Archive for June, 2011
This could save the world
Posted by: | CommentsJapan has the secret to making the world safer however they may not have realised it yet.
Nagasaki 1945
This is Nagasaki post nuclear attack and below is Nagasaki post Tsunami
Nagasaki 2011
So all we have to do is establish what that arch is made out of, patent it and build every building in the world out of it. problem solved 
.
Get Going and Stay Safe ~ Dean Letfus
Unintended consequences
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A few weeks ago i was talking to a mad golfer in Singapore who was concerned that the drop in membership in his club was jeopardising the viability of it.
I hadn’t thought about that discussion till I saw in the Herald today that several NZ courses are feeling the pinch and some are already negotiating with developers to turn them into housing estates.
Now let’s put aside for a moment the complete insanity of grown men and women beating an innocent ball round lush grass fairways dressed in permanent early bad taste and consider what is really going on here.
We are in a global recession, 3 years on and it is only now starting ot really bite and we are far, far from anything like a recovery. Of course people are going let things like golf memberships lapse. They would have been grossly overpriced anyway and typically appeal to ones snob value index.
The luxury of looking good has significantly been downgraded as families worry about less important things like paying their mortgage and feeding their kids, however to sell off clubs because of the current environment may be an unintended disaster.
In case you didn’t know from my above comments I am not a golfer, however I know how hard it would be to replace something as large as a golf course down the road.
So surely it would behoove clubs to try and hang on to their properties and find ways to stay viable because once we are out of this mess as we will eventually be, where will everybody go with their Remuera Tractors and E Class Mercs on the weekend??
Get Going and Stay Safe ~ Dean Letfus
Be thankful NZ is not like Phoenix
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Phoenix Arizona
We don’t really understand volatility in New Zealand like they do in the USA. At a fundamental level our markets are “reasonably” predictable. We all make a big deal about getting a nominal increase or decrease in values correct but really we can be pretty safe in knowing we have steady rises followed by marginal falls and on and on it goes.
So a lot of people ask me why Phoenix is not my first choice of US markets instead of third and this US volatility is the answer.
In 2005 house prices increased by 45% in one year.
In 2008/2009 prices declined by over 50%
Many experts claimed it bottomed out in April of 2009. There were some moderate increases and then another 12% decrease after the tax credit expired April 2010.
And right now in 2011 they continue to decline one month, recover slightly the next but generally values are still headed south!
Phoenix is sometimes described as a saw tooth market. Looks more like a mountain range market to me
So remember the name of the game in New Zealand is appreciation over time with enough cashflow to stay alive.
In the USA it is cashflow, cashflow, cashflow……
oh and a hint of cashflow
(Seriously there are cities like Memphis that are and will continue to get growth but don’t apply NZ rules to this market).
Get Going and Stay Safe ~ Dean Letfus
Mother nature
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It’s hard to talk about anything else today except the CHCH situation. It’s great that residents have gotten some clarity over their homes but at the same time I feel sorry for the politicians who have had to cobble together a solution rather than have time to get all the facts.
Tragedy is never neat or tidy and human tragedy even more complicated. I watched on Close UP last night affected residents admitting that they had pushed the government into a quick response and they knew it wouldn’t be the best result.
Aren’t we a weird lot when we would rather have second best now than the best with more time?
Given our instant replay, instant coffee, overnight idol sensation culture I guess it isn’t a surprise that we have trained ourselves this way but the less we plan the more we get poor results. Sadly now government bows down to this pressure also and in one sense that is quite scary.
Anyway it is great to see that many residents can get their money and move on with their lives. I hope the government doesn’t take another beating when it i discovered down the track that there may have been better solutions had they waited a few weeks/months.
I have lived in my current home for only 6 years and would be devastated if I had to leave with no choice in the matter. It must be awful if you have been life long residents.
I pray that those who want to stay and can’t will find strength to rebuild their lives and uncover the good things that will come out of this disaster. And we pray for good news at 1:30 today when we hear the details.
Get Going and Stay Safe ~ Dean Letfus
Hubble boil toil and
Posted by: | Commentswell trouble or opportunity depending on your world view.
This excellent article in the Herald LINK observes the unwinding of global property markets and the required correction. This is of course on the one hand trouble as “wealth”, (whether notional or actual is up to you) vanishes in front of ones eyes if that wealth is tied into real estate, opportunity on the other hand as housing affordability improves.
What the article doesn’t say is that the USA is the only country where the prices have dropped so much that enormous cashflow opportunity is now present. A shift form 2% to 2.25% yield in Hong Kong or Singapore is better than nothing but a jump from 5% to 20% yield in the USA is something to get excited about I think.
As an example the property below sold in 1998, 13 years ago, for $82,000. In 2006 it would have sold for around 150 to 175,000.
Today it has just been fully renovated and is available for $54,000 with a genuine 17% NET yield after all expenses.
This was actually sold and I have been in this property but the buyer didn’t complete so it is literally available if you’d like it to warm your heart email me EMAIL
Get Going and Stay Safe ~ Dean Letfus
Lessons from the trenches
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I have had 2 big lessons this year in business. One is too complex to comment on here, it will be in my next newsletter. But the other one was a promoter of mine in Asia. They appeared to be honest and we got on well. We ran our first event successfully and all was good in the world. A short time later one of my US partners caught this company passing confidential information to a competitor. When confronted they lied to my face until the evidence forced them to stop denial. It transpired that in their greed they were setting up in competition to provide a lower level of service to their clients but make more money for themselves.
They have since gone on to try to set up against us without knowing what they are really doing, all in the name of blind greed. To try and get some traction they have spread defamatory lies about us in their market.
Fortunately our business partners are the best in the business so their smear tactics have failed and if anything we are doing more business through their clients who are coming to us disgusted with this companies behaviour.
Fortunately we had our relationships tied down and our clients results speak for themselves but it has been an interesting and sad experience. Especially for me personally as I ventured into this business to help the owner recover form a dishonest business partner. So to have them be so dishonest to some trying to help them is doubly sad.
What have I learned?
1. Never assume someone who is referred to you is to be trusted without testing them first.
2. Never proceed on a trust basis, if it isn’t contracted it doesn’t exist.
3. Don’t return dishonest competitors behaviour with like kind, let your results and your clients defend you.
4. Saddest lesson, you have to keep a watchful eye even on trusted partners.
5. Pray for blessing on your business, leave the judgment to Him
6. Build your business based on what is best for the client, the money will follow.
6. Structure your business to minimise the points where dishonesty can occur.
More lessons in my newsletter this week
Get Going and Stay Safe ~ Dean Letfus
Maori land coming home to roost
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I have never been a fan of leasehold land having seen many people end up with worthless houses paying enormous leases and in some cases simply walk away leaving the land owner rubbing their hands together and inheriting yet another property.
So it was no surprise this week to see the maori commercial land leases in the CBD finally kick in making many businesses there completely unprofitable.
It was always going to happen of course. The land owners have done nothing wrong at all, they are simply actioning what they are entitled to. It will however end in tears, as it must. The leasehold model, popular in parts of Meadowbank and Greenlane in Auckland is a proven failure in terms of the lessee.
You see the thing I have never understood about leasehold land is simply this. It is specifically designed as a win/lose process. It completely ignores the fact that the land value will increase and therefore the land owner is the dominant player who will profit. The building owner/land renter is on a hiding to nothing from the outset. The only certainty is that the earlier in the lease period they purchase the larger their losses are going to be.
So to allow it on large scale apartment buildings and commercial property in our city centre is a massive failure of local and mainstream government.
There isn’t much anyone can do, it will probably end up in court for some time.
However what we can do all do is remember to never, ever, ever go near leasehold property as an investor or business owner. It has failed in the past and is going to really cause some carnage now in Auckland city.
Get Going and Stay Safe ~ Dean Letfus
