Archive for real estate
I have been a vociferous opponent of the poor legislative drafting and the tactics of the REAA since its inception, however I was talking to one of the complaint board legal beagles this week and he advised that the REAA had been able to remove several bad agents from the industry who really needed to be dealt with.
So that is a good thing to see happening. Hopefully their assault on innocent traders may taper off now that their former cop hatchet man has departed the agency and they will focus more on cleaning their own industry up.
In the mean time there is a rumour that they may be looking at allowing buyers agents to exist in NZ. That makes so much sense and is so reasonable I don’t believe it is true but you never know, larger miracles have occasionally occurred.
And speaking of miracles I find it amazingly clever of the government to plan an election smack bang on top of the world cup. It is nearly October and there is no interest or publicity around the issues because we are all watching rugby .
Should be good for a National shoe in!
And lastly, whilst on politics, I also hear there is a serious inspection/referendum regarding MMP coming up. This is the worst thing that ever happened to dear old NZ so if actually egt any chance to get rid of it make sure you vote. When it came in we were told it was a one term trial and would then be reviewed. This never happened. It has been a disaster, we were lied to when it came in, let’s make sure we get rid of it if we can!
Get Going and Stay Safe ~ Dean Letfus
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
This week I had a family member, non investor, sell a home for 15% more than they paid just a few months ago and saw a property sell for 45% less than its 2007 purchase price.
So as a trader or investor the big secret to figure out is where is the profit and where is the carnage. Or at least that’s what we think don’t we.
It is such a common question I hear: “Where is the best area to invest?”
So let’s remind ourselves, again , that there is no best area to invest. Of course there are areas that have differing rates of capital growth and some areas consistently out perform others so that is one factor to consider. However often those areas also have a higher floor in terms of discount so buying there purely on growth stats is a misnomer.
As always we need to look at the numbers to decide where the best areas might be.
For example if our primary need is cashflow then a property in a low capital growth area paying you a hundred dollars a week is going to “outperform” a high capital growth property with no income.
But the point really about all this is that 2 neighbouring properties in the same street can be bought for widely varying discounts and supply different yields, so there is no such thing as a best area, there is only ever a best next deal for you!
Stay Inspired and Stay Safe ~ Dean Letfus
Real Estate is such a difficult commodity to really nail down because it just doesn’t behave consistently. When I was a bookbinder I could price a particular machine, work out the daily output and decide whether it would be profitable or not.
Equally I could look at the second hand market for those machines and know how much a or 5 year old machine was worth.
Then I could break all that down a “$XX per 1000 books” cost and decide whether to invest or not.
But property, oh my goodness, if only it was that easy.
First of all trying to establish the correct purchase price is affected not only by the market but also the vendors circumstances, various factors around the appearance of the place plus the big wild card, human emotion.
So the same property could sell for up to 40% either side of what it should depending on these factors. No “normal” business could ever survive with such enormous variations in stock cost on EVERY purchase.
Next the performance of the asset can be enormously affected by the market, government policy, natural disasters or even the behaviour of the asset next door!!
Thirdly the cash-flow of the asset can be predicted but it is dependent on a third party who frequently tries everything they can to NOT give you any money and we have no control over how much damage they may inflict on the asset.
Back to my bookbinding analogy it’s like me never being able to predict whether the machine will produce good quality finished product or destroy every second copy.
And lastly you live in an environment where you will forever be maligned for being non productive, freeloading unethical capitalist who is constantly being penalized for breathing.
So that’s why I love being a property investor, what about you?
Stay Inspired and Stay Safe ~ Dean Letfus
PS: Make sure you come and say hello at SNI.PR this month
Many agents are personal friends of mine so I trust my comments today are kept in context .
One of the wonderful things about the recent changes to the law in New Zealand is that the quality of agents is increasing rapidly. One major franchise estimated they would lose 30% of their agents through the changes. In the main it is the unethical and unskilled people who will tend to leave as the industry becomes more professional and accountable.
I have met a number of new agents in the last month and have been quite struck by the “new breed” of helpfulness and professionalism. This may actually become an industry one can trust in New Zealand rather than 5th from the top of least trusted professionals as at last years survey.
So the interesting thing about all this is that if it is relatively “simple” to change an entire corrupt industry surely we could also legislate to fix car salesmen, politicians and telemarketers who are the top 3 least trusted professions.
And another question for Monday morning,:
How sad is it that the only way to clean an industry up is threat of fines and jail. Whatever happened to personal responsibility and pride in ones work?
Stay Inspired and Stay Safe ~ Dean Letfus
The Ethical Investor
From Politically Correct Bedtime Stories
Once there was a young princess who when she grew tired of beating her head against the male power structure at her castle, would relax by walking into the woods and sitting beside a small pond. There she would amuse herself by tossing her favorite golden ball up and down and pondering the role of the eco-feminist warrior in her era.
One day, while she was envisioning the utopia that her queendom could become if women were in the positions of power, she dropped the ball, which rolled into the pond. The pond was so deep and murky she couldn’t see where it had gone. She didn’t cry, of course, but she make a mental note to be more careful next time.
Suddenly she heard a voice say, “I can get your ball for you, princess.”
She looked around, and saw the head of a frog popping above the surface of the pond. “No, no,” she said, “I would never enslave a member of another species to work for my selfish desires.”
The frog said, “Well, what if we make a deal on a contingency basis? I’ll get your ball for you if you do me a favor in return.”
The princess gladly agreed to this most equitable arrangement. The frog dived under the water and soon emerged with the golden ball in his mouth. He spit the ball on the shore and said, “Now that I’ve done you a favor, I’d like to explore your views on physical attraction between the species.”
The princess couldn’t imagine what the frog was talking about. The frog continued, “You see, I am not really a frog at all. I’m really a man, but an evil sorcerer has cast a spell on me. While my frog form is no better or worse — only different — than my human form, I would so much like to be among people again. And the only thing that can break this spell is a kiss from a princess.”
The princess thought for a moment about whether sexual harassment could take place between species, but her heart went out to the frog for his predicament. She bent down and kissed the frog on the forehead. Instantly the frog grew and changed. And there, standing in the water where the frog had been, was a man in a golf shirt and loud plaid pants — middle-aged, vertically challenged, and losing a little bit of hair on top.
The princess was taken aback. “I’m sorry if this sounds a little classist,” she stammered, “but…what I mean to say is… don’t sorcerers usually cast their spells on princes?”
“Ordinarily, yes,” he said, “but this time the target was just an innocent businessman. You see, I’m a real estate developer, and the sorcerer thought I was cheating him in a property-line dispute. So he invited me out for a round of golf, and just as I was about to tee off, he transformed me. But my time as a frog wasn’t wasted, you know. I’ve gotten to know every square inch of these woods, and I think it would be ideal for an office park/condo/resort complex. The location’s great and the numbers crunch perfectly! The bank wouldn’t lend any money to a frog, but now that I’m in human form again, they’ll be eating out of my hand. Oh, will that be sweet! And let me tell you, this is going to be a big project! Just drain the pond, cut down about 80 percent of the trees, get easements for…”
The frog developer was cut short when the princess shoved her golden ball back into his mouth. She then pushed him back underwater and held him there until he stopped thrashing. As she walked back to the castle, she marveled at the number of good deeds that a person could do in just one morning. And while someone might have noticed that the frog was gone, no one ever missed the real estate developer.
Stay Inspired and Stay Safe Dean Letfus
I’ve been a bit sidelined this week with a sick wife, thankfully nothing serious. It is always a good reminder of what is really important. Money comes and goes but the ones you love are precious beyond compare aren’t they!
I’m driving Raewyn crazy actually because I insist on checking everything twice. After all I’d be devastated if she was disabled or I lost her. Look after those you love while you have them