• Tweet
• Email

October this year we will have an election. I am hopeful that regardless of whether the left or the right get in we will at least have some competent immigration policy introduced this year.

As I research Australia and understand more about the impact of immigration and the coming boomer retirees I have become much more critical of the current government because they are so adversely affecting out economy and the knock on effects of losing so many good immigrants to Australia is going to make catching up even harder.

One of the world’s largest real estate companies Knight Frank just released their Global Property report and Australia features strongly as a safe, robust market with commercial and industrial sectors being very strong. New Zealand hardly gets a mention because we are basically doing nothing and going nowhere. It’s not right and we don’t have to put up with it!!

Where to from here!!

I’m not going to try and “predict” the future in New Zealand for the rest of this year because there is simply too much uncharted territory going on.

Global issues, 9 years of anti capitalistic government, unique baby boomers population impact, the list goes on of unusual drivers that can change the horizon.

However there are some fundamentals we need to keep hold of and some plans we can make that won’t be undermined by an uncertain landscape.

Every slump is followed ultimately by a boom. This is simply a fact, so if you decide we are in a slump, then we can accurately predict that a boom is coming.

High population areas in New Zealand already have a housing shortage and trend is towards a diminishing supply over demand. This must ultimately put pressure on prices in certain areas.

The replacement cost of property is increasing nationwide, both in terms of land values but more importantly construction material costs and labour costs.
Housing is not an “option”; everybody needs at least 1 place to live in.
Interest rates are cyclically high, very high and therefore are very likely to come down in the future rather than go up.

The normal property cycle would indicate a property boom was due around 2010/2011. This coincides with the first round of boomers retiring so there is double the normal likelihood of a boom phase beginning in this period. So given the above what should we be looking at doing from here??

I have discussed this when I speak but I don’t think I have detailed my retirement 101 strategy in a newsletter before so here we go.

For the reasons above I believe we need to be positioning ourselves for the coming boom with a view to using it to put us in a retirement position.

Let’s assume we want $100,000 per annum in passive income to retire on.

If we were to own property in a main centre like Auckland we could work on an average of $400 a week rental income. Therefore if we had no debt we could retire with 5 freehold properties.

So the goal is to achieve 5 rentals in a main centre with no debt by the end of the coming boom, with me so far?

Well to achieve that we need to do one thing only. We need to own or control ten properties going into that boom.

These properties need to be in an area where boomers will be retiring from so there is demand for housing, AKA cities and main centres only.

So let’s say you have 1 rental now, you bought it for 210K and it’s currently worth 260K.

In 2008 you buy another 2 rentals, 1 now in the midst of the doom and gloom and 1 later in the year.

The first one you buy for 250K with an RV of 325K.
The next one is 275K with an RV of 310K

So at the end of this year you have 895K value with 735K debt

In 2009 you buy 3 properties over the year all at 15% discounts and average price is 280K and let’s say 2009 gets 5% capital growth.

So end of 2009 you now have 1,929,000 value with 1,575,000 debt

2010 you buy 2 more same as previous year, at 280K and 15% discount.
During the year you also manage to lease option 2 properties from vendors where you are paying market rent with an option to purchase in 3 years.
1 property is worth 450K, you have an option at 405K and the other is worth 375, your option is 330K Market starts to show signs of real recovery, growth for the year 8%.

So end of 2010 you now CONTROL ten properties. You own 8 valued at
2,741,000 and with debt of 2,135,000.

In addition you control 2 more properties currently valued at 825K with unrealised debt of 735K

Total picture 3,566,000 value 2,870,000 debt.

2011 next boom starts. Your portfolio does 15% in 2011.

Debt constant at 2.87 mil but value now 4.1 mil.

2012 = 20% = 4.9 mil
2013 = 20% = 5.9 mil.
Your asset value is now double your mortgage debt so you are about to retire. In 2013 you sell down the 5 properties you like the least and freehold the other 5.

You now have 100K in income and no debt!!

If holding the properties is difficult for you then learn to lease option more than 2. These ones will cost you nothing to hold.

I believe we will see bigger growth than what I am quoting and I believe you can buy a lot better than 15% but you get the picture I’m sure.

There will be some tax implications depending on your current position but regardless, you will be permanently unemployed if you want to be if you implement a strategy similar to this.

So all you have to do is decide how you are going to hold 10 properties going into the next boom. Utilising a mix of buy and hold and lease option systems you can do this with a lot, a little or no money down of your own.

If I was wanting to be cute I could say that anybody still working after 2014 wants to stay employed or was simply too lazy to retire.

You can do this, do you want to?? Now there’s a question.

This makes sliced bread look like a Coronation Street episode!!

It’s taken much time and money but I am delighted to announce we are now able to take applications for multi currency loans in New Zealand. Whether you are a NZ resident or living off shore we can help you access this facility.

You must be a member of my forum to be able to apply, more on that below. But let me give you an example of how they work and why you might want to apply.

Would paying an average of 3% interest interest you?? What if you were only paying interest only but your loan was being managed to reduce the principal through favourable currency movements?? Here’s an example.

A NZ couple had three properties in New Zealand that were at the time mortgaged through a local bank, interest only.

In 2004 they refinanced their loan amount of NZD 638,000 in Japanese Yen. They were now paying NZD 2,390 per quarter on an interest only basis at 1.5%, a saving of $2,261 per month. With today’s interest rates this would be closer to $3800 a month in savings!!

After 1 year they were switched back into the NZ dollar and they had reduced their principal by NZD 98,738 or 15%. 6 months later they switched into the Swiss franc. They were now paying just NZD 3,532 per quarter on an interest only basis at 2.62%.

They were once again able to benefit from reduced interest rate payments and over the next 12 months saved NZD 32,248.

They then switched back in to the Kiwi and further reduced their principal by NZD 97,423 or 18%. So after 36 months they had saved over $78,000 in interest and reduced their principal from $638,000 to $441,839 through managing favourable currency movements.

So join the forum

I established my forum to assist people with their investing without huge cost to them. It has achieved far more than I hoped with an active community of positive property people able to interact, ask each other questions and access my team of professionals and myself for specific advice.

It has also become a safe place to ask “dumb” questions and know you won’t get attacked or dumped on, just helped.

There is an ever growing bunch of us hoping to meet you in there soon!!

I am running the multi currency loans through my forum to ensure that I know the people who are accessing the service so I can make sure you stay safe and that the system is not abused.

More info and joining information HERE

Current license to print money strategy IMHO

I alluded to it earlier under controlling property but I want to make sure you are clear on one huge opportunity presenting itself in this market.

There are vendors all over the place who can’t sell so they are considering renting their properties out instead. When I was in Rotorua Terry said he was tracking available rental stats and they were increasing at the rate of nearly 15% a month.

The same is true in much of the country. This creates a huge opportunity to you. Here’s how.

Imagine if as a vendor you are having to rent out a property and become a landlord when what you want to do is sell. Not only is the idea stressful but also you are thinking about the damage that might be done to your house.

So suddenly you contact said vendor and offers to rent the property, guaranteeing the rent 52 weeks of the year and taking care of any maintenance issues not covered by the owners insurance. Not only that but you will give the vendor an option to purchase the property and even pay them a small nonrefundable fee.

So think about that for a minute. You have the choice of becoming a landlord and watching your house devalue through wear and tear or get a guaranteed return with no management required on your behalf and a sale in say 2 to 3 years time.

This is not a hard sell but creates control over the price of the property long term. You simply rent the property out to a normal tenant which covers your expenses. You fund any vacancy but hey if it costs you a grand a year to control a 400K property is this not a great way to make money. Even better go and find a house you want to buy in a the school zone you want and buy it using this technique.
You get all the benefits now and can easily get a mortgage in 3 years through the equity you will have created. Like shooting fish in a barrel.

What’s the catch I hear you say??, well…………………………

THERE ISN’T ONE

Stay Safe, Dean and the Massive Action team