It is important to understand what the micro cycles are doing and run with them.
At the moment with daylight savings ending and the weather being bad there is huge opportunity to get agents working for you as they don’t have any daylight hours to show houses and no one wants to buy when the weather is bad. On top of this we have interest rates ridiculously high and the government out of bed over investors.

This all means $$$$$ to be made for the educated investor. We need to be buying now while no one else is.
We need to be looking for listings that are going stale. If they didn’t sell in February and March they sure ain’t gonna sell now, so a low offer just might get accepted. People who are concerned that they have to wait for summer to market their property may be open to a sale now and long term settlement.

So play the game like a professional. Now is huntin season for investors. get out there and bag a bargain!!

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As the oft quoted cliche goes, “Business would be easy if it wasn’t for the customers”.
My recent experience with a course attendee highlighted this when I received a multi page complaint letter regarding one of my courses.

The fact that the person hadn’t paid but had done the whole course and then refused to pay highlighted their lack of integrity. But the fact that they had often raised negative issues during the course that all the other course attendees disagreed with and would comment on never caused this person to think that maybe they were the problem.

This is probably the worst case of mindset I have ever encountered so that is why it has stuck in my mind. How can someone be so obsessed with a negative that they ignore all the positives in front of them?
If you were dying of thirst in the desert and came to an oasis would you refuse to drink because you couldn’t find a clean glass??

So how do we avoid this??
Well we don’t avoid it, we have to learn to confront it. Now that’s easy for me to say because I am a glass half full kind of guy. But my lovely wife is a glass permanently bone dry kind of girl so I can tell you that what she does works.

She constantly tells herself that she is going to naturally look for the problems, naturally see the negatives, automatically find a hundred reasons to not believe something. THEREFORE she chooses to look for solutions, chooses to look for positives, chooses to pursue the good KNOWING that she won’t naturally do that.

Now the things that used to terrify her don’t bother her at all. The issues that used to debilitate her she manages and manages with relative ease. Is it harder for her than I? Sure. Is she getting amazing results that she never dreamed possible? Sure, and that’s the key thing. Are you growing into someone more positive, loving and successful? or are you like my attendee, burying yourself under a mountain of negativity??

It’s your life, I say live it to the full. Live today like it was the last day of your life. Find some random acts of kindness to bestow on another, hug a stranger, oh and go and buy another house

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There is no secret. The recent obsession by people about “The Secret” saddens me greatly as I watch people go on about how fantastic it is and how much it changes their lives. See them 6 months later and they are back to “normal”.
Sadder still to see the recent trailer for the secret roadshow with a reverend going on about how God as you find Him will pour unrestricted wealth into your hands etc. Sadly a load of new age drivel.
Reality is that Jesus Christ promises to be with us through our ups and downs. He is not Santa on a stick with a never ending bag of goodies.
However God has given us abilities and gifts that if we apply them in accordance with universal principles, will help us achieve great results.
One of those abilities is called “hard work” and another one is called “perseverance”.
By applying those to our property investing we can and will succeed. So tonights video is about researching an area. It is one of my secrets, one few decide to follow, in spite of my repeated evidence of it’s value and success in my own life and those of some of my students.
I’m not going to go into it in detail here as you can watch the video and read my step by step approach HERE

Enjoy!!

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OK so I promise I won’t go on about it for a while, but I wanted to finish off our discussions on negative gearing and holding property. And you need to get this. The next 6 months will determine your financial future for the next ten years so I want to keep getting into your heads, for your sakes!!

As I have been saying ad nauseum you can afford to hold property if you learn to think. And you need to be holding lots of property so you can sell some off in the next boom.

Ben sent me a spreadsheet calculator that enables one to establish what the actual costs are of holding a property with all expenses factored in.
So on my Papatoetoe example the numbers are far better than my initial calculations indicated. I could have paid full retail for the property and in 5 years I am still laughing.

So can I encourgae you one last time to do whatever it takes to be able to own at least 6 to 10 properties over the next 4 years.

This is one of those times in history where you will forever kick yourself if you don’t take some action now.
This IS one of those times when the property market is transmitting the future for the next 5 to 10 years and inviting us to take advantage of it.
Please don’t join the crowd that says ” Oooooh interest rates are too high, I’ll wait for the slump and the return of cashflow”. IT IS NOT GOING TO HAPPEN!!

Take a deep breath and come on in, the water is fine.

PS: The demand for a repeat of our trading workshop has been so great that we are exploring dates and venues to run the workshop in Wellington and Christchurch, (we will be emailing all previous attendees with an opportunity to join us again at reduced rates ): AND we will be running Behind Closed Doors in Auckland, Wellington and Christchurch. Dates will be available soon!!

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I had 2 conversations today that reminded me of how easily we can be put off things through bad advice. I don’t know whether it is true or just made for good cartoons but the fact that elephants are afraid of mice is a good analogy.
I find often investors hve made major decisions based on one erroneous piece of information. 2 examples that come to mind immediately are someone telling me last night that they fixed a mortgage for 2 years at 9.5% because someone told them that was the best they could get. Or the lovely lady I met today who sold off her portfolio because she read Ollly Newlands book about the impending collapse of property in 2003 and is now having to start again!!

If some small piece of information comes your way and you find yourself reacting to it you need to do the following:
1. Analyse the information. Is the source reliable? Is the information verifiable? Is the information biased?
2. Evaluate the information. Is this piece of information relevant to my reaction? Do I need to factor it into my decision making.
3. Verify the information. If you are going to change a decision based on this info you need to know that it is true.
4. Either adopt or reject the information.

If you are easily changed by unreliable information you need more robust goals and more self confidence. It should NOT be simple to get you to change tack without you going through “due diligence” on the information.

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Had to post the video in 2 parts as they are in different resolution
Anyway today I wanted to finish off my explanation regarding gearing.
You’ll see from the video that the actual holding costs of a property negatively geared by $12400 a year is actually only $1500 a year and most of us could fund that by robbing small children at the sweet shop.

It was a poignant reminder to me today when i met some people who were in trouble through NOT having kept any property that it is just so critical to hold as much as you can. It’s like banking your future into real estate.

Property can only pay you while you own it. Find a way to own more, understand the REAL holding costs.
An online approved NZ credit card can give yo uthe ability to own a significantly neg geared rental in Auckland. Once the card is maxed out at say 5K you will have made somewhere between 50 and 120K in capital growth. Tell me that’s a bad deal!!

PS if you are having trouble viewing the video without stopping click the pause button after it starts and wait a couple of minutes for teh video to “buffer” then start play again.
I will try another video server if y’all keep finding it not working well.

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Click here to listen to the audio only
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Well I admit I was a little naughty last night. I deliberately made a mistake in my calcs just to see if anybody would notice. Given that although as investors we all need to KNOW about numbers I should have been surprised that no one noticed, but it appeared no one did.
Anyway that aside I wanted to go into a bit more detail on the numbers side of things again today as I want to somehow get you to think your way out of this “must have cashflow” mindset.

My camera is misbehaving so it is text only tonight I am sorry. Should be fixed tomorrow!!

One way I may be able to help you with thinking differently is to try to show you just how I think about the numbers on a deal as it relates to yesterday’s blog about gearing.

So here we go with today’s purchase: You decide what you would have done as I tell you the story.
Agent rings me with a property in Papatoetoe. It’s in a great part of Papatoetoe, brick and tile, agent offers me the property prior to going to market as vendor is an investor and keen to exit cleanly.

Numbers are
1. Rented for $290 a week
2. RV will be close to 400K
3. Spoke to 2 agents. 1 said could resell for 400K, other said 360 to 380K
4. Agent advised that low to mid 3’s should buy it

So based on only this info what would your thought processes be?? Let me guess

First “Only $290 a week rent”!! “You’d have to buy it for about 160K to have it paying for itself, forget it”

Am I close?? Now come on be honest with me, this is what most of you would think.

What did I think??
First Papatoetoe has average growth of over 10%, WAY over, so the growth in the property is bullet proof, (power of knowing an area)

Second based on my 2 agents numbers, (power of having a trusted agent), property is worth at least 360K on the open market so I would have to buy it at no more than 310K as a trade, (sticking to my rules of 50K minimum margin).

Third because it is brick and in a high growth area, (power of clear buying rules), and the RV is going to be more or less 400K, (power of having a valuer on your team), I could buy it for up to 340,000, (minimum 15% discount), and keep it long term as a rental.

Now notice that my thought processes are complete and I haven’t considered yield. Why?? Well because I don’t care. I’m serious it doesn’t matter. So what did I do??

I made a cash offer at 310K, they countered back at 325K, bought it unconditionally at 320K.

Now why don’t I care about yield?? Because I understand what I tried to explain to you yesterday.

Lets look at the deal

Purchase Price 320,000 x 8% interest only = $25600 per annum
Rates and Insurance = $2500 per annum
maintenance, vacancy etc. etc. = $4000 per annum

Total holding costs $32100 per annum

Income Rent $15080 per annum
Depreciation/chattel dep $7000 per annum
capital growth $40,000 per annum (average)

Total income $62080

So I am $29980 better off in the first year owning this property than not.
That does NOT include the EIGHTY THOUSAND DOLLARS I MADE TODAY IN EQUITY JUST BY BUYING THE PROPERTY.

Add that in and I will be $109980 better off in 12 months than I am today by owning this property.
What was the yield?? Who cares!! It is 4.7% GROSS but I can live with the $109,000 net worth increase on 4.7% yield.

Do you get this??
How many other ways can I say “STOP WORRYING ABOUT YIELD”!!