Archive for May, 2011
Permanent potential
Posted by: | CommentsI was discussing property investment in the USA with a property manager friend and he commented that New Zealanders, in his experience in hos business, suffered a lot from “permanent potential” syndrome. His company had lots of inquiries from multiple countries and he had many, many happy investors owning property in Phoenix from all over the world. However kiwi’s tended to inquire, “ooh and aah” over the numbers and then eventually do,,,,,,,
absolutely nothing!!
Potential: “Latent qualities or abilities that may be developed and lead to future success or usefulness.”
Permanent potential means never turning this latent opportunity into action or results. It is a great phrase and accurately describes many of us doesn’t it?
We see an opportunity and a couple of years later nothing has changed. We meet someone who is getting a great result in a particular area, they offer to share it with you and you just cannot get to a point of doing anything.
It may be a part of our culture but isn’t it time we break out of it and well………
Get Going and Stay safe ~ Dean Letfus
PS: I have new lists today of investments in 3 top US cities. If you are ready to take some action email me and I will send them to you. But only email if you are serious about getting your cash flow going with heavily discounted quality property returning 10 to 20% net returns 
Journalism reaching new weirdness??
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I can’t stop laughing over this one in the Herald. You may not get it like I did but this journalist did a piece the other day saying that rents were 43% over valued in New Zealand. This was factually incorrect and she had a back lash from people about how evil landlords were obviously.
So today she corrected herself and wrote a lengthy piece referencing all sorts of unrelated articles and declaring that she doesn’t have an opinion, doesn’t know what the answer is and maybe there is no such thing as average rents.
I have just never seen such a “keep typing and saying nothing” approach to a property article before.
It is truly the weirdest piece I have seen in the Herald ever.
Read it for yourself, what do you think?? LINK
Next Few Blogs will catch you up with US stuff as I am there from tomorrow. For some great reading on why you should be buying there check out this: LINK
Get Going and Stay Safe ~ Dean Letfus
Double edged sword
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Low interest rates and some easing of lending is a great thing for investors, no two ways about that. But it is interesting that it immediately brings out……, well “greed” isn’t quite the right word, snob value isn’t quite right either….., let me try to explain.
Todays news about houses in certain parts of Auckland selling for nearly double valuation is quite sobering or exciting depending on whether you are buying or selling. People who think like investors would taking advantage of the low interest rates to create cashflow or buy slightly better property that is still cash neutral and that is smart investing.
But of course what also happens is that the larger buyer pool look at what their weekly payments will be and as is obviously happening in the CBD, adjust their buy price UPWARDS focusing solely on the fact that they can afford the payments.
I don’t have and deep conclusion to reach from this observation other than the fact that no democratic government will ever find a way to keep property prices down to control inflation. Human nature will always raise a home buyers emotional quotient. I loved this quote in the Herald:
“Another couple told of similar problems in Herne Bay, where they struggled for 18 months to buy and eventually doubled their price range and paid about $1.9 million for a nice but basic family home.”
Can’t find anything for a mil, well shucks let’s pay 2 then .
Get Going and Stay Safe ~ Dean
Culture-ism
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It is fascinating to observe how different cultures respond to different situations. As I spend time in Asia, the USA and New Zealand I see very different cultural responses to the current global financial situation. As I alluded to in earlier blogs New Zealanders seem to be becoming increasingly depressed and angry, lashing out in frustration and creating a field day for litigators.
This is most uncharacteristic behaviour but increasing daily.
In Asia they see the current situation as an opportunity to make money and diversify into other areas. They simply work harder, get better educated and take better action. A great example of this was when i sent out my example of a 22% return property in the USA I sold 3 to Asian investors within an hour of the email going and had around 200 enquiries from kiwis, not one of whom has yet taken any action .
And in America they simply don’t have a clue that anything is really going on and they continue business as usual. They are quite happy generally because everything is Obamas fault but they still have their 15 credit cards and 60 inch televisions.
Same situation, equally relevant in each country and 3 totally different responses.
So what this tells me is that our environment and culture have an enormous impact on how we respond to adversity and opportunity.
And what that tells me is that we have to learn how to break out of our cultural responses to get a different result in our lives.
Step 1: Understand that a lot of what you think is not what you really think, it is what you have been trained into thinking. And the power to change starts with thinking about what you think about . More on this another day!
Get going and Stay Safe ~ Dean Letfus
PS: I have private lists of some awesome properties in the USA. If you are keen on investing but cannot join us next week I am happy to inspect and send photos etc. for you and get your foot on anything you like. Email me if you’d like any help before Friday!!
De- gentrification?
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My house is bigger and more ostentatious than your house
One strategy to maximise capital growth from property is to look for areas entering gentrification and get in early. The most quoted example in Auckland is Ponsonby, followed by Point Chev, both areas that were “dives” and are now Blue Chip value wise.
So it was fascinating to read about the apparent degentrification, value wise anyway, of Paratai Drive in Auckland.
Apparently renamed Parasite drive by some it appears that the Hotchin mansion debacle, leaky and abandoned buildings plus numerous fights between neighbours has taken the gloss off what was once NZ’s richest Street.
Given the location and views it is hard to imagine the place ever going “really bad” but maybe it also shows just how hard the global recession is hitting the so called Super Rich?? As you can see from the pic it will never win any “beautiful street” awards
Complete article at THE HERALD
Get going and Stay Safe ~ Dean Letfus
Stranger than fiction
Posted by: | CommentsIn case you missed it there was a case this week in New Zealand where a house was “foreclosed” on or repossessed, by chainsawing through the foundations and putting it on the back of a truck!!
In trying to find out more detail I came across a forum that was punding away at the bank for its heartlessness. One apt post said”
“Come on guys, they would have had months of warning. Westpac didn’t wake up yesterday and think; “Who can we **** off today? I know let’s go take that guys house, oh and let’s actually “take” it!”
The whole thing smacks of “more going on than we know”, but it is a timely reminder of the folly of not talking to your bank.
I have had incredible pressure from banks over the last 2 and a bit years and in some cases stopped paying mortgages for some time but always kept the banks fully informed. As a result I am still able to find my houses on their own sections.
Many people think the worst is behind us and that may be true, however there are still lots of people under the gun financially and the temptation is to hide and do nothing. This is almost certainly what happened to the family above and whilst the outcome is more dramatic than normal it was hardly unfair or the banks “fault”.
My personal experience of asking for my private parts back form every bank in the country has been that even the ones who are unreasonable respect the fact you came and saw them and definitely don;t rush you into trouble as long as you keep the channels open. And in fact most institutions will work very hard to assist you.
Often there is no good solution and we have to come to terms with that. I am going to lose my home, my rentals or go bankrupt or whatever. We will want to blame the bank, the cat, our boss, the tv evangelist and the government but generally it is going to be better for us to accept responsibility for getting through it if not causing it.
And whatever you do, talk to your lenders BEFORE you miss a payment if possible. If too late for that get off the computer and ring them now.
What s that I hear?? Sounds like a chainsaw………
Get Going and Stay Safe ~ Dean Letfus
Land of a thousand (different) markets, laws and opportunities
Posted by: | CommentsThe more I learn about the USA property market the more I understand just how &#*@&%)( complicated it can be. I mean investing there is pretty straight forward but to understand their markets and the resulting opportunities is a huge task. It is like literally researching a hundred different countries but all on the same bit of dirt.
Thankfully my US Real Estate Publisher friend has saved me probably years of time by sharing his expertise and knowledge which makes the learning exciting, but still complex .
I am telling you all this because I have recently discovered the way a “non judicial” state works. To keep it simple it means that in a couple of US states if you miss a loan payment, you can be sent a notice of default and the house can be foreclosed on almost overnight.
This has meant in one state in particular a tsunami of foreclosures. This drove retail prices through the floor and created an enormous cashflow opportunity. The state has good employment etc. just a lot of mortgage carnage.
So for example I am very happy with 10% net return in the USA after all expenses as this out performs NZ all day long.
But we now have a market available to us with the same quality of management etc as my favourite Memphis market but with even higher returns.
Here’s an example:
3 bed, 1.5 bath property, fully renovated and already tenanted long term.
Purchase price = $35,000
Rent = $950 a month.
Now this is a cashflow play, not a capital growth story but it returns 22.54% NET AFTER ALL EXPENSES.
Try and do that anywhere else in the civilized world
Oh and it looks like this……….
Not exactly a dive is it? And in a great part of a bustling city.
Oh it sold in 1999 for $45,000 and it’s current appraisal is $70,500.
Wow is all I can say. If I had known about this in 2003 and built in the USA what I built in NZ I would have well over a million dollars a year in cashflow already.
Better late than never I guess??
(BTW this property, (and others similar) is actually available if you’d like more info EMAIL ME)
Get Going and Stay Safe ~ Dean Letfus
