Yes, it CAN change your life!
Have you ever wondered if property will change your life for the better? Well, I’m here to share my personal story.
These days I’m a property coach, but first and foremost I was an investor – just like you! And I will be a property investor till the day I die as this is a lifelong business. I hope to be able to pass on all my hard work to my kids. But that’s another story.
I had an early introduction to investing –
When I was young I remember my parents buying rental properties in Timaru and renovating them. My sister and I would sit on the floor watching an old black and white TV. Yes, it was that long ago…. Times really do change as I have such vivid memories of the wallpaper they would hang on the walls and the ceiling. Every room was different and the wall paper had big bold patterns and bright colours. I remember the most delightful white wall paper that had great big red apples on it. Property trends change just like fashion.
My Dad was in Real Estate so he was a real property man. I suppose you could say that property is in the blood! They did well for many years but what tipped them over, the wrong way, was the share market crash of 87. That put paid to everything they had worked hard for, the home, the lifestyle and eventually their marriage.
When I reflect back on that now as an adult, the lesson I took away was that property is an asset class that I want to invest in. So long as you are set up correctly with appropriate buffers in place, then you can ride out the highs and the lows and given enough time, property always grows in value.
It’s fascinating to look back at the values of those properties from that time and where they are today. People love to say, “but how can the values possibly go any higher”. They do, give it time. Ten and twenty years ago no one would have believed that our values would be where they are today. What will we be saying ten to twenty years from now!
I started investing 13 years ago –
After being overseas for many years, we decided to finally head back to New Zealand when it was time to settle down. I had a husband in tow and a baby on the way. We were lucky to bring back a great deposit for our first house. We purchased a 4 bed, 3 car garage, house and land package off the plan and it cost us $287k.
I bet you are thinking, that was a lot for your money, you are right, it was, and that was only 13 years ago. We decided to sell this property 3 years after we bought it as we wanted to move locations for schooling. Lucky for us we sold just before the GFC for $425k. Not a bad gain in a short space of time.
What was on our side was timing and good luck, not good management. We spent more on the next property but built another home which was better for our family.
What we were not aware of was the opportunity hiding in the bricks and mortar.
We had equity, but with 2 kids, one husband, full time and part time jobs, life was busy. We were not thinking about buying a rental nor would it have even dawned on us that we could. Having young kids, what felt like a big mortgage and the day to day juggle, the last thing on our minds was wealth creation or retirement set up.
Cashflow was tight, we were a typical kiwi family living paycheque to paycheque, with not quite enough coming in to cover expenses. There may have been a fancy house but there was certainly no fancy lifestyle. We weren’t living, we were surviving. This is the reality for most of us and I completely understand that.
That is why we need to be aware of what our options are.
With a finance background I was back at work part time after our second child was born. With a stroke of luck, I got a job with a property investing company. The director of that company is the director of Positive Real Estate New Zealand today.
By default, I was immersed in the world of property investing and a big perk of the job was that it came with a property mentor. I listened, I learned and I explored my options. Most importantly, I took action confidently, as I was educated, supported and had the right team of investment professionals alongside me. This was to be the beginning of a lifelong business that would improve our today and prepare us for a much brighter future.
Our strategy back then was cash flow as we needed the extra income. What worked then and what we needed from our investing all those years ago is very different to today. That’s why you have to move with the times. Your position changes, you change and your portfolio needs to reflect that.
The result of the extra cashflow was that we could suddenly breathe. I could stop counting every single penny as I had doubled my part time income through the cash flow from our first two rentals. We bought and sold property along the way and our mortgage has been paid off in 10 years not 30. Not by squirrelling every penny away, but using the portfolio gains to chunk down the mortgage.
As each year went by, life got easier and our lifestyle improved. Paying down the mortgage quickly puts more money back in your pocket and saves you a small fortune on interest payments. Creating more equity along the way to be able to buy more property. It’s not fast, it took time as we all live with lending restrictions. It’s a balance between equity for deposits and income for servicing. What we did do though was take every opportunity available to us. We purchased when we could.
With the pressure easing, our life over the last 13 years has been completely different to what it would have been had we not invested.
Plus, we had the freedom to do what we wanted to do and what was important to us.
Travel is a big one as we have family all over the world. Because of investing I get to see my family every year in Singapore. I haven’t missed out on being part of their lives which I would have done had I not been in a position financially to spend money on travel. I am incredibly thankful for what property has done for us.
Whilst we are enjoying the journey we are preparing for the future. Our end goal is to be in a financial position to retire early and comfortably when we choose to. You have to put the ground work in now in order for it to have to build up. Property investing with a long-term view is safest. The earlier your start means the longer you own your property for which gives it time to grow in value. This is where the real wealth comes from to support our retirement.
Where are we at now?
Our strategy today is very different to what it was when we started investing. We need to consider the property we already own, our financial position, our goals and the time we have left before we look at retiring or supplementing our incomes with our portfolio.
Understanding the various markets in NZ and what the tenants are looking for are other key factors to consider when formulating a plan. Everyone needs a personalised buying plan to give you direction and clarity as to what your best options are with property. Right down to where you buy, what type of property and of course most importantly – why! It is not ‘one size fits all’.
Our focus is on buying new property in the main cities across the country. Buying in various locations offers diversification. You will have all heard the expression ‘ don’t put all your eggs in one basket’. The same should apply to your properties.
When you consider Hamilton, Auckland, Tauranga, Wellington, Christchurch etc, they are all completely different markets. Underpinned by different drivers so are at different stages of the property cycle. No one can time a market, you can only do that with hindsight, but by then it is too late. Having our properties in different cities in NZ offers us safety and continued growth. If we only owned property in Christchurch then our whole portfolio would have been at a stand still for the last 5 years. The knock on effect of that would have meant that we would need to keep working for 5 years longer as we have now had to push out our timeframe by 5 years as we did not move forward financially.
New properties are appealing to the types of tenants you are looking to attract. Professionals with good jobs who want a nice place to live as they can afford it. The type of property needs to match the type of tenant. The location of the property is also important as tenants want to be close to amenities.
In some locations your tenants won’t have cars so they need to be within walking distance to supermarkets, bars and restaurants. This type of tenant is not looking for a big back yard or a large kitchen as their style of living is very different to the way you may like to live. Remember, you are not buying an investment that you would be happy to live in, you are buying an investment to make you money. Looking for growth over time but has rentability so that you can hold for the long term. When buying new, the other benefits are hands off with little or no maintenance.
What really made this all possible?
One thing I know to be true, is that you’re always learning. To stay at the top of your game with your investing you need to be surrounded by a team of experts who keep your knowledge current. The playing field changes but the reason why we invest doesn’t. If you are the smartest person on your team, you have a problem.
Our collective knowledge at Positive Real Estate comes from years of being in the business working with investors, buying hundreds of rentals through all of the trials and tribulations life throws at us.
You will always need the expertise of an Accountant, Lawyer and Financial Advisor. There is no way of investing without these people. So, we need to ensure they are investment specialists. Only then can you be confident that every member on your team understands the world of investing as they should so you can rely on your team to do the very best job for you that they can. On top of that you need to think about where your investing knowledge is coming from. Even seasoned or experienced investors need help.
Takeaways for anyone looking to do the same –
- You are an expert in your line of work, you are not an expert in the business of investing. Get professional help from those who have been there and done it before.
- Keep your day job as you need the income to support the servicing to borrow money to buy property.
- Invest in your education and advice to make the most of what you are doing and to ensure your valuable time is not gobbled up open homing weekend after weekend. When we get frustrated we tend to eventually purchase just to get the job done! Our time is valuable and we run out of patience.
- Working with a team really streamlines this process to minimize your input and maximize any time spent and the rewards.
- This is a business, so treat it like one. Create your team and work with them to build your asset base safely and successfully. If you make the common mistakes that the typical kiwi DIY investor makes then you put yourself at risk and you limit your rewards.
I hope you found some part of my story inspiring. Truly, I think anyone can invest in property if they just have a go.
To start writing your own property investing success story, come along to a Property Investment Masterclass.
See you soon!
– Lisa de Vries
PRE NZ Head Of Education, Property Coach and Investment Mentor
Reserve your FREE seat here – Property Investment Seminars