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My Property Investing Journey – Grads

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  • My Property Investing Journey – Grads

    Hello to everyone following this forum. I would like to share my property investing journey so far to benefit those interested about creating wealth through property investment. I am passionate about property investment as it gives the opportunity for anyone willing to learn investment fundamentals to achieve significant wealth. I started my investing education after being completely lost in life; I had nothing but a massive desire to learn about how to invest successfully to create wealth and financial independence.

    If I receive any criticism for this post that’s fine, its part of life when you post publicly, maybe I might even learn something. I’ve learned not take things personally. I’m not writing the following to promote myself, most my friends and work mates don’t know of my investing and that’s how I prefer it. I’m writing this because absolutely anything is possible with property investing and I want to share how I achieved my investment goals. I am also writing this post because it is very easy to do well when property values are rapidly rising. I have been an active investor during bad times not only the easy times of the last few years. If you are going to act on investing advice it is prudent to take advice from someone who has experienced complete property cycles as there are valuable lessons to be learned.

    This week I have completed a successful commercial property sale which greatly improves my financial situation. I have achieved my property goals while taking my family along for the journey. Being father to three young boys I’ve decided to park active property investment goals for now and I want to share with others my story of what has worked best for me.

    Background
    2000 dreams were shattered after failing to qualify for Sydney Olympics at final qualifying tournament in May 2000 when I was beaten by former two-time Olympian. For years I trained hard and represented NZ internationally working towards peaking at the Sydney Olympics. I had always planned on sporting success providing my future career and financial wealth. I was 23 years old, managing a gym in central Auckland and completing my final paper of Sports Degree. After this setback I quit my job and walked out of uni without completing my final paper after dispute with staff (three years later when I wanted to finish my final paper AUT faculty of sport ruled I had to re-enroll and start over due to the time taken). That was one tough and expensive lesson.

    After meeting recruitment consultant about possible next steps, it was suggested due to prior study in commerce to look into banking and finance. Within months I was working in banking. It wasn’t long before I was bored of cubicle life with no windows and I searched for other opportunities. I moved into commercial finance role responsible for covering NZ in demanding role working very long hours. Almost two year’s later after unrelenting travel I took up new opportunity for Startup Company that I am still employed with today. I enjoy my work, the great relationships and being involved in sales and innovation projects and excellent work culture. I like the fast paced environment of the finance industry that’s constantly developing due to technology.

    Investing Beginnings
    2003 Boss took me to sales success conference in Auckland where I listened to speakers including Brian Tracy and Brad Sugars. This opened my mind learning to what successful people do and I was amazed I had never been exposed to this kind of thinking. After many years of University and Sports Institute study where I learned about psychology, goal settling and visualizing but nothing about psychology of success, psychology of selling and unstoppable confidence.

    The first property book I read was Dolf De Roos Real Estate Riches and I continued to read dozens of property investment books. I was aware information was important but nothing happens without action. I was 26 years old and I went searching for my 1st property to buy. I purchased a 4 bedroom West Auckland property needing a lot of repairs from very motivated vendor. For 2-3 months after completing a lot of repairs and maintenance including plastering over holes in walls. To my surprise 90 days later the property had increased in value $90,000. Back to the bank I went and refinanced to borrow the next deposit. This first property purchased in 2003 is still a buy and hold investment today.

    I could write and discuss property experiences at length of risks I’ve taken, shouldn’t have taken; numerous pitfalls encountered and dealing with negatively geared properties in uncertain times. I’ve learned it’s crucial to have good people around you, supportive partner and know everything will work out if you never give up. You must take 100% responsible for everything in your life and the choices you make. Every habit is either taking you towards where you want to go or away from it. I’m certainly not going to say achieving all your property goals is easy but I can tell you it is definitely possible and the best time to start is now.

    The initial goal was to purchase 10 buy and hold properties with $1,000,000 equity. This was achieved before 2010 after buying properties in Auckland, Hamilton, Rotorua, Otago, Palmerston North and Tauranga. The GFC consequences resulted in taking a different view on best actions for sustainability as property values do not always increase, values work in cycles. These actions included selling under-performing properties and re-investing profits to buy better quality properties, restructured loans to minimise risk, use various entities when required, focus on reducing debt and increasing rents.

    To summarise investing and achievement principles of over the last decade the following is how I now Think, Act and Invest.

    INVESTING GUIDELINES AND PERSONAL PHILOSOPHY (alphabetical order)

    BE COUNTER-CYCLICAL
    From Buffet be fearful when people are greedy and be greedy when people are fearful. e.g. my next purchase will NOT be in this current market but when vendors become motivated and wanting to sell quick

    BE FLEXIBLE AND PATIENT
    Learn not to react to any situation rather take time to consider all options; what is the worst case scenario, accept that then work to improve on the worse case. Being patient and flexible has allowed me to get the best outcome from negotiations

    BE OF SERVICE
    How may you serve. Whether it's helping your friends, family, colleagues or community by helping others and being of service you in turn will receive what you want. You must give first in order to receive

    BE ON PURPOSE
    Look for the good in what you do, if you can’t do what you love, love what you do. Attitudes and energy is contagious, get passionate about what you do, be on purpose and the world will open up to you with unlimited possibilities

    BUY AND HOLD IS BEST
    Preferred strategy is buy and hold. I never wanted to be trader as I didn’t want another job. Passive income is preferred; my objective was to build up significant portfolio in spare time. Property appreciates in value and rent over time. Once sold a property can seldom be purchased again for less

    CASH-FLOW IS KING*
    If your properties cannot self fund you are asking for trouble. Negative gearing will handbrake growth and make you vulnerable. I learned in 08-09 banks do not like negatively geared property. Purchase property at least cash-flow neutral initially and create increased rent.

    DEVELOP A DAILY MORNING ROUTINE
    Use to your advantage the power of establishing a daily routine to supercharge your day. This would have to be one of the best things I’ve incorporated into my life. Once I wake, exercise, fill my mind with positivity and eat a nutritious breakfast I've set myself up to have an awesome day. Any negative events then feel like Teflon

    DEVELOP EXIT STRATEGIES
    Know set your ‘Stop Loss’ (bottom price) when it’s time to get out of an investment if you have to. ‘Zero based thinking’ if there is something you have done that you shouldn’t have or wouldn’t do again the question to answer is how fast you can get out.

    DIVERSIFY BY OWNING NUMBER OF PROPERTIES
    Diversification by asset class allocation is financial planning advice to spread risk. If you spread risk doing this you receive average returns overall (every asset class cannot give great returns at the same time). Instead you can diversify with safety in numbers by owning multiple quality properties in multiple quality locations for overall superior returns

    FACE YOUR FEARS
    It may be only one thing holding you back from achieving what you want. Have the goal to be confident and courageous in any situation. Courage is not having any fear; courage is feeling fear but following through anyway. I had a great dislike of public speaking; I joined toastmasters (TM) and completed CC and CL programs. I highly recommend TM to anyone wanting to conquer the fear of public speaking and become a confident speaker in any situation

    FEED GOOD NOW
    It’s important that you feel good. You get back in life what you put out; you reap what you sew, karma and cause and effect. To help feel good think positive thoughts, appreciate and be grateful for what you have in your life. If you can’t feel good now imagine what it would be like have life exactly how you want it. Playing your favourite music is great way to feel good instantly

    FOCUS ON YOUR MOST IMPORTANT TASKS (MITS)
    Set maximum of 3-5 MITS each day. Ideally only 1-3. This will help you focus and spend your time and energy on what is most important and meaningful to you. Same with Goals don’t set too many goals ideally 1-3 most important goals e.g. Financial, Relationship, Health

    GET A GREAT TEAM
    Having a great team around you e.g. local property association, solicitor, property coach, accountant, family, mentor etc is essential for success and provides well balanced approach to investing. A property coach can fast-track your goals. I was coached for approx 6 months in 2005, for the thousands of dollars I spent this was a good investment in my future. Only listen to those that have practical experience and have achieved the result you want. Ditch or limit time with anyone that pulls you down

    HAVE FAMILY HOME WITHOUT HOOK ATTACHED
    If you have a family home it can be beneficial to use equity to buy investment property however you must have plan in place when your home (PPOR) can be released as security. If you have PPOR used as security by lender your home will always be at risk. Real freedom is not having hook on your home

    HAVE FUN
    Enjoy what you do, have fun, lighten up, laugh daily and don’t take yourself too seriously. Learn to Let Go of things that aren’t important. There is nothing better than having fun and enjoying a good laugh. Laugh off any negativity or criticism

    HAVE PLANS TO REDUCE DEBT
    It can be okay to start buying properties with Interest Only loans or small deposits however have plans for loans to change to Principal and Interest so you are reducing debt every month. Leverage works both ways, when the market deteriorates you will be glad you were reducing debt when property values are falling

    HAVE SET PLAN OF ACTION
    It’s important to know where you are heading. You can deviate from any plan but you should have a clearly defined plan. The Why is most important and the How is least important. Once you have a set plan include a plan of action, nothing happens without action. Review your plan 6 monthly or at least annually

    HOUSES ARE BEST.
    Investing in houses is best. Followed by units. I’m not a fan of apartments and had too many issues with body corporates. Standalone houses or units with section (freehold title and land) provide more capital growth than apartments. It’s much easier to add value to a house than apartments. Home and income properties provide superior incomes

    INCREASE INCOME AND CAPITAL GROWTH
    Focus on how to create increased income and capital gain of each property before you buy. Renovate smartly, add on bedrooms, build sleep outs or minor dwellings and complete subdivisions to increase yield and value. I’ve accelerated returns in order of cosmetic renovations, minor dwellings, subdivisions and designed purpose built rental investments

    LEARN AND MODEL THE OUTCOME YOU WANT
    Listen and learn from those that already have the result you want. In school they call copying cheating but modeling successful people is a great strategy to achieve any outcome quicker than by trial and error

    LEARN ART OF ADDING VALUE
    Adding value fast-tracks growth. You can’t add value when investing in shares and have no control of performance. You should make money when you buy e.g. motivated vendor and have a plan to improve each property e.g. sweat equity through renovations, new carpet, repainting interior / exterior etc. An improved property keeps tenants happier and retains tenants for longer

    LEARN INVESTMENT FUNDAMENTALS
    Learn the basics of what makes potential purchase viable; yields, income, equity, risk management etc will put you in position to grow your portfolio. Many property investment books can teach you this. I went back to school while working and completed BBS degree in Entrepreneurship, business development and innovation (I learned to finish what I started).

    LINE OF CREDIT / REVOLVING FACILITIES ESSENTIAL PARTNER
    Revolving, flexi type facilities are essential business partner. They can fast track deposits and cover unforeseen events. Set them up with your lender/s as soon as you have increased equity. These facilities make unexpected costs stress free. CAVEAT these facilities can be reduced or withdrawn at any time by lender – I’ve had facilities reduced but never cut completely.

    LIVE IN DAY TIGHT COMPARTMENTS (CARNEGIE)
    Weekly and monthly tasks and events can seem insurmountable. Rather than looking at you’re to dos for the week and feeling overwhelmed live and focus only on today. Don't get held back by past events or worry about the future. Instead you can achieve a huge amount in a single day before resting and starting fresh tomorrow

    LOCATION AND QUALITY DESIGN
    Location, Location, Location is critical to property investment success however so is quality design and materials. Having owned monolithic plaster residential and monolithic plaster commercial properties with no eves in great city locations are disasters waiting to happen. I would rather own fewer well built properties in Auckland, Hamilton or Tauranga than many properties in small regional towns. Big cities that are desirable places to live provide more long-term capital grow

    MANAGE YOUR INVESTMENTS
    Learning gained through property management experience is invaluable. I would recommend this to new investors for the share learning it will provide before handing over to professional managers and focus on other opportunities. Having managed tenants for years I’ve experienced the good and bad. Property management experience gives hands-on approach and 360 degree view of investment upside and downside

    OTHER PEOPLE’S MONEY (OPM)
    Leveraging other people’s money can provide infinite returns. I simply wouldn’t be in my position today without using other people’s money, banks, non-banks, vendor finance etc. To grow your investments you must take risk and using OPM is your partner. Banks prefer to lend on property over any other investment type. Try going to any lender and getting 60-90% lending for share market portfolio and see how you get on.

    PROPERTY INVESTING LONGEVITY
    Investments should to be self-funding, cash-flow neutral-positive and not too highly geared. Ideally leveraged no greater than 50-70% with plans to reduce to <50%. Sell underperforming investments and re-invest in better quality property and reduce debt. Shorter term loans give greater flexibility i.e. floating, 6 months, 1-2-3 years). Economists forecast based on data and often are incorrect. Once had millions of debt fixed for 5 years at >8 percent and now know importance of not fixing for too long

    READ, READ, READ, LEADERS ARE READERS AND LISTENERS
    If you don’t want to invest in a property coach, read up on success books available on property investment and life. There is an abundance of investing knowledge and wisdom you can learn. Many of these books are available and free from your local library. YES FREE

    REMEMBER THE 80/20 RULE
    20% of your activities will produce 80% of your results. Focus on the important 20%. Reduce, delete, delegate or dump non important activities that are not in the 20% so you spend more time on the very important 20%

    SAVE 10% OF YOUR INCOME
    From the Richest man in Babylon, I have always saved 10%+ and invested once I had enough savings. The secret is to pay you 1st everyone else comes next. It’s not the amount of income you earn it’s your habits that count, whether you earn little or a lot your spending habits will remain the same.

    SET GOAL TO BECOME A MULTI-MILLIONAIRE
    As Jim Rohn (Tony Robbins mentor) said set the goal to become a millionaire not for the million dollars but for who you grow to be by becoming a millionaire. So set yourself the Goal to become a Multi-Millionaire. You many fall short and become a millionaire

    START YOUR OWN BUSINESS
    To create wealth start your own business, even a part-time business. There is much to be gained by owning your own business. As property investor you are in business and number 1 rule of business is to make a profit. A mentor (work CEO I was fortunate to interview for real life university business case studies) clearly advised ‘you will not be wealthy if you work for someone else, you must be a business owner to become wealthy’

    TAKE TIME TO THINK
    Find out what you really want in life; dream big, anything is possible. It’s as easy to dream big as it is small. Realise that any perceived limitations are self-imposed. Understand that if your goals are not written down they aren’t really goals at all. Make sure you write down your ideas when thinking

    THERE IS NO FAILURE
    There is no such thing as failure only feedback. If I worried about failing I would feel like the biggest loser now. There is only learning experiences. I have learned more from many set-backs, disappointments and failures but understand they are what make me stretch and grow. Stretch your comfort zone

    USE NON-BANK LENDERS
    Non bank lenders can accelerate growth when main banks are reluctant to lend. Once I started getting NO’s from banks I used Aussie Non bank lenders that would lend up to 90% then refinanced back to main banks at later. Learned valuable lesson of one bank trap risks in 2008-09 when bank cut my line of credits / revolving facilities are reneged of approved lending. Using multiple lenders minimise your risk. Use broker to discuss non-bank lenders.

    YOU MUST SEE YOUR GOALS
    See everything working out as you would like it to. Visualise and expect to achieve your goals. Whenever I didn’t win in competition was only when I had doubt and fear and wasn’t confident

    YOUR MIND IS YOUR MOST VALUABLE ASSET
    Your mind will be a strength or weakness. To have a strong mindset think thoughts which are calm, relaxed, confident and open-minded. Feed your mind positivity with positive thoughts. If you are thinking negative thoughts let them go (non attachment) and go back to positive thinking. Make this a habit and you will glide through any negativity. E + R = O Event + Response = Outcome. You decide how you respond to every event in your life

    WHAT IF SCENARIOS
    If you are purchasing any investment you must plan for ‘what if’ worse case scenarios with plans A,B,C and D. Understand how an investment affects your overall financial position. I once owned property with business partner (close friend) who gave me 1 week to buy him out or sell (Valuable lesson and has taught me to limit unexpected risks)

    THERE IS NO END GAME, LIFE IS A JOURNEY
    Once you achieve your goals make new goals, life is about experiences, learning, growing and expanding. Enjoy the journey as your values and priorities shift as you progress through life stages

    VALUE TIME ITS IRREPLACEABLE
    Manage your time well doing what is most important to you. Learn to manage your time efficiently and effectively. If you don’t know what is most important to you; take time to find this out (usually demonstrated where you spend the most time, energy, money and where you are most organised and disciplined)

    VISION
    It is important to have a vision of what you want. Seeing believes. My investing vision was owning a multi-million dollar property portfolio and personal vision of designing new double story family home by the beach with views. My visions have become reality and no lender has security over my new home

    I hope this post can be of benefit to other investors. Nothing is Impossible. Anything is possible.

    All the very best for your own investing journey!

    Grads

  • #2
    Nice. Thanks for sharing, the tips are perfect. Grads what discipline were you aiming to excel in at the Olympics?

    cheers,

    Donna
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    • #3
      brilliant and congrats..........

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      • #4
        Well done grads... It is valuable to have been through but the up stage and the down stages of a property cycle. There are many who have only seen up and think that they're bulletproof.

        some interesting thoughts in your post that could benefit people at any stage of their investing journey.

        Comment


        • #5
          Thanks Guys. Yes I thought the timing was ideal for posting. Having experienced the downsides of bank lending and declining values gives better perspective for investing. A lot of people only know the current market and media hype. The market will at some stage turn negative.

          I agree Hype people that have only seen good times think they are bulletproof. I have had my share of nervous times with banks that delay and change former decisions. It doesn't matter how good or strong your relationship is with your bank manager or commercial banker rules can and do change over night.

          Discipline was Boxing Donna, contact sport is tough but I loved it. Much like investing the outcome you get is 100% up to you and only you. Cheers

          Comment


          • #6
            Thank you Grads, I really enjoyed your post.
            I would love to know some of the books and writers you found most helpful.

            Comment


            • #7
              Thanks Eugene, as far as property investing NZ books, you can't go past Graeme Fowlers Real Estate Investor Secrets (+ 5 year update) as its helpful to know real people (not theory) have become millionaires using property in number of different ways.

              Lisa Dudson & Andrew King complete guide to residential property in NZ is also good. I have found books by Bob Jones & Olly Newlands also helpful (as they have experienced a lot). Most property investment books are similar and repeat key concepts.

              You want to work out what strategy best suits (and your risk profile). Many books and live seminars only give examples based on interest only loans. This can be fine when starting but there should be plan/s to reduce debt (P&I loans are great way to achieve continual debt reduction without selling assets while improving your financial position).

              I believe what is more important than books on Property Investing is books on success (i.e mindset). e.g most lotto winners eventually end up in worse position due to their mindset. (as Jim Rohn said, if you win a million dollars you better become a millionaire quick or you won't keep the money). For success read up on any material by Robert Allen, John Kehoe, T Harv Eker, Tom Hopkins, Brian Tracy, Jim Rohn, Tony Robbins, Earl Nightengale, Tony Schwartz etc

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              • #8
                Thank you Grads.

                Comment


                • #9
                  Great post Grad.

                  One request - Can you go into details about your purchases in terms of settlement dates, locations, purchase price, and current rental appraisal etc?
                  www.PropertyMinder.co.nz
                  # Property Management
                  # Ad Hoc Tenancy Services / Rental Inspections / Terminations and Notices

                  Comment


                  • #10
                    if someone wants to PM me re steps on how to copy someones post when replying would be most helpful thanks.. I can't seem to do this?.

                    Thanks Big D, I would provide specific details on purchases if I thought this was valuable and beneficial to readers but I don't really think it is. What is more beneficial are the steps and actions I had to take when I met significant challenges along the way and what I would do know if I had to start over.

                    I do think the best time to buy is always now! (if you haven't yet started investing). For any one looking to invest now, you must have your focus on income your investment can provide. If your investment doesn't have adequate income return you need to be able to create increased returns.

                    If I was starting now I would look to purchase property where I can either relocate a home on same section / or build minor dwelling. This gives immediate capital gain and improved yield (corner sites work great for this). I would also make sure I negotiated delayed settlement and access where I can begin adding value prior to having to hand over any $$ and settle.

                    Cheers

                    Comment


                    • #11
                      Hi Grads,

                      I started in 2002, and have been through 3 cycles, I would like to get to 10 properties so that I could sell down some in the next boom. In your opinion when do you think we will go into the slump phase? Are we entering into this now. Certainly feels like it. I have enough funds to purchase another property but I want to buy at significant discount to allow good cashflow! I invest in the auckland market so finding anything cashflow positive at the moment is hard.

                      FH
                      "DEBT BECOMES IRRELEVANT WITH INFLATION".

                      Comment


                      • #12
                        Brilliant post Grads, thanks for sharing your journey with us!

                        Allow me a few questions?

                        Would be great to see where did you end up number of property, cash flow and equity wise at the moment? You said you reached your goals in 2010 but surely expanded since?

                        Why did you buy all over NZ and if you kept this strategy still and follow it nowadays?

                        You have said you are employed at a startup, any reasons behind not going full time in property? Or even retire? (If it's your startup, I mean you are the founder than Its a different matter of course)

                        Thanks much again. Great post. I'm saving it for future reading for sure.

                        Pete

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                        • #13
                          Originally posted by Grads View Post
                          if someone wants to PM me re steps on how to copy someones post when replying would be most helpful thanks.. I can't seem to do this?.

                          Thanks Big D, I would provide specific details on purchases if I thought this was valuable and beneficial to readers but I don't really think it is. What is more beneficial are the steps and actions I had to take when I met significant challenges along the way and what I would do know if I had to start over.

                          I do think the best time to buy is always now! (if you haven't yet started investing). For any one looking to invest now, you must have your focus on income your investment can provide. If your investment doesn't have adequate income return you need to be able to create increased returns.

                          If I was starting now I would look to purchase property where I can either relocate a home on same section / or build minor dwelling. This gives immediate capital gain and improved yield (corner sites work great for this). I would also make sure I negotiated delayed settlement and access where I can begin adding value prior to having to hand over any $$ and settle.

                          Cheers
                          You will need to click on "Reply with Quote" button at the bottom right of each post to do that.

                          Personally, I always find it very useful to read about other investors journey in terms of where, when, and what they invested in as it gives an overall picture of their journey. You don't have to share it if you are not comfortable but it would be much appreciated if you could maybe let the readers know about which location you started investing and what happened from there etc.
                          www.PropertyMinder.co.nz
                          # Property Management
                          # Ad Hoc Tenancy Services / Rental Inspections / Terminations and Notices

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                          • #14
                            Great read Grads. As for your lessons you do make some great points. Can you cut down/distil your list of tips to a top 10 investment tips for budding investors?

                            Regards

                            Craig

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                            • #15
                              Just wanted to add my thanks for a great thread.
                              Free online Property Investment Course from iFindProperty, a residential investment property agency.

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