Population Growth and Growth in Property Values

[Stranger_Danger]

I don't mean to put the boot in, but after reading http://www.stuff.co.nz/business/mone...pire-collapses take a look from post 60 or so when this bloke comes in.

2006/2007 were, indeed, crazy times.

I suspect we're not done in terms of realising just how crazy.

[Lizard]

HI srotherh. My equity in a fire sale of my properties would see me with over 2 million in the bank so can I weather any storm? absolutely.
In relation to the capital growth rates I'm happy to supply some samples. NOTE: I only buy property not requiring work so I have done no capital improvements on any of the following.

AREA Year bought P Price Current RV
Scott RD Papakura 2004 173000 250000
Waterview Dr Papakura 2005 320000 415000
Burbridge Mangere 2004 410000 505000
Clyside Pakuranga 2005 700000 850000
shool Rd Rotorua 2005 810000 1550000

I could go on. My worst performing property is achieving way over 10% PA increase. This 5.7% growth stuff is only true if you don't know what you are doing. Buy well in the right areas and 10% per annum is conservative.
Get a good education in property and nothing beats it IMHO!!

Hi Dean,

Firstly, well done. Secondly, and not wanting to be a cynic, but the figures you quoted were

AREA Year bought P Price Current RV
Scott RD Papakura 2004 173000 250000
Waterview Dr Papakura 2005 320000 415000
Burbridge Mangere 2004 410000 505000
Clyside Pakuranga 2005 700000 850000
shool Rd Rotorua 2005 810000 1550000

Note how the numbers get steadily bigger?

I suggest you read Bob Jones's latest book, in particular the hilarious (and true) chapter "Why Developers Go Broke".

In it he talks about the human nature element, in this case about development - ie, if you're successful at a lower level, it would deny human nature to persevere at that level, so they keep doing bigger and bigger deals, all debt funded. He calls it an addiction.

Whilst I realise you're not a developer, I hope the same forces are not at play - esp given that you're not adding any value to the buildings (as you say) - you're basically just leveraging up increasingly larger purchases.

Could your ego adjust to different market conditions? Could your finances?

Hi Stanger. I'm not leveraging up at all on my properties. I trade properties as well so my rules are very strict. I buy property at minimum of 15% below valuation and put in 20% deposit. I use profits from trading to fund the deposits. So my portfolio is currently geared at 63%. No fear of getting hurt in a slump. And my portfolio pays me cash every week in addition to the capital growth and huge tax benefits. Only a war would affect me and that would affect us all!! Gotta love property!!

Hi Dean,

I have to admire your enthusiasm, but frankly it kind of scares me.

The main problem I have with your approach is it all sounds so incredibly easy and indeed, the only risk you seem to forsee is war.

I've read through your website and the only comments I have are

(a) Your philosophy, indeed your website name, is basically "massive action". In my experience, massive action is not the way to good investment returns (in any asset class).

Personally, I prefer a risk averse "slow but decisive action" approach, one based on trying to look at the future rather than the present, or, even worse, the recent past.

Whilst running around doing a deal a day sounds terrific fun, the more "action" I tend to have in my life, the less money I make. Less is often more.

(b) From reading your website, you don't make improvements to the properties, tax minimisation is a key part of your strategy and you use property managers to look after the properties.

In other words, the bank provides most of the money, the taxman chips in, you don't improve the properties, and someone else looks after them.

In this context, I get why you're so enthusiastic!

The flipside as I see it is that you are literally "riding the market".

In good times, your strategy of "maximum action" makes sense. In a different market, the cynic in me says you have a whole lot of unmaintained buildings looked after by apathetic third parties that you really have no intrinsic interest in (the buildings themselves, not the returns).

If property prices are not going up, do you REALLY care that Mr Jones has a major problem with his rented house? With the middlemen involved, do you even know?

The only thing as I see it that you can bring to the table is building selection and negotiating skill and in this market, winning that war is the easy part - just pay more.

In a different market, this strategy will probably work differently, regardless of what you ultimately record on your spreadsheet (which, as you point out, changes based on the tax outcome you want. Hmmm)

Anyways, don't mean to be over-critical. I suspect we just have very different styles, and there is more than one road to the pot of gold so best of luck.

Sorry stranger but I can't stop laughing long enough at the above to answer properly. Taking consostent action IS the way to succeed. If this hasn't happened 'in your experience" then you were not adequately educated or didn't really take enough action.

An earlier post by another also stated that I might be "in IRD's radar for CGT". I pay plenty of tax on my trading. Any professional property trader who was not paying tax deserves to be in jail.

I guess sometimes it takes time to prove who is "right" in an investment debate....
http://www.stuff.co.nz/business/6047...pire-collapses

[Stranger_Danger]

Lizard,

I wasn't going to say that. But, thank you for doing so

[Kaspar]

Stranger_Danger > Letfus

[patsy]

Reading this thread from post #60 when Leftus appears has made me realise that he hasn't been the only 'expert' (read 'property investment buffoon') participating in the debate of how easy of to make money with other people's money.

[lissica]

All these articles point out the obvious really. The baby boomers are getting ready to retire and the biggest boom in NZ's history is around the corner.
All we have to do is accumulate property as fast as possible and get ready to retire around 2012.
I love property

As I'm not familiar with this chat room I don't have a good feel for it's members yet but many of the posts indicate a lot of intellectualising (spelling?). But are you guys achieving your goals? Are you living the life of your dreams or at least taking some action to head towards them. I can tell you that property has been very good to me. It is not rocket science. With a decent education and hard work it is not difficult to retire in 3 to 5 years or even less. Don't over analyse yourselves into doing nothing

I remember cringing when I read this, and wondered why Dean had strayed from property-talk.

Anyway, five years later, it seemed a pretty good indicator of market peak.

Speaking of property....Rents seem to be slowly catching up with property prices, and ahead of cash in the bank atm. Might be a good time to go shopping.

[D B Cooper]

From Massive Action.tv

The culmination of that education was Raewyn and I getting a proper education at a 3 day event in October 2004. I finished work and decided I would either succeed or fail by giving property my full attention. I was able to amass a portfolio of over three million dollars in property in 4 months and to begin to build a passive income stream that would enable us to give away more than we could ever earn.


By 2006 we had over seven million dollars worth of property and had traded over double that amount.


By 2008 that had become 20 million dollars of buy and hold property and Dean had traded hundreds of millions of dollars in NZ and overseas.

and by 2011..................BUST

seems to have bought $13m at the top of the market 2006-08

PS I wonder how much Dean gave away to Charity?

[Stranger_Danger]

On your figures, $13 million - to the previous owners of the properties.

[skid]

This seems to be the era of the boring property investor who slowly acquires investment property [saving-saving -saving]and makes sure a large percentage of the value is payed of Its not high flyer,get rich quick,but we are still standing.
Its alot harder to do nowadays...but im glad now I did it that way when i could.

[Halebop]

This seems to be the era of the boring property investor who slowly acquires investment property [saving-saving -saving]and makes sure a large percentage of the value is payed of Its not high flyer,get rich quick,but we are still standing.
Its alot harder to do nowadays...but im glad now I did it that way when i could.

Imagine that. Methodical, manage cash flow, modest gearing, repay debt. Who'd have thought that would work in the long run?