"Property Climbers" program a good lesson.

[flyernzl]

Last night's "Property Climbers" television episode featured two young woman entering into a partnership to buy a rental investment.

Regrettably, I did not record this program. I wish I had.
If I ever run a seminar on rental property, I would then be able to show this episode as the perfect 100% wrong way to go about this sort of investment.

From failing to draw up a proper partnership document to looking at the wrong sort of property, failing to make any allowances in their costings for rates, insurance, and any other expenses apart from their mortgage interest, to relying on the advice of a real estate salesperson (who generally know nothing at all about what constitutes a good rental investment) I cannot think of any mistake that they did not make.

Their crowning achievement was to sit down in front of the vendor's agent and say "We'll make an initial offer of $275000 and go up from there". Hardly the right opening gambit if they want a bargain.

Bunnys.

I'd love to hear how they view their "investment" twelve months later.

[SuperDad]

I also thought it was very funny when they told the REA what their limit was.

Certainly some good lessons there.

[Glen]

flyernzl, have you seen this thread also?

http://www.propertytalk.com/forum/showthread.php?t=7018

[MoneyMaker]

Mr Newland ...

Missed this episode, but I understand Olly Newland is on the show as an "expert" what did he have to say on the fact that they had not formed a proper partnership, etc for this investment exercise?

[mjmarketing]

Saw the prog............

I too thought it was strange that the partnership had not been formalised before they bought - it was said at the end - kind of like an afterthought by Ollie - that they needed to sort that out!

The lady who showed them through the house was not a real estate salesperson - I know her and is the Property Management head who is very experienced and is very successful at what she does.

[leapy]

I applaud them for actually doing it. And odds on they will probably do just fine out of it.

Most investors will readily admit their first investment was not textbook - and not their most savvy.

And with their intention to live and work overseas for a while and their good qualifications - it's pretty likely they will be on better money than they are in NZ and the bills back home will be a doddle.

They've got a foot on the bottom rung of the ladder. Hopefully they find themselves a good property manager.

I'd like to say well done to them.

[Davo36]

Yeah you've gotta have a go. Only way to learn.

[Halfway To Paradise]

What amazed me was when they said they had not put together a legal partnership agreement. Especially after they said they met when they were 16 and had gone through law school together. Makes me wonder what they learned at law school.

[Glen]

Yeah you've gotta have a go. Only way to learn.

Too right!.....I'd rather give something a go and fall on my arse,... than to sit on my arse and do nothing!

It seems strange that this show could've justified being an hour long, but is only a half hour, and yet a crap show like deal or no deal , has less than a half hour of content, but it is stretched out to one hour???????

[cube]

Missed this episode, but I understand Olly Newland is on the show as an "expert" what did he have to say on the fact that they had not formed a proper partnership, etc for this investment exercise?

To be fair, Olly did say that, to become a successful investor, you need to 'buy bargains, not pay retail like this pair did'.

The lack of a formal partnership may come back to bite them later, when they want to sell or have to pay for some maintenance.

Unlike the week before, I didn't get the impression that Olly had spoken directly with this pair?

cube

[flyernzl]

I didn't get the impression that Olly had spoken directly with this pair?

cube

That was the impression I got, too. They were just doing it, and he was commenting on their activities.

What these two ladies have done is commit themselves to a capital-gains exercise. They will be relying on increases in housing prices to make anything out of their deal. The rental income will just reduce their cash losses in the medium term. That's fine, if you realise that this is what you are doing and the implications and risks of doing that. I don't think they (and many others) consciously realise that this is what they are doing, and it's anyones guess how much values will increase (if at all) over the next five years.

My impression is that they had been told 'invest in property and make money' as if one automatically follows the other.

Conversely, the older couple in the same program who had developed an exercise in putting additional dwellings on large sections in country towns had a very clear idea of what they were doing, the goals they were working towards, and how they proposed to get there. Applause.

Personally, I would not go into a program like this. I prefer to keep a lower profile. Whenever any of my tenants attempt to find out how many rentals I own and how wealthy I am I immediately point out how much I owe the bank, so much that HSBC rings me up from time to time and inquires if I am feeling well and have I had a medical check-up recently. They can't afford to lose me.
I clatter around my properties in a diesel van, keeping the Rolls Royce to commute to polo in the weekends.

[juba]

To be fair, Olly did say that, to become a successful investor, you need to 'buy bargains, not pay retail like this pair did'.

The lack of a formal partnership may come back to bite them later, when they want to sell or have to pay for some maintenance.

Unlike the week before, I didn't get the impression that Olly had spoken directly with this pair?

cube

Sure these two made all the obvious mistakes pointed out by the experts around, but good on them for having a go, and while it has been pointed out that it is not a "bargain" it was ideal for them in the sense that it should be low maintenance, especially since they don't look like diyers and they are in it together.
It may not prove to be a great investment in the short term
No one has had to "buy bargains to be a successful investor" while i have been in game (10 years) in fact every house i have seen for sale up to last year I could have paid 10 percent extra for and they would have still been "bargains"
(although I am bearish now)