[Paul34Member@paul34Join Date: 2005Post Count: 21]

December 5, 2005 - 11:24 pm

Hi Guys

Sorry for the delay in getting back into the forum. I see theere were some questions on where I brought in Hawera.

To protect the tenants privacy I won’t be exact other than they are streets that border the town.

Both were do ups. I brought themm straight after Stephens presentation in NZ in June, 2005.

1. 5 minutes walk from town is a massive (and i mean massive) house which was splitinto two (1 and 5 bedroom). I remodelled this to be a 2 and 4 bedroom. Gross yeild 12.4%. do up 12k.

2. The other is a do up in a very good street. 10k spent 11% yeild but revalued and 40k+ equity.

Also brought two in Patea which I see as rising slower but being one of those undiscovered costal areas underpinned by the growing economy in south taranki.

Also after that I brought another in Pahiata (2 flat property) and commercial.

Recently focus on Westport where I have picked up two complet blocks of flats on a 10-12% YEILD respectively.,

[Paul34Member@paul34Join Date: 2005Post Count: 21]

October 23, 2005 - 3:46 am

Hi minimogul

Agreed with your sentiment. It is all intertwined and understanding the macro economic drivers was a question I possed on this site six months ago and got no replies. They are fundamenatl for being at least an informed investor and I believe that mny of the gurus are deliberately underplaying two key areas as they try and get people involved in property:

1. Education: Whih takes time.
2. Secondary income.

The issue with immigration is as you say however it is driven by the productivity of the country. NZ’s productivity is what our issue is and it is that which will curb immigrant and increase migration until we can find a solution.

[Paul34Member@paul34Join Date: 2005Post Count: 21]

October 23, 2005 - 3:39 am

Well Muppet you know my views of Tokoroa given all the other greta areas in NZ. Apts is that area is just damn right silly!

These are interesting times for sure.

[Paul34Member@paul34Join Date: 2005Post Count: 21]

October 21, 2005 - 1:49 am

Steve

You have just been to Auckland, (sorry we did not catch up), and must have seen them. What are your thoughts on them as an investment?

[Paul34Member@paul34Join Date: 2005Post Count: 21]

October 21, 2005 - 1:46 am

None if your vacancy rate is 52 weeks of the year. Seriously I would not touch these without 12-15% gyeild. I lve in freemans bay and walk past these monstroteous every day. Rename as China town, then look at the reduction in overseas students and increased supply and you will see why they advertised in Oz not here.

The Auckland city council should be shot. They are the ugliest buildings and will be slums in no time. Try selling your apt when that happens.

They are investments for those too lazy to look for their own decent stock.

[Paul34Member@paul34Join Date: 2005Post Count: 21]

October 21, 2005 - 12:29 am

Hi Muppet

VERY interesting article. Don’t you love the spin!

Dunn blamed (‘BLAMED’ INSTEAD OF ‘EXPLAINED’) bad publicity about the market, falling rents and an oversupply of apartments for the situation (WELL Mr DUNN THAT JUST ABOUT COVERS EVERY REASON!! THESE ARE INVESTMENTS ONLY FOR OUTER TOWNERS. next headline should be KIWIS USE AUSSIE TRICKY ON AUSSIES!) “The publicity has sparked a degree of panic which we’re not happy about (I’M NOT SURPRISED YOU ARE NOT HAPPY). I have been saying fortunes will be made and lost in the apartment market in the next few years and, unfortunately, I’m right,” he said. “Now is the time to buy if you want a bargain (Sure it is!!) – not in six months’ time.”

Who would you trust:
Real Esate agent or

Last night, BNZ chief economist Tony Alexander said the huge over-supply of apartments had been hanging over the Auckland market for two years. He predicted prices would fall in the next 18 months.

That is a great article to summarise this industry. Cheers Muppet made my day [biggrin]

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October 13, 2005 - 2:35 am

I use the proffessionals who are very good.

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October 8, 2005 - 3:03 am

Sorry that should be Queensland not Queenstown!!

[Paul34Member@paul34Join Date: 2005Post Count: 21]

October 8, 2005 - 2:57 am

Hi Muppet

If the site could take pictures I would show you as i have some shots on film (I went there to see for myself what all the fuss waqs about). Boarded houses, Boarded shopping block and a supply of rentals. Couple this with the insecurity of the employment situation and the attraction is what??

Is it any wonder it is Aussies buying there and not kiwis. Much like the kiwis buying apt blocks in Queenstown me thinks.

When you look at New Zealand and see amazing small towns with good beaches, etc. that have a similar yeild without the hassles Tok’s is hardly that attractive. Especially now that the eyes have been picked out of it.

However please don’t let me stop Aussies buying there!!

BTW: Have brought a couple off Aussies lately (not in Tok’s obviously). The best thing about them is that they are absent landlords and don’t seem to like spending money to do the property up and therefore it gets run down. If they are to invest here they do need to spend money to bring the property up to spec but in towns like Tok where rent is capped it is easy to over capitilise. What a quandry

[Paul34Member@paul34Join Date: 2005Post Count: 21]

October 5, 2005 - 7:52 pm

Not at all, so long as it is cashflow positive. That in essence is the morale of the site and this philosophy on prop. I have also sold property to fund renos which ensure stable tenants and good rents. Finally, and a key part of the puzzle, I do have good cashflow from my business which enables me to handle shortfall and provides the banks with the critera they need. i think this is vital and what people never talk about. it took me ten years to build my business but it now provides the vechile for investment. In my mind there ain’t any easy way around it:-
1) Get an education that is your best guarentee for a decent wage.
2) If you can start a business.
3) Invest

Too many people want to jump in at 3 and that is what a lot of the guys in NZ selling courses promote. It is not what they say but what they don’t which is where is the secondary cash source.

[Paul34Member@paul34Join Date: 2005Post Count: 21]

October 5, 2005 - 5:41 am

Hi Westan

The more I read from you the more i like your style!!

As promised i will up-date everyone on the purchases that I made after attending Steve’s presentation in NZ. Stuck to the goals that i had and picked up 815k worth of property all over 10% at various places around NZ.

All were 10%+ gy and one of the major areas that i came across was indeed Hawera. I’m trying to get a website up about my whole portfolio (now 35 properties) but after scouring the web (and driving the length and breadth of NZ) the only places I believe were left were South Taranki, the odd one on the westcoast of the south Island (if you could find something that was not Maori land) and the odd smaller town (to be disclosed once I finish on this last deal).

Anyway could not agree more about Hawera and to a lesser extent Patea (which has a surprisingly good beach). What both of these places have over other towns like Tokoroa (which for the record I would not touch with a barge) is that they are under supplied for rental. Ring an agent to get a quality property in hawera and then ring one in tokora.

What else has STaranki got (oil industry growth growth growth). Supermarkets do more dd than mcdonalds and just as I brought in waganui when i saw pak and save go then so to this is a sign to anyone that Hawera is a great spot.

[Paul34Member@paul34Join Date: 2005Post Count: 21]

August 2, 2005 - 9:10 am

Hiya

I know where you are coming from but seriously give it a try. Give it a bash with an existing property you have and tell me it works?

What repairs
– Often it is an outside paint
– Carpet etc. i agree and often try and get some time between settlement and confirmation to get this done. My secret there is agree to give them some money to cover the insurance during this period, $50 goes a long way for a couple of weeks access.
– When the tenant is there I ususlaly do cosmetic stuff that is non intrusive. this said i have had a bathroom done with the tenant there and that was a big success. more recently turned a back shed into a sleep out, again while the tenant was there.

You are right in that it depends on the nature of the r&m and some is better suited to a vacant property. Sorry if I did not make this clear. however some is actually better suited to the tenant being there especially if you are looking for long stay as they make it there own (so long as they don’t want black rooms!).

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August 2, 2005 - 7:49 am

Hi Westen

Glad to keep this going. In response to your questions:-

Re the clause- often in towns that are smaller there is only a few property managers, sometimes you may not have the luxury of using a different manager to the selling agent.

This is true. Howver, the PM does not want to take on a lemon and it is all about building trust. If an agent sees you as someone who will invest in the area than they are unlikley to do the dirty. This has been a philosophy that has worked well for me. i tend to try and buy 2-3 in an area which then gives me more power in the relationship. I’m actually doing this right now in an area of NZ that i have not invested in previously!

But how do you get the tenant in before settlement and fix up the property after then???? This sounds like a contradiction.

1) Get a rental appraisal of now and if done up.
2) Get a tenatnt in at the old rent and keep the rent stable on the condition you can do it up. Explain you will do it up around them. Most tenants enjoy this as they get scope on THEIR house. Good tenants treat it lke their house and this is a way to get buy-in from the start. i’m going to build a website soon to show properties where i have done just this and get quotes from tenants who are still in there and won’t move as they treat it like their house. my philosophy is make residential like commercial and you do this by thinking about tenants differently.

It’s actually very difficult to improve properties while a tenant is in them, I’d never do that to a tenant, i’d alway wait till the property was empty.

You are missing an opportunity. i have done both and for major repairs i agree. However you will be surprised at what you can acheive if you involve someone else in the decesion. It is all about finding the right solution (TIP: A dishawasher is a bloody exciting inticment!).

In practice what do you find vendors say when they are presented with that on the contract ?

– I’m yettohave any hassles. The agent goes in and says they have someone lined up so they condition the vendor. Everyone wins.

Personally (as a seller)i wouldn’t be that excited to sign a contract like you are suggesting, i want one that give me certainty, unless there were no other offers i wouldn’t accept a contract with that clause (well most likely not), just in case reletting the property was slow.

Understood but if the real estate agent puts you at ease and it is in the time frame for other conditions to be accepted, like builders, LIM etc. then the impact is nothing.

[Paul34Member@paul34Join Date: 2005Post Count: 21]

August 2, 2005 - 7:03 am

Hi

Re: The clause.

A good point was raised re: The agreement. The key to this is however to have your management team seperate from your real-estate team. This way the propertyy manager will only put someone in that they like. This ddress the concern raised.

You are right about knowing vacancy rates in small towns. However, there is HUGE advantage to small towns in that a lot of the places are run down and operated by absent landlords. Let’s face it to own a property in one of those towns you are unlikely to live there. A lot of people buy and hope to make money rather than doing a place up, which is more forte.

This presents the ethical investor with a huge advantage. If you can buy a property and do it up, certainly my preffered option then you will attaract a good tenant and have the place filled super quick. Why? Because someone will move out of their dirt bowl and into a nice place. If they are on welfare, as many are, then welfare will cover the upped rent. The property managers will in turn encorage it getting their tenants to move into better properties to keep them happy. Yes, you can do this up with the tenant in there. in many cases they will help out!

Small towns have different rules and it is understanding these rules that are crucial more so that the stats.

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July 28, 2005 - 9:03 am

To Sinead

Sorry for the delay in getting back. I had some down time so went back on the site to see you asked me a question directly.

Have I sold

Absoultely.

As I mentioned at Steve’s seminar i discovered most of his rules by accident and then had them confirmed by his book and never looked back.

I have sold a few properties but like you originally brought to hold for ever. Why I sold was always because something hapened or I found out something. It may even been an ineffictive body corp, bad area, or getting more knowledge and wanting to move out of anything on a cross lease.

The difference was i was able to reinvest that money to create a multiplier. This happened somewhat by chance. I would sell a flat in a city and then reinvest in a town.

This meant for example I could turn 150k say at 5% into 150% at 10% by having two properties at say 75k both of which rented at 10%. Why did I have a 5% yeild you ask. Will in reality it was brought at 10% but with the market moves, and rent doesn’t it drops to 5%.

I was lucky as well as i was able to do this because of tye ripple effect. However when the ripple becomes a swamp then it is harder and this is what i’m looking forward to in Steve’s newsletter as to where to from here.

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July 28, 2005 - 8:51 am

Hi Steve

I have read the other posts and of those i would support are the following:

will appreciate your thoughts and views on the recently updated book “The Dollar Crisis” by R. Duncan. Also your thoughts on the The Economist ‘s recent themes on the ‘worldwide property market bubble’.

To tell you the truth I am interested in seeing what you think of the next two decades, especially with so much going on (baby boomers retiring, pension situation, etc)… The opinion of even experts varies amazingly, from total depression to not much happening at all. It would be nice to hear from an investor view point, rather than from the screaming headlines of newspapers (and even the cover of books too!).

Also perhaps some strategies of what investors can do to reduce their risk (perhaps a mixture of non property and property related).

So to put it down into two ‘tags’: trends and risk control

I’m interesrted in the long-term macro economics especially given the NZ trade defeict.

On a more pragmatic note:

1. Why America: You mentioned you were doing this in your seminar. i would be interested in why. Is it because NZ is dryoing up.

2. Is NZ drying up: From my perspective commercial is great at the momment but I see only one area of NZ that is left for good yeilds and even then you will be lucky as it will last for a few months or so.

BTW: Since the seminar confirmed on two, one during the seminar both meeting the 11sec rule! Have also driven to and through all the areas of NZ I had never been to get a feel for it. So I’m pleased to stay stickn to the goals, sad to say that even small town NZ has done a dash (yes, there are always the odd bargin but when rural NZ is at 5% you got to ask questions).

Which leads me to my final question: Do you think Oz and US are better now just due to sheer size which allows for more undiscovered or untapped markets. With the Aussies coming over here and NZ buying it is pretty easy to see how it can get swamped fairly easy. The ripple effect in NZ only needs to go three or four towns and you hit another city.

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July 13, 2005 - 8:06 am

Hi

It is simple money in money out. I saved for my first house by renting because it made economic sense. Low rent in a <edited> house is cheaper than all the added costs of owning a property. Rememebr the idea of sacrfice for future gain?

You could always buy and rent out all the roooms, except 1, as a means of killing two birds with one stone.

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July 13, 2005 - 7:57 am

Hi Hong

My formula for selling is as follows:
a) Have I added as much as I can to the property
b) Has the yeild dropped such that my investment (given the equity in the property) is now in a better place.
c) Can I sell on an insane low yeild.

If the answers to these are all yes than sell. Rememebr you brought to hold but you could never have thought that the market would rise as it did or that someone would pay a silly price to buy your place.[biggrin]

[Paul34Member@paul34Join Date: 2005Post Count: 21]

July 13, 2005 - 7:54 am

Hi

My name is Paul and I attended last week. As I mentioned at the seminar I have 23, or 24 now holding a good % of which are in small towns. I can’t say I have any idea on vacancy rates in general BUT:
a) Know yopur apprehension. I had it as well and initially got over this with a clause to say that the property manager had to find a tenant before I went inconditional.
b) Have not experienced any issues with vacancy in these properties indeed much less than cities. Why. It is actually quite simple and is to do with the princiople of scarcity. These areas see VERY LITTLE development so the stock number is low. This means there as actually often more of a shortage than an oversupply. This has been my experience and has resulted in good returns with LONG stay tenants in these areas. People are less transient if they are in a rural town.

I live in Auck BTW. Hope that helps (1 question down 2 to go to do all the homework )