Archive for September, 2010
Time for a tune up
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Who'd a thunk it?
I was talking to a friend of mine yesterday who is a long time investor and involved in the property industry full time. He was expressing his frustration that investors and agents for that matter needed a serious check up form the neck up in how they thought about the current market. I was very flattered that he said he thought people should be doing what I had been saying for the last year 
.
His specific comments were most insightful so I thought I’d share them with you.
1. Typically investors who like renos for example go into cheap areas and do cheap renos then flick on to first home buyers. My friends observation was that there were no first home buyers currently in those bottom feeder areas so investors were renoing and trying to sell only to other investor. Where as smart investors were going into the best parts of average areas, spending maybe 30K instead of 15K on a reno and then selling to first home buyers and making a relatively easy 40 to 50K profit.
2. Similarly traditional traders were trying to buy strictly on price and wanting the agent to onsell it for them tomorrow for a profit. Where as the smart traders were buying only cash positive and understanding they should hold for 12 to 24 months and then onsell. And if they had to hold a bit longer, who cares when it is cash positive pre tax.
3. Then agents on the other hand were still expecting to be able to tick every vendors boxes and still sell unrealistic listings and were not being real with clients about this current market and pretending that top dollar is still viable.
So are we smart or sticking to the old rules??
July/August were the worst sales for property in decades, mortgagee sales are up to 5% of all sales and unemployment is on the rise.
I think we need to be smart don’t you??
Because in the midst of this adversity is incredible opportunity
Stay Inspired and Stay Safe ~ Dean Letfus
Looks like a duck, sounds like a duck…
Posted by: | CommentsOh Dear, there are so many hilarious one liners in today Herald I want to post the whole article but you can read it there at LINK
My favourite one though is probably:
“These sales levels are almost identical to what REINZ reported during 2008 when the market was at its worst in the midst of the Global Financial Crisis,” said REINZ spokesman Bryan Thomson.
How can so many people look at the evidence and indicators and reach a different conclusion. We ARE IN THE MIDDLE of a Global Financial Crisis. That’s why the figures are what they are, because the elephant is still in the room.
Anyway the good news is this will definitely keep Bollard away from the OCR for some time so interest rates should stay down for some time.
Also because our market and economy is so tiny the earthquake in Christchurch will actually have a significant impact as well due to reducing housing sales and the bleating of Insurance Companies in government ears.
So what do we do as investors??
1. Keep hunting for cash flow bargains, especially those we can control with no money down.
2. Keep an eye on interest rstaes but use the low interest rate environment to create surplus cash flow and write down debt.
3. (If it’s your bag), hedge against the inevitable fall in the NZ dollar by having some exposure to US currency.
4. Don’t sell anything unless you really, really have to.
More on the last point tomorrow. There is some silly nonsense being talked about in the hallowed halls. And as we all know silly nonsense + the Beehive usually = new laws.
Stay Inspired and Stay Safe ~ Dean Letfus
Go West Young Man
Posted by: | CommentsIt was interesting to see today that Fletchers are basically reporting to shareholders that they are reducing their exposure to NZ’s market and looking to Australia and Asia for “better earnings reliability”.
Their outlook for non residential investment in New Zealand is “particularly weak”.
The market must have liked what they heard because their shares rose 8 cents and it is good to see our biggest player in property at least be frank about what they think is happening here.
Having been in Asia so much recently I can understand the flight to those markets. When you have huge numbers of people in small land masses the ongoing demand for housing is simply greater.
In Hong Kong and Singapore in the last 2 weeks the government has instituted law changes to stop people investing and take some heat out of their markets.
I have for years said that what New Zealand really needed is to double or treble its population and economically that is true however there would be a price to pay in terms of societal impact.
So the good news is that with big players looking offshore this will put even more pressure on markets here when they eventually turn.
I am increasingly excited about the next cycle as the sentiment over the last 18 months has really driven lots of nails into lots of coffins prematurely and we are setting ourselves up for a chronic shortage of property.
The rental cycle is already behaving as I predicted with increases across the board and vacancies non existent for landlords in main centres. However we are a long way away I believe from a genuine recovery and subsequent boom so there is still plenty of time to shop for the best opportunities and benefit from the next phase.
So the only real question is whether we do something or not?
You can control property very easily in NZ right now without any of your own money so there is literally no excuse.
If you’ve lost money in the last 2 years through a bad deal or through adverse events now is an opportunity to get it back.
But it will require some action and the only person who can make that happen is:
“Nobody nobody but YOU!!”
Stay Inspired and Stay Safe ~ Dean Letfus
Tragedy and triumph
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Whilst I am a long way away from the USA it is impossible to get through September without thinking about the World Trade Centre attacks and sharing in the sadness of those affected.
Death is a sad thing in any context and to have had the death of friends, workmates and family broadcast around the world live is somehow horribly invasive.
However the equally sad fact is that there is tragedy around the world daily which few of us are ever confronted with because it isn’t news.
The final death toll from 9/11 was 2752 people which is shocking.
But did you know that 24109 (on average) children under 5 die of hunger and disease EVERY DAY. And every one of them is preventable.
This number is too big and too distant to really pull at our heart strings though so it just happens.
It takes something more dramatic like 9/11 for us to consider how precious life is.
So I hope as we consider the privilege of life and mourn with those whose worlds were forever changed 9 years ago that we might also consider what we could do to reduce preventable tragedy in our own cities and nations.
And be thankful that you have breath in your lungs and the sun overhead today, it really is a privilege.
Stay Inspired and Stay Safe ~ Dean Letfus
Doing whatever it takes
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You’ve all heard me say we have to do whatever it takes many times and I know many of you do, but I think as a culture we don;t really embrace this process as true or valuable.
When I spoke in Taiwan recently I was talking to my translator at the end of the event to discover he is a PHD in finance and a professor at Taipei university. And he was translating at an event to learn more about being successful.
In fact the room was full of highly qualified professionals who were not above doing whatever it took to get more educated to get better results.
And in their culture it was almost shameful for them to be seen with “lesser” educated people in this environment.
It really struck me just how much more committed to their own success they were than many in NZ and OZ.
When I asked them what the government would do for them in their old age they immediately shouted “NOTHING!”, so I guess that helps motivate but I must admit I was really challenged to see so many people move outside of their comfort zone and their own cultural norms to learn how to improve their financial position.
It was an honour to teach them and I felt like I learned more from their attending than I taught them in content.
So how serious about your own life and goals are YOU??
Really??
So what are you doing about that today my friend, or is just a nice “idea” with no actions attached
Stay Inspired and Stay Safe ~ Dean Letfus
Any offense entirely unintentional :-)
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Two Aussies, Ian and Craig are walking down a street in Queenstown.
Ian happens to look in one of the shop windows and sees a sign that catches his eye. The sign said:
‘Suits $10.00 each, Shirts $4.00 each, Trousers $5.00 per pair’
Ian says to his pal, ‘Craig, look! We could buy a whole lot of those, and whin we get beck to Stralia, we could make a fortune’. ‘Now whin we go unto the shop, you be quiet, okay? Jist lit me do all the talking cause uf they hear our eccint, they might not be nice to us’. ‘I’ll speak in my bist Kiwi eccint.’
‘No worries, smiled Craig, I’ll keep my mouth shut.’
They go in and Ian says, ‘I’ll take fufty suits et $10.00 each, 100 shirts et $4.00 each, and fufty peers of trousers et $5.00 each. I’ll beck up my truck end…’
The owner of the shop interrupts, ‘You’re from Australia, aren’t you?’
‘Will… Yis,’ says a surprised Ian. ‘How the hill dud you know thet?’
The owner says,
.
.
.
.
.
.
‘This is a dry cleaners’.
Stay Inspired and Stay Safe ~ Dean Letfus
Twas brillig and the slithy toves
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Beware the Jabberwock my son…..
Well boring is not one word you would use to describe things right now is it?
Between Hubbard and SCF, the Christchurch earthquake, the fatal plane crash and the bad weather the media must be in heaven.
It is sad to see so much tragedy at all let alone all at once, but I hope it sobers us all up to think about what is important.
I loved this comment I saw on Facebook showing our kiwi attempt to look on the bright side:t
The house is a bit buggered but my car now has a brand new chimney
PROPERTY UPDATE BY DEAN LETFUS
So let’s get right to the point. Things are ^$*#&$#* hard out there. I see it everyday, not just in NZ but around the world.
We all want it to end and things to get back to “normal” but it ain’t gonna happen any time soon.
So… we have to decide whether we allow the circumstances to dictate our future or not.
I vote NOT!!
In the midst of all the drama and gloom there is always opportunity and we need to not miss it.
There is good buying all round NZ right now and some incredible opportunities locally and off shore to create cashflow. But are you willing to look, or learn how to take advantage of them??
As most of you know I have used lease options for several years now and trained investors all round NZ to do the same.
I frequently get asked to run another round of training in this area but time has always prevented me.
It still prevents me but recently a good friend of mine who is doing lease options almost daily rung me to ask if I thought people would be keen to learn what he is doing.
I said quietly
Lease options Rock
because he is doing lease options in today’s market in a very difficult town with shockingly low yields and making a killing.
This really is the bomb strategy right now.
Just to give you one example of one of my long running LO’s.
Property purchase price $340,000. Brand new 4 bedroom brick and tile home in Auckland
IOC from tenant buyer $40,000 so $300,000 mortgage
Weekly lease payments $685 a week.
Hands up who would like a 10% plus NET yield on a brand new Auckland property?
Well you need to learn how to execute this strategy from an expert. I simply don’t have time but I 100% recommend spending a weekend with another LO expert to learn how you can do this right now in today’s market.
NOTE: I am not speaking at this event nor receiving any remuneration for recommending it, I simply think this is the best training in NZ right now if you want to get this really right.
I trust Jay and he shares my commitment to integrity and quality.
You can turn any property into a $80 to $200 a week cashflow positive money machine, legally, safely and repeatedly!
Jump on over to Jay’s website, no not now, read this newsletter first
BOOK NOW AT http://www.cashisking.co.nz/
Next month I’ll share some of the off shore options for cashflow but in NZ, lease options has really matured and is a “right place/right time” strategy.
Even if you have had some training on this before the rules have changed big time so you need to get up to speed legally and strategically. So go and learn from the man doing these deals RIGHT NOW!
BOOK NOW AT http://www.cashisking.co.nz/
FINANCE UPDATE BY KRIS PEDERSEN
Lending criteria is relaxing…just very slowly
Another couple of lenders relaxed criteria further last week unfortunately however the changes made were not applicable to investment properties. ASB will now (officially as they have actually been doing it for a while anyway)lend up to 90% on owner occupied properties and Sovereign will lend up to 85% for new customers and 90% for existing for owner occupied properties.
What this does mean for those of you who are hitting equity walls is that the deposit criteria is continuing to relax which has been a trend across the major lenders since late last year.
The more criteria relaxes, the more competition you will have to pick up some of the great deals on offer at the moment.
With South Canterbury Finance falling over around $1.6b is due to be paid out in the next few weeks because of the Retail Deposit Guarantee. The majority of this is likely to end up being deposited into the banks with these funds then potentially then being passed on as additional funds able to be borrowed.
Interest Rates
The Reserve Bank won’t increase the OCR this Thursday so at this stage I’d recommend that if you are floating, stay floating for the meantime. Midterm rates continue to decrease and will probably continue to do so with some of the negative global data that is around at the moment.
The whole interest rate curve is flattening at the moment so it is definitely worth waiting to see if some of the longer term rates get under 7% again.
And remember…….
when it comes to finance I will always keep you up with the latest opportunities and news.
MINDSET SCIENCE BY DEAN LETFUS
I must admit this section of my newsletter is my favourite. I can teach a monkey to invest in property, (and have), but if I can affect your thinking even a little bit then you can really change and grow.
I have taught a lot this year in Asia on forgiveness and yesterday had someone in Taiwan come up to me to thank me for helping them. They were attending an event I was involved with in Thailand and the night before I spoke this friend had a dream about an event between he and his partner that he had been unable to forgive her for.
He thought it was so weird to have the dream as the event was a long time ago. He said he couldn’t believe it when I stood up the next day and challenged him that he had to forgive others if he wanted to be emotionally well. He went on to say his relationship had changed completely since he learned how to forgive that day and let go of the bitterness inside of him.
That’s the sort of results that makes my heart sing. His life will forever be fuller, richer and more passionate.
And isn’t that we all want, really? Yet our default position so many times is to actually become smaller through negativity, pettiness and judgment.
So to affect internal change we have to imbibe the 4 “A”s
Firstly Acknowledge our need of change:
Secondly Accept that it won’t necessarily be easy and:
Thirdly Adjust our stubborn head and heart so that we can let new information in.
And finally set up someone to be Accountable to.
Doesn’t sound like too much fun yet does it?
Well it isn’t fun, but it is THE pathway to a fuller life.
I hope you’ll join me and many others on the journey called growth.
It has often been said there are only 2 choices for each of us.
We are either busy growin or busy dyin
