All Topics / Overseas Deals / Insiders perspective

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  • Profile photo of icarus1icarus1
    Join Date: 2005
    Post Count: 28

    As a new member I dont wish to ruffle any feathers, but i cannot help but see a lemming mentality with NZ real estate. I was headhunted by the largest Real Estate company in NZ as the sales manager for two of their largest offices in Auckland I went on to become a partner in one of the offices. I spent more then 2 years in NZ and know the market well. The stories you are not hearing are the ones where I was telling owners of properties who we were selling for that the property they had paid 260 for was now only worth 180 (2 – 3 years after the purchase) and the embarassing thing was we still did not have a buyer even after they had spent $3000 in marketing the property. Just remember the saying “when a man with money meets a man with experience the man with the money ends up with the experience and the man with the experience ends up with the money. I still regurlarly travel to NZ to see friends most are in the real estate industry so I know all these lovely towns people are talking about and know why most kiwis wont invest in them. Good luck, do your homework well and understand what drives the real estate market in NZ. They might be no good at cricket but they do know how to releive some poor aussies wallet[buz2]

    Profile photo of Don NicolussiDon Nicolussi
    Join Date: 2005
    Post Count: 1,086

    Hi Bill,

    Welcome aboard.
    Do you currently own any property in NZ. If so would you mind disclosing where.
    Good Luck.
    Don and Liz

    Don Nicolussi | Mortgage Broker - Home Loan Warehouse
    Email Me | Phone Me

    "I think of finance as a technology, a way of getting things done." Robert Shiller

    Profile photo of icarus1icarus1
    Join Date: 2005
    Post Count: 28

    No I recently sold 3 properties all in Auckland and am waiting for a price adjustment and then I will buy up big. I tend to be more interested in doing developments and syndications today. I am still positive on the Oz market especially as people are talking doom and gloom If i was to buy out of Auckland my big tip would be whangarei or hamilton. Good luck with the invsting

    Profile photo of MiniMogulMiniMogul
    Join Date: 2002
    Post Count: 1,414

    hi Bill and thanks for posting. Not ruffling feathers so much as loving to debate with you an issue where I know I am in the statistical minority and your view is probably shared as you said by ‘most kiwis’.

    “260 for was now only worth 180”
    spent 3 k marketing it –

    OK, can I bet $100 that it was a ‘brand new apartment’ in Auckland?

    Boy, I am so not into apartments in general, and for the simple reason that history tells us they are a bit like new cars, the value is greatest when complete and then it goes down, sometimes it goes down for ten years (I think Melbourne apartments from 1991 -2001 had an average capital growth of only 2 percent. Sad really. Especially considering they probably weren’t cashflow positive either. Strata fees…oh dear. I hope at least they got to write some of those losses of in tax. Who knows, maybe that’s all they were wanting from their ‘investment’ – a loss. But not me, I want profits, and lots of them!)

    When you say you know the market, do you mean you know the Auckland market or the entire NZ market?

    Did you used to sell mainly to investors, or to owner occupiers?

    I make practically a full time obsession/sport of knowing the NZ market as an INVESTOR. I do this with the help of about 5 other locals and other investors with about a squizillion properties between us all over NZ.

    If you had been working as a RE agent in Auckland selling last year’s formerly brand new and now second hand, unwanted, and crappily built and managed brand new apartment, very likely you would have dealt with NONE of us even though we are all very active and buying all over NZ!

    Whangarei, Hamilton, yep, two quality cities (out of many good spots in nZ) where you can buy negatively geared properties, so…?

    re: “why most kiwis wont invest in them” –
    most Kiwis don’t invest, full stop. Most are lucky if they can buy their own home, which they will spend their life paying off. Let’s say 80-90 percent of property owners. Who own one. The next biggest group is those that have one or two investment properties, say 8-15 percent. I sorta remember these figures from Aus stats but I am sure NZ is similar. Mom and Pops get to mid fifties and they have some equity so they by an investment property near where they live. Manage it themselves, do a bit of maintenance, sort of a bit of a hobby business on the side. They do a reasonable job sometimes, and sort of never get beyond 1 or 2 properties because they are negatively geared and they couldn’t afford to buy any more and make up the shortfall each week.
    Oh and by the way I know there are loads of these mom and pops landlords because we buy off them regularly. The highly recommended (by me, I would never have it any other way!!) concept of having your investments professionally managed in NZ is not yet the norm – though this is changing. And the amount of underlet Mom and Pop-owned properties where they didn’t keep the rent up to market and had the same tenant paying the same amount for a million years is just incredible.
    Then they have one tenant problem which would have been avoided if they had used a professional to correctly screen the tenant, or else they have one maintenance issue too many, which they can’t afford to fix because remember their rent isn’t at market and they haven’t been approaching it as a business, and they realise prices have gone up a bit in value so they sell, to people like us, who fix the places, raise the rent to market, and then wahey the value just went up because the yield did. Yeah, there are quite a lot of those kind of investors around.

    “Why are the vendors selling?”
    “oh, they’re an older couple and they’re just a bit tired of managing the property”.

    Yep, we’ll take ten of those, thanks!

    Then there are the people who own three or more rental properties. Apparently only 0.7 percent of all property investors. That would be me, and my compadres, buying up all the good deals we can find and absolutely creaming it. Hammering it!

    meanwhile the amount of renters in NZ continues to increase. the government predicts 40 percent within 4 years.

    So….yes…”why most kiwis wont invest in them”
    ….true…when I was rather under-confidently starting out I took advice from some of those ‘most kiwis’ and I wish I hadn’t. It cost me dearly, taking advice from non-investors who don’t know (but think they do.) I have made as much money as the Herne Bay darling investors have made, owning a quarter of the value of real estate. yes, I outperformed the market and then some. And I intend to continue. And no, I don’t expect that 98 percent of investors let alone Kiwis will understand, get it, or do the same. They will just carry on agreeing with eachother just as they always have.

    And like yourself I have met many whose paradigm is only to buy in ‘a certain area’ (Auckland being a common favourite) and also many who’s current market position like yourself is ‘OUT’.

    I am very much ‘IN’ the market in NZ, however not currently particularly interested in Whangarei, Hamilton, or Auckland, all of which were more interesting 2 years ago, and may get interesting again.


    Profile photo of Hux001Hux001
    Join Date: 2003
    Post Count: 108

    If this isn’t the best post of the year then I don’t know what is.

    Mini you’re a STAR !

    Well said..

    Profile photo of chickybidchickybid
    Join Date: 2005
    Post Count: 2

    I 100% agree with you. Being an Aussie whose migrated from Oz with family, we have and are still doing what you have said – yep – we’ll have 10 of those too please!! We’re on our way with our 7th property under contract at the moment.

    We love the kiwi market!

    I could almost certainly say that we are not the Auckland investor type people ( we hear those crappily built units for sale on the radio every now and then & they make them sound so good!). We started negative gearing more than 10 years ago – I always hated it and never really understood it. Not any more. We now love our positively geared investing.

    Good luck to all!

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