June 07 ~ Back to the Basics
By
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Here we go again!!
Yes it’s newsletter time again!! We’ve been busy preparing for our workshops, Wellington is now sold out!! We’re also working on the plans to get the community centre rebuilt in Fiji.
So how are you going?? Are you taking action that will move you closer to or further away from your goals??
PUBLIC WARNING!!
I am in a very motivational mood this month so you may find this newsletter a little more challenging than any before. For those of you wanting a quiet, comfortable, mediocre and unsuccessful life then please don’t read any further 
Work it out!!
So humour me for a minute.
Lets assume you are going to live till you’re 80.
Subtract your current age from 80. In my case that leaves 35 years.
Sounds like a long time on the surface. But think about the number you have in your head.
Do you realise that that you only have that many Christmas holidays left??
Have you though about the fact that you will only have one chance to live each of those years. And if we take off say 10 to 15 years when you may not be as vigorous as you are now you may only have a few short years to do all the things you always wanted to do.
Now consider 2 more important facts.
1. Most of us reading this won’t get to 80!! Car accidents. Disease, genetics means that some of us may only have 1 year left.
2. Of those of us who do get to 80, only about 3 in 100 will be financially secure after we retire.
So as my wife teaches, “You can have anything you want, but you can’t have EVERYTHING you want. So decide what you really really, really want, AND DO IT!!”
You see, if you really, really, really want financial freedom through property, you have to take consistent, persistent action to get there. In today’s environment especially any foundation built on sand is going to get washed away.
Understand inflation and tax
So how do we ensure we don’t live longer than our money?? Or more importantly what should we avoid?? Firstly don’t do what most financial advisors would recommend!!
The following information is paraphrased from an excellent article by Neville Bennett in a recent NBR. This is important stuff as it applies to my above comments.
Picture this:
Inflation:
Average house price in 1988 was $98000. Whilst there is no doubt that they increase in value they tend on average to stay very close to inflation. We need to understand that inflation is a killer disease, especially for the elderly. Think about it. Rates have recently increased about 10% and the elderly pay heaps for medical help, especially as once you turn 65 everything you have wrong with you becomes elective and user pays.
Depreciation:
Depreciation is another problem. How often do you replace you car as you age. And more than that, what about painting the family home, carpets, drapes etc. Appliances and computers etc. don’t last forever.
So lets assume you have done nothing to really plan your financial future, just worked hard and done what 99.9% of kiwi’s do.
You retire at 65, your spouse isn’t working or retires slightly younger when you do.
You sell the house in Auckland and get a nice nearly new townhouse by the sea.
You add the capital windfall from downsizing to your savings account. To get “set up” for your retirement you buy a new car and lets say you have $400,000 invested in a portfolio of fixed interest securities.
You get NZ Super of $8000 a year after tax.
Life is all good, health is fine, you both start to unwind, enjoy walking on the beach, join the golf club. Aaaahhhh retirement.
Your $400,000 portfolio yields 8%, so in the first year you get $32000 less tax of 20%, netting you $29,000, which you spend.
However the rate of inflation is 3%, so your $400,000 is worth $388,000 after 12 months. In 25 years it will be less than half.
Meanwhile the real cost off all your goods and services INCREASES by at least 3% per year. Rates are increasing by triple that. The club fees and medical bills seem to get higher every month.
Roll forward a few years. The car is getting tired, goes in for a service and needs 3 grand spent on it. Depreciation awakes from hibernation and you have to replace the carpet. To keep up with your friends you replace the tatty golf clubs and do a bit of redecorating.
A minor medical problem gives you a fright so you plan the big OE to visit your son in London and join your friends at a senior golf tournament in Brisbane. You make a one off capital withdrawl that both reduces your inflation crippled capital AND reduces your passive income.
At some point the economy recesses, interest rates fall and your passive income shrinks even further.
By the time they really need entirely passive income due to old age and ill health, they may even be below the poverty line.”
Imagine what the outcome COULD have been if they had put that $400,000 into only 2 rental properties.
Every ten years their available capital in the form of equity would double. Even if it only kept place with inflation it is still inflation proofed.
Their rental income would also increase by inflation, possibly more.
When the economy recedes and interest rates drop their income will increase and they can use the addition interest cost savings to get their 2 rentals completely paid off.
When they die, having enjoyed a financially secure retirement, they will leave a significant inheritance for their children entirely intact.
Imagine if they had invested when they were younger in property. I’ve just worked out that if I do no more investing of any kind, don’t earn another cent between now and my death (in 30 years at age 75), I will leave around 110 million dollars worth of assets for our heirs and it will be producing about 10 million dollars a year in passive income.
And remember we started in October 2004 with $250,000 equity so don’t tell me you can’t do it!!
It’s your future, pick one.
Back to the Basics
I was with my mentoring people last night and discovered that human nature never changes. Good, intelligent committed people forget to do the basics and struggle to take action. With property investment there are no shortcuts. There are a couple of things you need to do regardless of which strategies you are using or how you plan to go forward.
1. Get to know an area well. I am yet to meet a full time trader who doesn’t farm 1 main small area. This is kindergarten property investing but are you doing it??
You know you’ve heard me say to do it about a zillion times but are you doing it? Have you downloaded my “How to become a hunter”, and actually done it, or is it sitting pinned to the wall above your computer so you can feel guilty every time you see it. And if you haven’t done anything to become the market expert in one area then decide what you really, really want. If you really wanted to be successful at property and financially free then you would have done something about this. Is that a fair statement.
We do the things we really want to. If I really want to kiss my wife I don’t sit at the computer with a picture of her feeling guilty for not doing it, I go and find her and kiss her (if she lets me J).
Because I really want to help the poor in Fiji I put in 100s and 100s of hours preparing quality events like our trading workshops so that I can raise funds to achieve my goals. I pursue my investing till I get the results I need to achieve my goals.
ARE YOU??
2. Do you ever try to buy anything?? There are only 2 foundations, 2 secret weapons, 2 fundamental practices that you must pursue to succeed in property. Trying to buy property is the second.
You will never know what someone will sell for unless you offer to buy it. If you are unable or unwilling to make an absolute minimum of 5 written offers every week, you will NEVER cultivate the habit of making offers and you will miss out on amazing deals literally every day.
Going to an open home is NOT making an offer!!
Ringing an agent is NOT making an offer!!
Telling an agent or a vendor how much you would pay for their house is NOT making an offer!!
Sitting at the kitchen table reading the Property Press is NOT making an offer. Putting little stars beside the listings that look really, really good or ringing them with felt tip pen is STILL NOT making an offer!!
Pick up a pen. No I mean stop reading this and go and get a pen. Got it?? OK, now find a piece of paper. Check that the pen works. Ok now sign your name on the piece of paper. See how the ink remains on the paper and you can see your signature?? Great. Now the only thin that qualifies as making an offer MUST have one of those on it. Got it? Only a WRITTEN SIGNED OFFERR IS MAKING AN OFFER.
Oh 2 last things about this:
A: Your signature must appear amongst other relevant information on one of these CLICK HERE and
B: You have to either fax it or give it to the agent or vendor for it to count.
I was explaining at mentoring last night that we all look for things that are complicated and kind of ‘glamorous” because simple things aren’t attractive. Something as basic as making 10 offers a week can’t possibly be the secret to finding deals, too easy. Learning the special secret phrases and hand signals of American property guru’s, spending thousands of dollars buying the right looking clothes, getting the bomb website, being told over and over again that only a chosen few will ever really make it, THAT’S what we all want to hear. Then when we don’t succeed we don’t feel so bad because we knew it was really, really unlikely that we would be successful anyway. True isn’t it?
Well it’s not true. In fact it’s a load of old bovine eschatology. And on the other end of the scale total nonsense like ‘The Secret” tries to tell us to simply “issue a command to the universe and the universe shall obey”. This is at least laughable nonsense, but the “ I didn’t expect to make it anyway” disease is more insidious.
So please, please, please believe me. If you will get to know an area well and cultivate the habit of making offers every week you CAN succeed. You WILL find better deals than anyone else. You will find properties suitable for holding and trading or assigning. You will be less afraid of buying because you will KNOW a good deal from a bad deal.
It’s like this. Every full time trader and serious investor I have ever met in New Zealand ALL do both of the above things, EVERY ONE OF THEM!!
So if every successful person does these things and they work, shouldn’t we follow them??
Of course we should, but instead many, sadly most of us, decide that there must be a better, groovier way, so we never, ever, ever do these essential basics.
Hello???? Earth calling silent investor????
Finance and other 7 letter words
I am very proud to announce that Kris Pedersen has joined the Massive Action stable recently to bring his amazing finance expertise to bear on your investing!!
Kris has a unique background as the connection between banks, finance companies and brokers. Don’t be deceived by his boyish good looks, Kris is a professional financier of the highest calibre.
He has already accessed some incredible finance options for full time traders and just seems to “know” where they hide all the money. In combination with Farida there is no mountain high enough to keep you away from your next deal!!
My favourite Kris story is when he financed the best deal I ever bought. My usual broker had tried and failed to get me 820K to buy a block of units in Rotorua. I was buying well but had no money for deposits. On top of that the property was 6 units on one title, which made it commercial and it was Christmas. In other words, this was an impossible deal.
Via text with me in OZ and Kris not having a holiday he got me 100% finance from 3 lenders and basically made me $700,000. This is what Kris is like!!
Happenings in Massive Action Land
Coming to Christchurch??
Our Wellington event is now totally sold out so Christchurch is the last chance ever to attend our Advanced Trading Workshop. If you’d like to learn everything I know first hand then please join us. We will be filming the event but it is never the same as being there.
Oh and on filming you may have received an offer from Richmastery to purchase the DVD of my event in Auckland.
This offer is not from me or Massive Action. And just to make it perfectly clear this is NOT a DVD of the entire event, it does not contain any of my specialists as they were unwilling to be filmed for a Richmastery branded product. Similarly the best of my material is missing. So the statement in the advertising that it is the entire FULL event is absolutely untrue. Please do not waste your money on misrepresented material and wait for the real DVD which we will have available in August.
More info available on this HERE
Online Forum
Our forum is going unbelievably well. Members are getting huge value form it and some of my specialists are being kept very busy answering questions.
I created this forum to help you as a cost effective alternative to personal mentoring. $500 a year to talk to some of the top brains in the country whenever you like?? How is that not an amazing opportunity. Here is a sample of just one recent thread to show you why I think you should consider joining us:
Click here to download the sample thread (PDF)
So if you are looking for direct access to me, a bunch of other top traders and investors AND all of my property experts, CLICK HERE
Final Words
The only things that remain when life throws us a curve ball sometimes is our reputation, our integrity and our friends and family. Remember that. “Success” whatever that is, will not be measured by your bank balance, your figure or your toys.
Pursue your hearts desires, but never at the expense of the above.
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