Hi,
I’m just starting to look at buying an investment property – my first – and have been considering NZ. I live in Sydney, but my parents live in Tauranga so I initially started looking around there when I visted recently. I also bought the book “Where to Live in Auckland” and have been reading through that.
Mt Maunganui is perhaps a bit expensive for a first purchase, but I have been looking around the Papamoa area. Any opinions on that area, and Tauranga / Mt Maunganui in general? Also, what do you think of those areas compared to Auckland? This would be purely for investment, but the thought did occur to me that Papamoa mightn’t be such a bad place to live later on if I get sick of the hustle and bustle of Sydney.
And another question. Today I went along to one of those free property seminars by a group called the Investors Forum, run by Daniel McEwan. They seem to be mainly pushing investments in prime residential apartments, hotels, and lifestyle resorts around the place. Any opinions on this group and those types of investments?
All advice greatly appreciated.
Thanks.
Wayne
Welcome Wayne,
Two things, firstly you’ll find some great people here on the forum and experts in NZ like Mini-Mogul, Castledreamer, Westan, Wilander and others.
Secondly stay away from those type of property seminars, they only want you to buy what they sell – no teducate you.
Hi Wayne,
Welcome aboard and I am sure you will get a lot of information from the people who post here.
The types of investments being promoted by IF tend to give an inflated view of the cashflow situation as they are furnished and a such there are increased depreciation deductions available to improve the cashflow situation.
Short term accomomdation is at the mercy of any tourism downturns and as such you will need to ensure the properties are located in areas that are attractive to local visitors too.
Check the occupancy rates quotes as they can be a little inflated and being new developments you will need to ensure the rates quoted are achieveable. Such property also has the need to be cleaned even without occupancy so you may find that your cashflow gets eaten away by all sorts of hidden/undisclosed costs.
Be also aware that anything under 50 sqm is a problematic lend for many lenders and it is possible you will need to raise a larger deposit (in percentage terms) than you would otherwise for a standard residential property.
Such property can really only be sold to other investors should you ever have the need/desire to sell and as such growth may be a little compromised over the long haul. On the other hand houses, townhouses, etc also appeal to owner occupiers and as such the potential market is much greater.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Thanks Hux001 and Derek for your quick replies.
Regarding Investors Forum, the seminar only glossed over the situation but a few things bothered me. Firstly, the amount of depreciation on the fittings sounded good, but there was no mention of the cost of maintaining and replacing those fittings as required. ISTM that depreciation and cost of maintenance/replacement would balance out in the long term, so the initial depreciation would only be a short-term gain.
Secondly, they seem to work on maximum gearing with interest-only loans, although he did specifically say not negative gearing. And while he did say that they only invest in properties that return at least 10%, to cover the interest, etc, they presumably can’t guarantee that, and any loss of income would presumably result in large interest bills. Of course he sounded very confident that they’d always get 100% tenancy.
On top of that, many of the places are not ready to live in for a couple of years, so it sounds like they’re relying on capital appreciation during that period and refinancing at the higher value to show a return during that time. I haven’t had time to study this, or do any figures, but he continually referred to a gain of about 10% pa as if it were a given, which seems rather optimistic to me. This combination of 10% gain and 10% return, with only 20% equity, supposedly gives an effective return of 100% pa, but I got a bit lost as to what happened to the interest payments and where the depreciation fit it. As I say, all the figures flew past pretty quickly, with only the good ones (like the 100% pa return) being emphasised to any degree.
Regarding the 50sqm, he did say that generally that’s the smallest they do.
Thanks again for your responses.
Wayne
Thanks for the welcome Henry.
At this stage I’m just starting to learn about investment property, so am struggling even to come up with ideas for myself.
Wayne
I just attended the Daniel Mcewan seminar (free) which others have also discussed in this thread:
https://www.propertyinvesting.com/forum/topic/4496.html?SearchTerms=Daniel,Mcewan
He now charges $1,000 to join the Investors Forum club.
IMHO, it sounds like he’s doing something similar to the Investors Club and sourcing property from developers and onselling them.
He was also very optimistic about future capital growth. It sounds almost like a syndicate or even mezzanine finance in some cases.
Thanks for the reply xxx and the link to the other thread.
$1000 to join now – the price seems to be going down.
The figures he mentioned sounded good, but I’d want to go through them slowly and in detail, checking out all the assumptions and claims, before committing to anything. All the emphasis he kept placing on 100% return per year and no tax to pay sounds too good to be true. I noticed at one point he was very quick to circumvent a question about some of his claims not holding for Australian residents investing in the NZ properties.
And I’d like to see some figures of real returns on investment achieved over a number of years from some of the forum members (and I don’t mean just testimonials on their Website). Still, it does seem like they have a lot of members taking up these investments, so I’d expect to see more about it if they were too much of a dud deal.
Wayne
Seminars schmeninars. All you get are promoters selling dud products at inflated prices. Its now happening online as well. One such is a new 22 townhouse developement in Waterford West qld. It has purchase price at $205k with all sorts of wizbang assumptions on occupancy etc.
Now guess what, thats one of my ‘pet’areas. There are 4 stages of this developement in place and they were completed 4 years ago. Current resales on offer for $130k and $135k. So even from a 2 minute chat with one of my agents it was vitally clear these were being what I call “bunny marketing” as in lets find some stupid bunnies.
Cautious approach and never taking the marketing blurb at face value is the best approach.
So ok there is a $70k margin in a slowing market on these townhouses alone. I know there was 1 sold off the plan at $175k before he hiked the price too. Always do your own research, never be afraid to ask difficult qiestions, phone 3 other real estates in the same area and go for it based on information not supposition.
Good Luck
DD
Don’t sweat the small stuff,and it’s all small stuff!!
Hi and welcome, I think its fine going to these seminars , you might find some useful information, even if its to stay away from them
or to see what the others think and how not to get trapped by the pocket.[or foot] as most bunnies do.
If it looks like a duck and it quacks like a duck…
If it looks too good to be true , yep your right it is too good to be true.EZY does it , take your time look listen and learn.[biggrin]
I did notice in Steve’s book that he got motivated by going to a seminar [singer]
Even if it was by Robert Kiyosaki.
Originally posted by GreatPig:(like the 100% pa return)
Wayne
Hi Wayne,
The 100% return is a bit of a ‘smoke and mirrors’ trick.
I suggest that the salesman was referring to 100% return on your money as follows (I have simplified the numbers consistent with my maths ability)
You purchase a property for $100K and use a deposit of $10K.
Assume the property grows in value by 10% (10% of 100K = 10K) as such they say you have doubled YOUR money – even though the property has only grown by 10%.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by GreatPig:Of course he sounded very confident that they’d always get 100% tenancy.
Unless thats gauranteed i’d take it as farsical as it sounds[blink]
DD,
What was the Waterford West property at 135k? I haven;t seen any 4 year old units in waterford west for that price, and i’ve been checking out that place for a while now? Which one is it?
kay henry
Derek,
As I said, he flew through the figures so fast that it wasn’t really possible to try and work out exactly what he was doing, but I think it was much like you said.
The idea was though that you’d realise that return through refinancing at the higher capital value (meaning you’d borrow another $8K against the $10K increase in value). While that’s only 80%, I think the rest would supposedly be made up by depreciation and overall positive cashflow.
Can’t remember how he allowed for the first couple of years now while the place would still be under construction. There was talk of buying from the developer at a discount, so maybe he was counting that somehow.
Wayne
We went to an Investors Forum seminar in Melbourne some months ago. Ended up taking 5 hours by the time McEwan did his presentation and then fielded questions. The run sheet he uses was described in the other threads.
He got me offside at the start when he bagged all other authors/speakers from Somers to Burley to Kiyosaki to everyone. He didn’t seem to realise he was not in their league as in he was flogging his own developments etc whereas they flog information.
Then he ran thru his offerings, which are either developments he seemed to be involved in or sales he would benefit from. There didn’t seem to be independence from the deals.
He ran thru the figures and I was not satisfied with several points – the LVR’s, being off the plan, Aust-NZ structuring, a $50KNZ “free” furniture package which seemed to boost the depreciation to make it somehow positive after tax. Too many speculative and uncorroborated elements.
And he quickly became annoyed and prickly when I began raising my hand to ask questions and seek evidence etc. In fact, he would ignore me and either keep speaking or answer other questions first. In fact my partner and I began to laugh about how he was ignoring me and those around us joined in.
When we heard there was a $2500 fee to join “the Club” I said forget it.
Just my $0.02. Do your own due diligence.
skippygirl [suave3]
I go to the wealth creator seminars in Sydney. This morning we were treated to threeunder 30 multimillionaires who each spoke then were a panel fielding questions. These are excellent monthly meetings that give you business and other investing info, not just property. The networking sessions are excellent and past seminars are available on DVD and will soon be online by subscription.
No I dont work for them but have seriously benifited by opening up my perspective on certain things. Buy the mag first and then all the contact details for the seminars are in there.
Brizzy starts next Saturday so get along and be inspired.
DD
Don’t sweat the small stuff,and it’s all small stuff!!
And I bet the fact that Henry Kaye is the one who started up Wealth Creator never gets a mention anymore…
Cheers
Mel
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