Sam Mishriki of Orchard 10 made the $300/week offer. Photo / Supplied
Sam Mishriki of Orchard 10 made the $300/week offer. Photo / Supplied
A developer planning nine west Auckland townhouses is offering to pay $300/week off buyers' mortgages in a move one financier has called "a sales gimmick".
Sam Mishriki, managing director of Orchard 10, has made the two-year offer amounting to $31,200/townhouse to each potential buyer of yet-to-be-built two-level places planned for10 Orchard St, Avondale.
"... We'll contribute $300 per week to your mortgage for a minimum of one year. After your first year, if interest rates are still above pre-Covid levels, we'll top up $300/week for another year," advertising says.
Mishriki's business does not yet own the land but has offered to buy it. He wants $869,000 for a 70sq m two-bedroom one-bathroom place and up to $1.05m for a 100sq m townhouse with three bedrooms and two bathrooms.
He has not started construction but is seeking 10 per cent deposits to begin the scheme.
10 Orchard St, Avondale - nine townhouses are planned here. Photo / Supplied
Mishriki denied the scheme was a gimmick, saying the mortgage money would not be loaded into higher prices and he was not desperate.
"No. What we're trying to do is to have some sort of a social element. Places in the area have sold for higher prices. We have a straight profit margin we charge which is reasonable," he said.
Funder James Kellow of NZ Mortgages & Securities said he didn't previously know about the $300/week offer but his business was funding Mishriki's business to buy the land and develop the townhouses.
Kellow said he had successful dealings with Mishriki already.
"We have funded him on two developments at 11 and then 13 Mareth St, Panmure. They have come up very well," Kellow said of that project.
NZMS was very focused on pre-sales and liked clients to have sold at least 60 per cent of development before it begins, Kellow said.
James Kellow of NZ Mortgages & Securities. Photo / Michael Craig
"Pre-sales de-risk the project for everyone. Sammy putting $280,000 up [per unit] to help $8m of sales ($869,000 multiplied by nine) isn't too much money - 3.5 per cent - and hopefully gets a few people into houses they couldn't otherwise secure," Kellow said.
Mishriki says the offer "will keep your mortgage payments stress-free until March 2025.
"Only five houses have been released for sale at this stage. One has sold. The houses have only recently gone to market four weeks ago. Sales are tending as expected in our plan," Mishriki said.
Construction was forecast to start around September and be finished next March.
A complying resource consent application went to Auckland Council on March 18 and the council was working on it.
Plans for the nine townhouses, 10 Orchard St, Avondale. Photo / Supplied
Mishriki, 38, said he owned business Go1DayPainting. His parents were Egyptian but he said he had lived in Bahrain and living in New Zealand since 1999, bar five years in Canada.
"I'm an entrepreneur. I'm building 14 terraced townhouses in Panmure of which seven are complete and seven are nearing completion," he said.
Asked how he'd conceived the $300/week offer, he said: "I've been watching interest rates go higher. The motivation behind this is that I can't imagine paying a mortgage with higher interest rates. This, I thought, would help people be able to make those payments and fulfil their dreams of being able to own a house."
A trust would be formed to pay the $300/week, possibly with Trustee Executors.
Murray Weatherstone, a financial adviser of Financial Focus, doubted lenders would take the $300/week payment into account when deciding on loan applications.
"A first home buyer would need to qualify without this," Weatherstone said of the Orchard 10 offer.
But buyers could benefit via cashflow assistance for the first two years.
"Someone very cautious might ask how does the buyer secure the future $300/week? What happens if the developer goes bust? But the buyer would not be any worse off than they would have been without that support," Weatherstone said.
"Why would the vendor do it? Simple economics," he said, calculating possibly better terms of borrowing with substantial pre-sales.
"So I can see good economic reasons for a vendor to offer this deal. If I was a buyer, I would probably go for this if this was a townhouse I really wanted. If the bank will lend me the money to buy, I don't need the incentive. It will be nice to have so long as I get it to $300/week – but not the end of world if it stops. A deal can always be made if both sides can agree to the terms," Weatherstone said.
