Hi all,
Interesting article - I would love to hear peoples thoughts on this...
"What is it about property that brings out the worst in people?"
Okay. Maybe the question was loaded. But veteran investor Olly Newland doesn't pick me up on it.
"It's the big numbers," he answers.
This from a man who called tenants "the enemy," real estate salespeople "the afflicted" and bankers "reptiles;" advised landlords to look for ways to legally break commercial leases ("It's your job"); and suggested renovating a home before sale can be a quick "painting over the cracks" effort.
Such gems from The Rascal's Guide to Property (Empower Education, 2002) shouldn't be taken literally, says Newland with a grin.
The gist of his message seems, rather, to watch for tricks others might play upon you, to stand back and get the big picture while also checking the fine print and always to ferret out the good deals.
With this approach, property investment can be a full-time career - but it's not, he says, one for the likes of lawyers, doctors and dentists, who tend to focus on details rather than taking the overview.
Nor is it for those wedded to the steady pay-packet, Newland warns repeatedly.
Property as a way to make a living has veered wildly from despised to venerated during recent decades but Newland has retained his tough, assertive (sometimes blunt) and, oddly, endearing style throughout.
Like thousands of others, Newland was carried away by the rocketing New Zealand sharemarket in the 1980s and, for a time, he lived the high life - and the high-profile life.
But that's another story.
Newland's perception of it is worth a read - whether you were there at the time or not. (The book is called Lost Property). Suffice it to say, Newland ran Landmark, a major listed property investment company which took millions in public money (including his own, some of it borrowed in mind-boggling schemes via institutions such as the BNZ, Fay Richwhite and DFC), and lost most of it in the 1987 sharemarket crash.
Newland says he wouldn't invest the public's money again. But, were he running a property investment syndicate today, he would buy 10 $1 million buildings rather than one $10 million building, thus spreading the risk.
He says Landmark was a successful business but fell apart owing to events beyond his control.
So, limited to his ability to wheel and deal from his own resources, how has Newland kept on keeping on? He says he has actually "done his dash," but he still has a mixed commercial and residential portfolio and isn't ready to "cash up and drop dead from boredom."
He says he never buys "sight unseen" and is still as careful with every deal as he was with his first. "You can't afford to make a mistake. You make plenty as it is."
Among the keys to success is to stay informed about the market. Newland says he talks constantly to other investors, to real estate agents and others in business.
For a good hour and a half every day, he also pores over the "to let," "to lease" and "for sale" columns.
Note that there are some days when the keenest vendors will have their ads in (usually Mondays, Tuesdays and Fridays), rather than on the "big" days for property ads.
The effort might seem scarcely worthwhile because, Newland adds, 99.9% of what is advertised is "rubbish."
However, he and other canny investors are looking for the elusive 0.1% of available property that is well priced and located. Much of the property representing good value for money isn't advertised.
Newland may be offered a property by one or other of the agents who regularly fire off information via his phone, fax or email.
He may see signs put up on a building and approach the agent. He may advertise one of his properties and sell or lease it out himself.
He reviews rents on a regular basis and negotiates a fair price for himself.
All this ensures the cheques come in. Newland says though the cheques tend to be large, they also tend to arrive infrequently.
It may be a matter of living on credit for a while.
"It's not a pleasant existence," he says - with the air of a man who has had a very pleasant time of late.
He admits there's room for his family and his hobby (antiques) alongside the property work.
Among the drawbacks is being unable to plan a holiday six months out because one never knows how financial one might be or whether a landlord-tenant or other crisis will crop up.
I ask where the good buys might be in Auckland residential. He looks at me as though I am an idiot before saying it's well known the areas with potential include the yet-to-be-infilled suburbs such as Meadowbank, Penrose, Panmure, Mt Wellington and Otahuhu.
"It will take 10 years, which is a long time to wait," he adds.
"There's no use buying 50 houses now. Look for the deals wherever they turn up."
Newland says banks can be reckless with their lending - for example, handing over 90% or more of the purchase price for an investment property, using the purchaser's own home as security.
Anyone tempted to buy at high gearing should consider what a 2% rise in interest rates and/or a 5% fall in rentals might do to their investment, he suggests.
Will a New Zealand official cash rate rise put an end to the present Kiwi house-buying spree? Not necessarily, says Newland. "One to two percent more won't stop people buying property."
However, the hot property market has become a bubble, and bubbles do burst, he says.
As the Newland wisdom has it, a crisis can kill the market in three months. "I'm advising people not to get into long-term deals relying on the status quo staying around."
Investors often get carried away, as he did, with empire-building: "You have to get burned financially before you realise it's quality not quantity."
If there is a burning ahead, the apartments sector will be feel it first, he says, and here, the developers will bear the early brunt.
Yes, property is volatile but over time, it's not normally as volatile as shares, Newland says. "I don't want to have a heart attack every morning checking share prices."
Newland has some sympathy for the Kiwi home-owners who bought heart attack material when acquiring so-called "leaky" homes.
"I never liked the plaster-board stuff," he says. "You could tell it was shonky."
The problem relates mainly to ventilation, he adds. "Let the water out and [the timber] will dry."
Newland predicts demolitions of rows of leaky Auckland townhouses within 10 years.
Whether keeping a property for 20 years or flicking it on in five minutes, Newland, now a grandfather, still enjoys the thrill of "nailing the deal." In between times, he says, he can sit around for weeks.
That's when the market research must be continued or the spur-of-the-moment holiday taken.
Newland also fits in property investment seminars which, he says - like his Rascal's Guide - walk people through aspects such as the sale and purchase agreement which spells out every deal - and is probably read thoroughly by
few.
Best Regards
Marc
News Source->
Interesting article - I would love to hear peoples thoughts on this...
"What is it about property that brings out the worst in people?"
Okay. Maybe the question was loaded. But veteran investor Olly Newland doesn't pick me up on it.
"It's the big numbers," he answers.
This from a man who called tenants "the enemy," real estate salespeople "the afflicted" and bankers "reptiles;" advised landlords to look for ways to legally break commercial leases ("It's your job"); and suggested renovating a home before sale can be a quick "painting over the cracks" effort.
Such gems from The Rascal's Guide to Property (Empower Education, 2002) shouldn't be taken literally, says Newland with a grin.
The gist of his message seems, rather, to watch for tricks others might play upon you, to stand back and get the big picture while also checking the fine print and always to ferret out the good deals.
With this approach, property investment can be a full-time career - but it's not, he says, one for the likes of lawyers, doctors and dentists, who tend to focus on details rather than taking the overview.
Nor is it for those wedded to the steady pay-packet, Newland warns repeatedly.
Property as a way to make a living has veered wildly from despised to venerated during recent decades but Newland has retained his tough, assertive (sometimes blunt) and, oddly, endearing style throughout.
Like thousands of others, Newland was carried away by the rocketing New Zealand sharemarket in the 1980s and, for a time, he lived the high life - and the high-profile life.
But that's another story.
Newland's perception of it is worth a read - whether you were there at the time or not. (The book is called Lost Property). Suffice it to say, Newland ran Landmark, a major listed property investment company which took millions in public money (including his own, some of it borrowed in mind-boggling schemes via institutions such as the BNZ, Fay Richwhite and DFC), and lost most of it in the 1987 sharemarket crash.
Newland says he wouldn't invest the public's money again. But, were he running a property investment syndicate today, he would buy 10 $1 million buildings rather than one $10 million building, thus spreading the risk.
He says Landmark was a successful business but fell apart owing to events beyond his control.
So, limited to his ability to wheel and deal from his own resources, how has Newland kept on keeping on? He says he has actually "done his dash," but he still has a mixed commercial and residential portfolio and isn't ready to "cash up and drop dead from boredom."
He says he never buys "sight unseen" and is still as careful with every deal as he was with his first. "You can't afford to make a mistake. You make plenty as it is."
Among the keys to success is to stay informed about the market. Newland says he talks constantly to other investors, to real estate agents and others in business.
For a good hour and a half every day, he also pores over the "to let," "to lease" and "for sale" columns.
Note that there are some days when the keenest vendors will have their ads in (usually Mondays, Tuesdays and Fridays), rather than on the "big" days for property ads.
The effort might seem scarcely worthwhile because, Newland adds, 99.9% of what is advertised is "rubbish."
However, he and other canny investors are looking for the elusive 0.1% of available property that is well priced and located. Much of the property representing good value for money isn't advertised.
Newland may be offered a property by one or other of the agents who regularly fire off information via his phone, fax or email.
He may see signs put up on a building and approach the agent. He may advertise one of his properties and sell or lease it out himself.
He reviews rents on a regular basis and negotiates a fair price for himself.
All this ensures the cheques come in. Newland says though the cheques tend to be large, they also tend to arrive infrequently.
It may be a matter of living on credit for a while.
"It's not a pleasant existence," he says - with the air of a man who has had a very pleasant time of late.
He admits there's room for his family and his hobby (antiques) alongside the property work.
Among the drawbacks is being unable to plan a holiday six months out because one never knows how financial one might be or whether a landlord-tenant or other crisis will crop up.
I ask where the good buys might be in Auckland residential. He looks at me as though I am an idiot before saying it's well known the areas with potential include the yet-to-be-infilled suburbs such as Meadowbank, Penrose, Panmure, Mt Wellington and Otahuhu.
"It will take 10 years, which is a long time to wait," he adds.
"There's no use buying 50 houses now. Look for the deals wherever they turn up."
Newland says banks can be reckless with their lending - for example, handing over 90% or more of the purchase price for an investment property, using the purchaser's own home as security.
Anyone tempted to buy at high gearing should consider what a 2% rise in interest rates and/or a 5% fall in rentals might do to their investment, he suggests.
Will a New Zealand official cash rate rise put an end to the present Kiwi house-buying spree? Not necessarily, says Newland. "One to two percent more won't stop people buying property."
However, the hot property market has become a bubble, and bubbles do burst, he says.
As the Newland wisdom has it, a crisis can kill the market in three months. "I'm advising people not to get into long-term deals relying on the status quo staying around."
Investors often get carried away, as he did, with empire-building: "You have to get burned financially before you realise it's quality not quantity."
If there is a burning ahead, the apartments sector will be feel it first, he says, and here, the developers will bear the early brunt.
Yes, property is volatile but over time, it's not normally as volatile as shares, Newland says. "I don't want to have a heart attack every morning checking share prices."
Newland has some sympathy for the Kiwi home-owners who bought heart attack material when acquiring so-called "leaky" homes.
"I never liked the plaster-board stuff," he says. "You could tell it was shonky."
The problem relates mainly to ventilation, he adds. "Let the water out and [the timber] will dry."
Newland predicts demolitions of rows of leaky Auckland townhouses within 10 years.
Whether keeping a property for 20 years or flicking it on in five minutes, Newland, now a grandfather, still enjoys the thrill of "nailing the deal." In between times, he says, he can sit around for weeks.
That's when the market research must be continued or the spur-of-the-moment holiday taken.
Newland also fits in property investment seminars which, he says - like his Rascal's Guide - walk people through aspects such as the sale and purchase agreement which spells out every deal - and is probably read thoroughly by
few.
Best Regards
Marc
News Source->
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