A Hamilton couple went from being $35,000 in debt to owning a $1.53 million property portfolio in a year.

But Sanjay Raj Kaithakuzhiyil says he and Aiswarya Raj, who both work in the IT sector, are far from debt-free. They have an eye-watering $1m borrowings on their places in Hamilton, Rotorua, Hawera and Lower Hutt.

Yet they are still delighted at their new-found wealth and the rent from their properties easily covers all their mortgage repayments so they plan to buy more properties and develop some of the ones they have.

"We managed to build a $1.5m portfolio in one year," Kaithakuzhiyil said.


They did this by buying below market value, getting the place re-valued at a much higher number, then using the difference as equity uplift or collateral to fund them into their next property.

That enabled them to leap-frog from one to four properties in just a few months by recycling their equity, using what investors call "sweat equity".

Kaithakuzhiyil came to New Zealand from Kerala in southern India in 2009 to study for a computer diploma at the Manukau Institute of Technology and his wife - who friends call Ais - immigrated in 2014.

The couple, who appeared on the cover of the latest NZ Property Investor magazine, said they had an arranged marriage in India, are permanent New Zealand residents and aim to become citizens soon.

But when they started out they were in financial strife.

As a student, Kaithakuzhiyil accumulated $35,000 in debt; borrowing to buy a car, a computer, to send money home to his family and on credit cards. He said his credit rating was so low that he had trouble opening an electricity account.

Aiswarya Raj and Sanjay Raj Kaithakuzhiyil, who went from being broke to having a multi-million dollar property portfolio. Photo/NZ Property Investor
Aiswarya Raj and Sanjay Raj Kaithakuzhiyil, who went from being broke to having a multi-million dollar property portfolio. Photo/NZ Property Investor

He was paying interest rates of up to 21 per cent and the pair were finding it hard to get enough money for food. Then their flat was burgled.

But their lives changed after a phone call to Ais' brother in India who encouraged her to save for her first house.


She secured a work visa, got a job and with two incomes, the couple began repaying debts, saving and putting money into KiwiSaver which they used to buy their first place.

After being turned down by nine banks, BNZ agreed to give them a loan, so they hunted for properties selling for below capital value.

Sanjay Raj Kaithakuzhiyil with Aiswarya Raj.
Sanjay Raj Kaithakuzhiyil with Aiswarya Raj.

They bought:

• A townhouse close to Hamilton's centre, in July 2015 for $50,000 below the council CV. That was re-valued as a condition of the loan and when they had equity in it from the difference, they used it to get their second place. BNZ required them to wait three months but then they started looking again and bought;

• A new two-bedroom apartment in Rotorua, in December 2015, $32,000 below the council CV;

• A new two-bedroom townhouse in Hawera in April last year for $38,000 below the council CV;

• An older stand-alone three-bedroom Lower Hutt house last June on a big section at $50,000 below the council CV.

Andrew Bruce, president of the Auckland Property Investors Association.
Andrew Bruce, president of the Auckland Property Investors Association.

All the loans were from BNZ, he said, and no family money was used.

"Currently we have all the investment properties under 40 per cent loan to value ratio, so we're pretty safe even if the property market went down. We're doing subdivision in Lower Hutt and then we'll be even better off," he said.

Andrew Bruce, Auckland Property Investors Association president, said there were some dangers in buying in the way the couple had but he praised them for taking calculated risks.

"Mortgage interest rates could rise and put more pressure on their cash flow. Values can fall and people can get into negative equity territory," he said.

Another risk was possible Government reforms to require upgrading rental properties which would increase costs to landlords.

However what the couple did was not unusual and APIA had "a lot of people doing this, they just don't want to talk to you about it," Bruce said.

Mark Davidson, a valuer with Opteon - formerly Sheldons- at Takapuna said buying below the market, renovating and recycling equity to buy again was "a fantastic way to accumulate a property portfolio".

But he added: "Doing that now is much harder than it was a few years back due to 40 per cent LVRs, bank lending restrictions and the softening market."