only just been built. But he thought with half a year to go before his daughter was born, there would be an opportunity to get together a deposit on a house for her.

Zhang already had a home, so buying a second home was considered an investment, and the bank required a 30 percent deposit.

By coincidence, a friend of Zhang’s was in property too, and had already invested in three homes at the time. He told Zhang that if he bought a new build house for his second investment, he would not need a 30 percent deposit, as banks only require 10 percent for those (depending on level of income).

Zhang’s friend referred him to Williams Corporation, the same real estate development company he bought his houses from, which specialises building houses in or near the Christchurch city centre.

The Christchurch city centre has largely been rebuilt since the 2011 earthquake. The reconstruction process has been slow, but the government has invested a lot of money in infrastructure. The new stadium and convention centre will be city landmarks. And with all the amenities nearby such as supermarkets, the potential of the CBD is endless.

“A city can’t afford not to have a decent CBD, and CBD land is getting more and more expensive,” Zhang said.

He then looked at one of the company’s downtown penthouses, and bought it as his first investment home with a 10 percent down payment. It was October 2019, before COVID-19 had appeared. His property was proving popular for short term rentals on Airbnb, and the return was very good.

In January 2020, Zhang rented the flat out long term to a friend. Although the weekly rent was less than the Airbnb short term rental income, the decision saved him from the long-term impact of the COVID-19 pandemic.

“In addition, I re-approached my bank in April 2020 to adjust my loan ratio by putting some extra money in, and the bank gave me a new house price valuation, up 5.6 percent from my purchase price six months earlier,” Zhang said.

With this increased equity, Zhang continued to invest in properties in the heart of Christchurch. During the lockdown in April last year, there was widespread pessimism about the housing market, but Zhang felt that houses would be in great demand. His rental cash flow was sufficient to support additional mortgage repayments, so he signed up for another apartment under construction in the city centre during the lockdown (again with a 10 percent deposit) and a delivery date of December 2020.

In March 2021, the bank gave a new valuation on the property of NZ$120,000 over the purchase price.

In February, Zhang joined Williams Corporation himself. His role changed from client to employee. Williams Corporation is the seventh largest home builder in New Zealand, the largest private builder on the South Island, and the developer of Zhang’s four current investment homes.

As a property investment advisor Zhang sells homes, finds land for development and attracts investment. He said he has achieved his own goals and now wants to use his expertise in property to help his clients, and their families, achieve financial freedom and build wealth.

“Property is a really good financial leverage and investment. I’ve never heard anyone say they regret buying a house 20 years ago; all they regret is why they didn’t buy more houses,” he said.

As prices in Auckland and Wellington city centres became out of reach, investors looked to Christchurch. There was a marked increase in the purchase of city centre flats and townhouses by non-Christchurch residents. Buyers came from other New Zealand cities such as Auckland and Wellington, as well as overseas investors from Singapore and Australia – who are not bound by overseas restrictions on property purchases. Due to the border closures caused by COVID-19, some buyers viewed houses and signed contracts remotely.

“I think the opportunity to own a home, permanently, in the centre of the country’s second largest city is rare. There’s bound to be a higher upside to property in the city centre than land and property on the edge of the city,” Zhang said.

“Aftea all, land in the city centre is limited, while the urban fringe has an extraordinary amount of farm land that can be converted to residential housing,” he added.

Zhang is proud of his strategy of using “time” to buy a house for his daughter, and believes his story of property investment is achievable for everyone.