Next Steps Help - Moving from 6 to 50+ properties .... Advise in Wellington

[kiwibean]

Hi all,

Thought I would throw it out here. I am looking for someone in the greater Wellington region that I can buy a coffee and have a chat around property investing and what are the next steps to help me with my strategy. I currently have 6 properties which I have purchased since 2013. I am looking at growing this substantially and would to get some advise from someone that has done it. (I had a property investment company call me no long ago to see if they could "help" me, when I asked how many properties they had, they told me the mentor had was less than mine........ it didn't really interest me, as I know they are just trying to sell me their services)

I am very keen to learn from someone that has done it, looking at buy and hold strategy. Guess the one of the main questions is around banks and how to get to the next stage.

I am already signed up with WPIA which is great but thought I would try here to see if there is anyone I can possibly talk with.

Thanks in advance,
Simon

[PTILoveYou]

Perhaps discuss with a very good mortgage broker who has been in the lending business for a while to discuss?

Basically you need both equity and cashflow from each deal to be able to continue to borrow. Equity is less of a problem these days due to capital growth in recent years, but serviceability is the big problem now.

The more you borrow, the harder it will be, as there are only so many banks you can diversify your lending across. The more borrowing, the more risk you are to the bank, and lending gets progressively harder.

[orion]

Hi all,

Thought I would throw it out here. I am looking for someone in the greater Wellington region that I can buy a coffee and have a chat around property investing and what are the next steps to help me with my strategy. I currently have 6 properties which I have purchased since 2013. I am looking at growing this substantially and would to get some advise from someone that has done it. (I had a property investment company call me no long ago to see if they could "help" me, when I asked how many properties they had, they told me the mentor had was less than mine........ it didn't really interest me, as I know they are just trying to sell me their services)

I am very keen to learn from someone that has done it, looking at buy and hold strategy. Guess the one of the main questions is around banks and how to get to the next stage.

I am already signed up with WPIA which is great but thought I would try here to see if there is anyone I can possibly talk with.

Thanks in advance,
Simon

Simon,

Did you attend the seminar I did in Wellington last Tuesday evening for the Property Investors' Association?
If not, have a read some of the articles in the 'sticky' part in the section on here.

[kiwibean]

Hi Graeme, I am joined to WPIA not the CPIA which are different and totally forgot that you were having a chat last Tuesday. So unfortunately I missed it. I will look over that section etc.

Gary - I agree I might need a good broker, but it is not just that I would happily pay someone to help me out and look over my structure etc to see if I am on the right track and what I might be missing. But would only pay someone if they actually have done it and have proof as per my previous post of many oeoiple who think they know but would only know as much as me or less.

[PTILoveYou]

Gary - I agree I might need a good broker, but it is not just that I would happily pay someone to help me out and look over my structure etc to see if I am on the right track and what I might be missing. But would only pay someone if they actually have done it and have proof as per my previous post of many oeoiple who think they know but would only know as much as me or less.

Perhaps read Orion's sticky and maybe even drive up to see him in person

[Eugene]

WPIA - you have there a wonderful generous family who are members, mum, dad and son, very successful buy and hold and the dad has war stories, hasn't always been plain sailing.
I'm prob not supposed to write their name here so PM me if you like.
At Orion's talk at CapPIA I caught up with another very experienced large Wellington investor, again very generous with time, even willing to go to fireside meetings - the father of someone who featured in Orion's books actually.
And Orion of course also very generous and had something to say about Wellington.

[orion]

WPIA - you have there a wonderful generous family who are members, mum, dad and son, very successful buy and hold and the dad has war stories, hasn't always been plain sailing.
I'm prob not supposed to write their name here so PM me if you like.
At Orion's talk at CapPIA I caught up with another very experienced large Wellington investor, again very generous with time, even willing to go to fireside meetings - the father of someone who featured in Orion's books actually.
And Orion of course also very generous and had something to say about Wellington.

Thanks Eugene, was great to meet you at the meeting there
I had breakfast with the guy you mentioned and his son the next morning, really nice people and willing to help others.

It is definitely possibly to grow from 5 to 50 properties relatively quickly if you are smart, know the market well, can negotiate a good deal and keep the banks onside, and have them work with you to achieve it. Sometimes it means changing lenders or adding new ones to help.

What is your current LVR Kiwibean?

When I had some cash in the year 2000 (about $350k), it was difficult to get any loans as I didn't have a job, but once one lender was agreeable, within 2 years I had 60 properties. A lot of those were wraps, so made it easier but if you already have a reasonable foundation to start from then it should be possible.
I find it easier now to get finance as my foundation gets stronger every day, not stays the same or weakens.

[PTILoveYou]

In order to keep buying, you need:
1) buy 25%+ equity per deal (buy undervalue + reno + improvements) as you will need to top up 20% equity (80% of any increased value) AND reno money. If you can't achieve this, then you will run out of equity and reno money and can't continue unless the areas you buy has any capital growth..

2) due to bank servicing requirements, banks only take into account 75% of rent, and also some banks apply 7.3-7.5% servicing rate. These two combined means you need to buy properties that have 10%+ gross yield in order to keep borrowing. Unfortunately to be able to buy these high cashflow properties, you will be buying into slumpy towns of middle of nowhere and you will have tenant quality problems too. Also no to minimal capital growth.

3) once you have many properties, banks may deem you to be rent reliant, and then you will have to buy even better bargains to get around that... this is where the dark art of mortgage broking/lending begins.

Of course you can stretch your timeline longer, but then that has a lot of other variables.

Good luck.

[orion]

In order to keep buying, you need:
1) buy 25%+ equity per deal (buy undervalue + reno + improvements) as you will need to top up 20% equity (80% of any increased value) AND reno money. If you can't achieve this, then you will run out of equity and reno money and can't continue unless the areas you buy has any capital growth..

2) due to bank servicing requirements, banks only take into account 75% of rent, and also some banks apply 7.3-7.5% servicing rate. These two combined means you need to buy properties that have 10%+ gross yield in order to keep borrowing. Unfortunately to be able to buy these high cashflow properties, you will be buying into slumpy towns of middle of nowhere and you will have tenant quality problems too. Also no to minimal capital growth.

3) once you have many properties, banks may deem you to be rent reliant, and then you will have to buy even better bargains to get around that... this is where the dark art of mortgage broking/lending begins.

Of course you can stretch your timeline longer, but then that has a lot of other variables.

Good luck.

This is exactly why I'm pretty much over being on here once again.

People like you Gary who actually think they know but don't - try to tell others what to do and false reasoning and logic behind it as well as just outright bullshit.

Good luck Kiwibean, I've said my part here and you can take from it what you want to.
I do wish you well and know that with the right help and mindset, you will make it happen.

[Damap]

How is anything he said incorrect Graeme? Those things are all true are they not? His comments about slumpy towns (sic) are unhelpful but the actual facts re lending are all correct ?

[Wayne]

This is exactly why I'm pretty much over being on here once again.

People like you Gary who actually think they know but don't - try to tell others what to do and false reasoning and logic behind it as well as just outright bullshit.

Good luck Kiwibean, I've said my part here and you can take from it what you want to.
I do wish you well and know that with the right help and mindset, you will make it happen.

There is still a place for those who have done it the 'real' way Graeme.
I agree that it is a worry that people may take as gospel the word of someone who, while they have done well, started at the start of the current boom.
Time will tell but being through several cycles and still being here makes you a person worth listening to.
Hopefully people will take at least some of what you say on board.

[Wayne]

How is anything he said incorrect Graeme? Those things are all true are they not? His comments about slumpy towns (sic) are unhelpful but the actual facts re lending are all correct ?

I don't know - Graeme doesn't seem to be buying in 'slumpy towns' and has grown quite a large 'new' portfolio in the last couple of years (according to his very informative thread).

[Eljay1]

Gary is definitely Auckland-centric, which is fine as long as people are aware that there are different strategies available.

Gary, if you were just starting off in investing now what strategy would you use to reach financial independence, given that you very probably wouldn't be able to simply rely on a rapidly rising market?

[Wayne]

But the thread was started by a person in Wellington - how does an Auckland centric strategy become the answer?
Surely answers should be in context?

[Damap]

Wayne that has nothing to do with my question. What is incorrect about the lending facts?