My Statement of Intent !!

[Emblaze Pete]

As a new member of the forum and new to property investment, I though I would share with you my intended route to freedom and my statement of intent, albeit very broad and not very much hard detail. I am returning to NZ in a few months after being away 15 years and probably like most of you I want out of the rat race and the corporate world. I have always had high income but have never done much with it. (normally through poor investment choices, rather than red carpet, champagne and caviar lifestyle) Its time for a different approach and a different way of life which hopefully will result in not having to attend 7am meetings on a daily basis in the cold dark wet mornings of an English winter.

2006-2008
My thoughts at the moment are, upon my return to NZ obtain a PAYE job (not very smart) or continue as a self employed contractor.( also not that smart) Earnings would be aprox 100-120K pa. This would allow me to settle back into NZ, learn PI and keep income flowing in for property over the next 2 years, plus give me the ability to raise borrowings with the banks against my income.
The idea would be to use the next two years outside of work to gain greater understanding of the various PI techniques and learn as much as I can about being a PI. This may entail the odd course or two plus reading many of the property investment books and lots of networking. This would allow me time to build up some traction and confidence. The long term goal will be to build passive income and become finically independent. I would be looking to learn and use the following activities, plus whatever else is out there, to generate cash flow.

• Sandwich lease options, Lease options
• Assignment of contracts
• Flipping
• Buy and hold
• Buy and on sell

In this 2 years period I would hope to buy 1-3 properties plus maybe trying out a few lease options, assignments and flipping situations. I think once I have a few of these transactions under my belt, the confidence will grow quickly.

2008 – onward until retirement day
Give up the rate race and start to aggressively build a portfolio with a view to financial independence. It will be over the preceding 2 years that I will need to define how this will happen with well defined goals. My thinking at the moment is to be able to continue generating income from lease options/ sandwich lease options, flipping, assigning contracts and ploughing profits/ income into buy and holds.

I don’t believe for one second this is going to be an easy journey but I do have determination to succeed. That said, if you see me on the streets of Wellington with a cap in hand… flick us a few coins eh
A real part of me wants to just delve straight in, take my chances and learn the ropes on the fly as I am going. As they say you can’t beat living and breathing it. Feel the fear and all that stuff. I wondered if any of you had any thoughts or are in similar situations.

Kind regards

Pete

[CJ]

A couple of questions:

- How much do you enjoy your job
Can you go contracting in NZ - the contracting market is very different in NZ to the UK.

Depending on your answer to the above two questions, you could phase yourself out of the workforce.

ie. Get contracts and save deposit. reduce to say 4 days a week by managing the work you accept. Use the extra day on property. drop back to 3 days and do a bit more property. Drop back to only doing assignments you would enjoy and spend the rest of your time on proeprty, on the golf course or at the beach.

Alternatively if you dont like you job, this approach may not be suitable.

This is what I would like to do but the contracting market in my line of work is not present in NZ so I might consider a small shift while overhere.

[Emblaze Pete]

A couple of questions:

- How much do you enjoy your job
Can you go contracting in NZ - the contracting market is very different in NZ to the UK.

Hi CJ

1) I can’t stand the job if I am perfectly honest CJ I use to think it was ok until I realised I was lying to myself. I just put up with it. For me it is and has been purely about income which is sad I know. With property, I think I can at least develop a real passion so that for me, would make all the difference.

2) Contracting in my line is not a problem in NZ. In fact I would say for me, it would be preferable, purely from a ‘claiming expenses against income’ point of view, as apposed to PAYE where the only thing you are likely to receive is a huge tax bill with lots of love from the Govt. Plus the earnings should be higher than PAYE.
However I would say that scaling down days would be very difficult, as most or nearly all contracts that I know of are based on a 5 day week (6 month or 12 month contract etc). Shame really as that would have been ideal. It could work though on a 6 months on 6 months off basis. That said employers are sceptical though, if they see a gap of 6 months thinking that you are out there sunning yourself or on golf course. They like to see continuance work flow, but it would work for a year or two.

[artemis]

Contracting in Wellington

Hi CJ

2) Contracting in my line is not a problem in NZ. In fact I would say for me, it would be preferable, purely from a ‘claiming expenses against income’ point of view, as apposed to PAYE where the only thing you are likely to receive is a huge tax bill with lots of love from the Govt. Plus the earnings should be higher than PAYE.
However I would say that scaling down days would be very difficult, as most or nearly all contracts that I know of are based on a 5 day week (6 month or 12 month contract etc). Shame really as that would have been ideal. It could work though on a 6 months on 6 months off basis. That said employers are sceptical though, if they see a gap of 6 months thinking that you are out there sunning yourself or on golf course. They like to see continuance work flow, but it would work for a year or two.

You may find employers more flexible now, especially if you have in demand skills, as unemployment is now very low. I know several IT contractors working part time in Wellington, usually 4 days. Some weeks it turns out to be 5 days (or more), however, which goes with the territory.

[CJ]

Back to your original question - having a plan is a good start.

I think that taking a job or contract would be beneficial initially as you start to learn a market. Once you know what area you want to focus on and start to learn what rents are, what property values are, then you can start to launch into it. The banks will also see you move favourably due to having a good income.

The problem that I see is the getting out of work. You will need to have commitment to do this (which it sounds like you do) as once you ditch the job, you lose the income which has been making the banks happy. Once you get over this hurdle it should be fine but I image this is the hardest bit about going full time. Others who have gone full time may be able to comment more on this.

Good luck.