is demand slowing in NZ ?

Westan

I didn’t say buy top end of the market, I said buy in good areas.
A good investor that does his/her home work can still buy good property in good areas at below market value.

POINT 1
I said buy property that is running neutral or slightly either way, not property that gives you out of pocket expenses for years.I have never and will never buy property that costs me money continuely for years on end and certainly would not give anyone that advice.
POINT 2
I wouln’t buy property that costs me so I would not need to ride it of againt aussie income.
POINT 3
Growth markets , you know what I think is going to be a growth market . However good property in good areas will always be good investments.Sure there are always going to be good growth areas and areas that don’t go up for years but unless you have a crystal ball nobody really knows what is going to happen in the market. This is the reason I will never invest in 1 horse towns or areas I think are in bad economic state. This does not mean you can’t make money in these areas I know to well that you can I personally have seen huge oppertunitys in little country towns however it goes against my investing model and I would prefer not to take these risks. High risk high returns or could also mean high loses.
POINT 4
Good property in good areas has always out run inflation over long periods of time .
POINT 5
The dollar is set to fall , once again were is the crystal ball. When investing over seas this is always a risk but it could also be a good reward.
POINT 6
What if the market doesn’t drop . Look markets are always moving , if you buy good propertys in good areas you will never have to worry about this to much so long as it is a long term investment.For people that are after the quick buck this may not be a good investment but for people that want good investments you can’t go wrong (prodominantly)
POINT 7
8 to 10 years before you break even. What does that mean? Do you have a crstal ball?
POINT 8
Use your money elsewere. Well there is always a better investment . Would I invest in NZ not at the moment but if I was I would only invest in good property in good areas at this time in the cycle, not that I have a crstal ball.

Westan why do you think I am attacking you?
I am just pointing out my style of investing.
You know that I don’t like property that is not what I call a solid investment.
This is just my thoughts and my style of investing.
I have never and will never chase the quick buck, I look for good stong investments and will always do so.
I know a little about how you started out and completely understand why you invest the way you do and it has been very succesful for you.
I’m not saying your or my way are right or wrong just different and with different styles comes different rules to be successful.

Kind regards Rick[drummer]

Monopoly, my favourite game

Hi All
It is about time I jumped into this tread to back Westan up a bit. I think a lot of people have misunderstood what he is saying. I don’t think he is saying that opportunities are no longer there in NZ, only that they are not there like they use to be, and I would have to agree.
I personally have backed off a bit in NZ also of late. I now find a lot more deals in my own back yard at the moment that is giving my great returns. Sure I had to change my strategy a little and I am not doing buy and hold, but quick cash flow deals. Like very minor renovations that add great value and then on sell quick for a $20000/ $25000 profit.
I just love the down turn in the market all the people who were sucked in by the negative gear crap the government was spruking are now up to their necks in debt with no where to go.
There are some great buys around if you look for them and all I have to do is walk out my front door [biggrin].
Kerwyn

Hi Harry
The secret is to buy right at the beginning; you have to be prepared to make heaps of offers. You also have to have a walk away price and if you can’t get the house for what you want then you look for something else.
I simply look at what it costs me to buy the materials and then I just do the job. As I do this for a living now I simply look at the total profit as you do with any business.
I like doing this kind of work so it is fun for me and I get paid. It takes me around 2 weeks to do a make over sometimes 3 weeks.
I don’t do any thing that needs structural work, I stick to cosmetic only.
Kerwyn

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Hi Guys

Capital growth in Tokoroa about 48%.

Great stuff[thumbsupanim]

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One thing I’ve learned through getting deep into property investment is the relationship to the economy as a whole. What do we know, what can we count on? property going in cycles, of between 7 and 10 years (ten if it’s a long cycle.) So, if we had Taumarunui houses on a 16 percent return (higher if they were dumps, but let’s say 16 for a good house nothing to do) in 2003, and nowadays we’ve got 10, 11 if you’re luck for a similar property, then somewhere between now and 2013, we should get back to 16 percent yields, but low interest rates (4.5 percent.) Now interest rates are rising, they are high, so inflation starts, and this means prices go up. Okay, it’s a bit academic because it might be inflationary not capital-gains in the true sense, but let’s just say (logically, and also going off history) that if we have a time where capital gains don’t really happen in ‘real’ terms just because of the market moving, but while interest rates are high, then rents will go up. They will partly go up because of inflation, and partly because there are a few more renters thinking ‘i’ll wait to buy because interest rates are high, or because the media predicts doom and gloom’, or whatever.

I do think the government/reserve bank make statements to try and influence the economy a certain way (please people, can we try and scare you off property investment a little bit? because otherwise I’ll have to hike interest rates again, and I don’t really want to, because I am also trying to cap inflation again.)

Dolf de roos bought his first property when interest rates were 27 percent. A period of rampant inflation. Sounds crazy, but his yields were still better than that – he was buying positive cashflow. So in the end, I don’t mind if interest rates are 7.8 fixed for five years, as long as the deal stacks up for me. So what I am still buying NOW is a property with some or all of these sorts of factors:

town with an upside – new industry coming to town, or other reason for growth – or just a history of growth higher than the national average – or proximity to Auckland (predicted to grow) or proximity to another growing town.

property with an upside. either a great purchase price, room to increase rent (and add value) or add value (and increase rent) or subdivide, onsell, buy pie and sell pieces, and so on.

if it’s a hot or rising market, you can just basically buy anything and have it go up. if it’s a down or sideways or flat or quiet market, you can be the only buyer on the horizon and make crazy offers and get them accepted. I look forward to that time again, but perhaps it won’t happen ever again. Why? 2003 was pre-Steve McKnight AKA best selling book, 42,000 members of his site now (congrats Steve!) – all looking for cashflow positive properties, and NZ having it’s very own sub-forum.

At the beginning here I was yelling from the rooftops to the Aussies to check out NZ for deals, and some of them listened, told their friends, then we have hit books and seminars, and steve is not the only one, wealth creation is being taught everywhere – and I think once people have KNOWLEDGE they will never go back to being in the dark.

They say that 95 percent of the wealth is in 5 percent of the people’s hands, so maybe wealth creation for ‘everybody’ is long overdue. There is a long way to go before it even gets to 94 percent/6 percent let alone ‘100 percent of the wealth of the world is in 100 percent of people’s hands’ – but where I’m going with all of this is that I think NZ is in people’s consciousness as an investor’s paradise. Sure, the US has loads of opportunities, but it’s an enormous enormous place, and your places where Westan is doing stuff are just small spots where the investing is good. Nz is the same…there’s Auckland apartments (bad! oversupply, stay away!) and there are amazing spots, which keep changing of course as prices rise in places they were lower, and then suddenly places that seemed expensive pick up, as they seem a relative bargain. So NZ is small enough for me (with the help of a network obviously) get a handle on the whole country….and zoom around from place to place, as yields go up here, too high for us, but hey, look, this other town is twice the size and growing, so let’s buy there, and hang on, they have just announced a 3 year plan for XYZ in this town, so we can predict that that’s going to go, and so on!

You can see that this ‘technique’ works because we’ve picked things for various reasons (places) and seen it come true, it’s just logic and predicting what people are going to do in the future. It’s like saying, if I discount beers at the bottle store next door to a more expensive bottle store, I predict that more people will buy at my bottle store…I mean, duh.!

Anyway, you can do well if you know your stuff, and though I have nothing against the US and know and love and trust Westan, I personally am making too much dolleros in NZ and have grown my portfolio so much by just following the simple strategy of buy cashflow positive from the word go, increase the rents by tidying up the property to an optimum level (without overcapitalising of course, which I probably did by mistake at the start a couple of times) or undercapitalising (don’t do any or enough work, and your rents will suffer) – so aiming for the optimum – and then as the rents rise so do values, and you either sell or refinance to carry on. I also bought some negatively geared investments (i.e. vacant land) for cheap in places I thought would rise, but the surplus was covered by the extras I was getting through raising my rents on the ones I already owned. So my portfolio remains cashflow positive. Yes, I have sold, but only two properties since I started, and one was to invest in a business venture and the other was because it needed repiling and had a fire so I let it go to a home-buyer who got a fabulous subdividable section and villa which needed to be ‘returned to it’s former glory’. I am not selling out of NZ, I am buying more! And bigger deals too, as I gain more equity, and in bigger towns as I go (though i am still holding the small town properties – like many of my clients will attest, these are some of the AAAAA+++++ performers yield-wise of my portfolio with capital gains on a scale which would put the cities to shame. Why? Well, my ‘bottom of the market properties go up proportionately faster than mid or top market properties, even in the same market’.! now I would need a mathematician to explain this, but it goes a little like this: median price jumps 30k. median is 180k, so now 210k.
We buy 100k properties (rock bottom is say 75k, in worst don’t touch areas. we go for best of the worst, or worst of the best, if you get what I mean.) and so (this is my theory) *everything* goes up 30k. So the cheapies we are buying, just went up 30 percent….but the mid to expensive ones, only went up 10 – 20 (something) percent.

Like I said I’m not a mathematician, but I do think that you can make money in any market by outperforming it – and doing stuff. In Buffalo westan’s mates genesis buy the run down properties and do them up with their team and you buy them done. In NZ, we buy the properties and the new owner does them up (with tradies of course) and gets the profit, so in one market you I suppose are looking for capital gains to happen all by itself, and in the other (NZ) we don’t care if it does nothing, because we can create capital gains all by ourselves, and isn’t that a wonderful outrageous concept, to actually be in control and not be reliant on ‘the environment’?

So yeah, still in, can’t see it slowing, apart from in towns we’re not buying in anyway, (declining ones) or aren’t for the moment (overpriced ones) or oversupplies ones (auckland apartments.)

hope everyone is having fun, and creating wealth, that’s the main thing. i will add that in NZ it’s super-easy to get finance, and I should know as I’m a self-employed full time investor!

cheers!-
mini
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