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  1. #181
    Join Date
    Sep 2004


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  2. #182
    Join Date
    Dec 2003
    Hawkes Bay


    Are Investors paying their fair share?

    One of the biggest misconceptions about property investors is that they are all wealthy. While some are, 99% of them are not; they have full time jobs and struggle to make ends meet like any other families. If a tenant doesn’t pay rent or unplanned maintenance needs doing, that money needs to come from somewhere. Sure it is usually tax deductible but you get to claim 1/3 of that back the following year.

    The majority of property investors only have one or two properties as rentals. They pay tax on anything left over after the mortgage and all maintenance, rates and insurance which is usually very little - if anything. It usually takes many, many, years of investing in residential property before any real money is made. I know more investors that have gone bankrupt than I know that have been successful over a long period of time.
    No investor I’ve ever met has wanted to be an investor so they could pay less tax. They go into it because they want to have a couple of properties freehold when they retire and not have to rely on the government supporting them (other tax payers).

    I’ve been investing for about 30 years and started saving (starting with nothing) as much as I could in my early 20’s for a couple of years to buy my first rental. I bought a property with virtually no knowledge after saving $25,000 which was more than a year’s wages as a mechanic for me at that time. Seven years later, I sold the property for a $40,000 loss and ended up with no money once again (I also had a solicitor loan of $10,000 that was paid back as well as a few thousand dollars of principal on the mortgage that had been paid back).
    However I did learn a lot from it and rather than giving up, I put what I’d learnt to use.
    Now 20 years later, it is a lot easier because of what I learnt. Over the years I also learnt how to buy, renovate and sell properties so have completed hundreds of these over the years, as well as now having 80 long term rentals.
    So GST as well as income tax is paid on the ones that we renovate and income tax on the rentals.

    Combined, last year I paid several hundred thousand dollars in tax, and over the last 20 years I would have paid more tax than 90% of people would earn in their lifetime. For many people, that’s still nowhere near enough though. When people say pay your fair share, what is someone’s fair share? Tax them until it’s not worth doing any more? That is what I think will happen if yet more taxes, regulations, rules etc are bought in, not only with property investors, but with business owners as well.

    If taxes are increased too much, you start losing tax revenue as people are driven out of the market. Government interference and wanting to do good for the very people they have made poor, makes them worse off in the end. With all the changes they’ve already put in place, many investors have sold up and if things continue, many more will do as well. Now there’s a waiting list of 10,000 people that have nowhere to live that the government is paying to have them live in motels, spending millions of dollars a week on accommodation for them. The very people that can rent them homes are the ones they are driving out of the market.
    The government spends approximately $80 million every day, 7 days a week on Social security, welfare and the pension.
    This is of course only a part of what they spend daily.
    As mentioned the problem is getting worse with about 10,000 people now on waiting lists, our tax payer money paying for these people to live in motels.
    The more regulations, rules and taxes they introduce will not help any of these people, the problem will just get bigger and bigger until they realise that you just can’t tax a country into prosperity.

    Home ownership rates?

    If more investors are pushed out of the market, there will of course be even less homes for people to rent; and the emergency housing list of 10,000 people will keep growing.
    What happens when someone sells a rental? One of two things, another investor buys it, or a person or family to live in buys it. If another investor buys it, nothing really changes. However if a first home buyer, or buyer returning from overseas buys it, it takes another rental property away from being able to house a family.
    So where does the person or family come from before they buy this home? It could be that they had another home and are upsizing or downsizing, or they could have been renting. These situations again will not change anything, as it hasn’t taken another property out of the available houses to rent. However if they have been living with their parents or in a flatting type situation, this will affect the overall houses available to rent. Often a group of young people will flat together and when one of them is able to buy a home, they will move out, leaving the other flatmates. So in some scenarios, depending on where the buyer comes from will depend whether another rental is taken away from the available properties to rent.

    If tomorrow I sold my 80 properties, there would be a variation of who the buyers are, but it would take away a portion of the overall properties in NZ that are available to be rented. The more that investors are regulated, controlled, told what they can and can’t do, and taxed, the more they will think it’s just not worth it and sell.
    The government is in no position to supply 500,000 of the approx 1.5 million homes in NZ for everyone, if all the landlords decided to sell up, nor would many people want that.
    About 35% of the population in NZ rent, which has slightly increased over the last 40 years but not hugely.
    Another recent thing that has taken a lot of properties out of the pool of houses available to rent is people using their homes as Airbnb. The income is often a lot more than they would get letting them casually, as they would if they were rented to families on a permanent basis.
    There are also a lot of RSC workers that come from overseas to pick fruit for five months of the year and they need accommodation. These again are a group of people that take up some of the available properties to rent.

    There’s a Perception that investors are greedy.

    I think it comes from a few things, ignorance being one of them.
    Another is people’s own perception, or idea of money. The other perceptions originate from the media and the government.
    When the government continues to tell the public that what is needed in the economy - ‘is to transfer money from people who are rich to people who are poor’, people over time get the idea that wealthy people are bad.

    However, if it wasn’t for investors buying properties or business owners employing people, the country would be in a real mess. The media can often sensationalise headlines and people get a distorted view of the article just by a headline. How do I know that? In various articles I’ve been involved with and talked about topics, people jump to so many false conclusions without even reading further than the headline, then commenting.

    There are a lot of people that think investors are greedy, pay no tax and contribute nothing to society. If you ask people to write down what is the first thing that comes to their mind when you mention the word ‘Money’, it will usually consist of a list something like this – ‘struggle, broke, hard to get, rich pricks, bills’ etc. To these people, their mindset is that money is bad, so people with money must also be bad! These are often the people that buy lotto tickets hoping to win a million dollars or more. The problem is, when people with a poor association of what ‘money’ is do win lotto, it is often gone within a short period of time. Why? Because they believe money is bad and so they have to repel it, or get it away from them. Wealthy people have a different association to money, so they attract it, not push it away.

    When I employed people for a franchise I was in for 10 years, we had incentive targets for the employees. As a result of these incentives, they would often get a pay rise of $10 or so a week (probably $20 in today’s money). Each time this happened, the week after they got another $10, I asked if they now had an extra $10 left over to save. They always kind of looked at me weird and said - No, why??

    How long does in normally turn investing into something profitable?

    The first 7 years I lost all the money I’d put in. After that, I’d learnt enough to start again.

    This was done in 3 ways:-

    1. Buy and holds which are a long term investment, and the purpose is to pay the mortgages off over 20 - 25 years and then have the income. Until then, there is often not a lot of profit if any. Many investors will still be running at a loss many years later and the majority never get as far as actually paying their properties off and having the income.
    For me, with buy and holds, out of the 80 or so from memory 17 have no mortgage on them and within the next 8 years or so, about 40 of them will have no mortgage. The rest will be paid off in full over the following 8 - 10 years.

    2. Trading i.e. buying below market and selling, or buying, renovating and then selling. This can be profitable, however there are a lot more skills needed to do this well consistently. In the last couple of years, we’ve bought and sold about 50 properties. These are taxed at a higher rate than income tax, as we pay GST as well. Many investors don’t see the point in risking money doing this type of property investing, as a huge portion is paid in tax.

    3. Wraps or more commonly known as rent to buys. About 20 years ago, I helped about 40 HB families into their own homes with me giving them a mortgage. I would buy the properties at a good price, about 10% below what would be considered their ‘market’ value and then sell them to people who only had around $2,000 as a deposit. A few I also did on no deposit. So I had a mortgage with the bank for say a 7% interest rate and would sell them on at market price to the first home buyer for around 8.5%.
    They would also pay rates and insurance to me weekly which was included in their mortgage payment. This worked well mostly as it gave me about $50 a week cash-flow for each property for setting it all up, plus it got people into their own homes.
    They could refinance at any time with a bank when they had enough equity, which in many cases was only 2 - 3 years. The problem was, two things happened. The banks decided they didn’t like it, and also the IRD wasn’t that favourable towards them. Some of it justified (because of investors doing things that weren’t ethical or made any sense) and some not. The government made up new rules as well with such things as the credit contracts act, and it just again became not worth the hassle of it all, so I stopped doing them.

    Is there an adversarial relationship between tenants and property owners?

    Sometimes yes, sometimes no. Sometimes justified and sometimes not.
    We have ours managed so the tenants deal with our property managers who are great at what they do. Often landlords who manage their own properties will get themselves into conflicts with their tenants. Either the landlord is way too fussy how they want the property kept, or just don’t have the money for costly repairs. Now it’s getting worse of course with all the new rules with insulation, heating, ventilation as well as other things they keep bringing out. Many rental properties are better places to live than the investors’ own homes now, they just don’t have the funds to do the same things to the home they’re living in. This again is another reason more and more investors will leave the market, not being able to afford all the new government regulations. And of course on top of all that, they now want to tax capital gains.
    Last edited by orion; 12-03-2019 at 08:00 AM.
    Facebook Property Chat Group NZ

  3. #183
    Join Date
    Dec 2003
    Hawkes Bay


    Why We Do What We Do (November 2019).

    A little over 6 months ago, Katrina said to me “I know what I’m going to do next”. It took her three days to tell me, as she wanted it to be the right time.
    She finally sat down with me and said “I’m going to organise a property seminar for later on this year.” I said “really, why do you want to do that?”
    She said it was something she wanted to do and was very talented in event management. I knew that from having her organise our entire wedding from being engaged one day to being married 6 weeks later. We had 80 guests from all over NZ and the day ran as smooth and perfect as it could possibly go.

    So, I never doubted that she could do it, but I said to her ‘well, don’t ask me to speak at it because I’m not going to!’ Having prepared herself for 3 days before telling me, she was ready for my answer. 
    She said “that’s ok, I’m getting Jolene to speak on manifestation and the law of attraction” I replied “whaaat, not me?” I then said “well you won’t get many people there, how are you going to get anybody to go to this seminar?”
    She said “I’m going to put it your Facebook investor group to over 20,000 people! I’ve already mentioned it on my Women’s Property Investing Chat group which has over 1,000 people in it. There are already a lot of women just there that are keen to do it. Jolene messaged me and is going to be one of the speakers for it”.
    I said “ok, well I hope it goes well then (not really being serious)”. Then she said “and I’m going to get Phil Thompson to do a talk on negotiations!” I said “whaaaaaat, not me!?” She said, “no, he’s better than you anyway” 
    I thought about it for 2 seconds and then asked her “well if I did agree to speak at it then, what would you want me to talk about?” Katrina replied “I thought you didn’t want to talk at it?” I said “well if Phil and Jolene and going to be speaking at it, then it will probably be quite good. If I did agree to speak there, what would you want me to do a talk on?” She said “I don’t know, you’ll think of something.” 

    That’s how the weekend conference we held over the weekend was created. We named it “Summit by the Sea” and had the most prefect weekend for it. It was held at the War Memorial Centre in Napier with amazing views out of the room overlooking the ocean. It was a stunning location and conference that Katrina put on.

    The feedback from people has been mind-blowing to say the least. On the Sunday morning after the Q & A session and panel discussion, Katrina had three people come up to her in tears with just being blown away by the whole weekend, and how much it had changed their mindset and how appreciative they were.
    I had people come up and talk to me during the weekend when there was a short break, lunch and also at the evening formal dinner, all saying how appreciative they were to be there.
    Many of them that came up to me said how much my first book changed their ways on what they were doing, or got them started in property. Also how the second book (20 Rental Properties in One Year) was a book that they’d read several times and was like nothing they’d ever read on Property Investing before.
    Others who I’d either replied to an email they’d sent me 10 or 15 years ago and how my reply to them set them off in a new direction and what they’d been able to achieve just from that.
    One guy came up to me on Sunday after the event and said he’d phoned me from Napier in 2004 while visiting there and said he’d just read my book and wanted to have a quick chat. I happened to be in the office at Mr Rental doing very little so I said “sure, come over and see me now” I have no recollection of it now, but he said he had this idea or belief that money was bad or evil and that even though he’d read my book (NZ Real Estate Investors’ Secrets), he could see how he wanted to think differently, but was still unable to.
    Apparently we chatted for about half an hour and what he told me on the Sunday morning was humbling to hear from him. He said “you changed my whole world in that one conversation I had with you. I have never thought about money in a negative way since then and I’ve done really well for myself since that day.” He said “I was overseas and heard you were going to be speaking at this seminar, so I knew I just had to be there and I really wanted to say thank you in person.”
    It left me kind of speechless as I don’t remember meeting him, or for that matter most of the thousands of people that I’ve e-mailed back over the years, that have sent me e-mails.

    There was another instance in the weekend when a young Chinese lady came up to me at lunch after my talk on Saturday and said “I was one of the people that had my hand up when you asked the money association question. The first words I wrote down when you said the word were negatively associated with money. It’s the way I was bought up by my parents. I was always told rich people are bad or corrupt and you should never be like that.” Then she went on to say, “I also have the belief that investors are taking homes away from other people, like first home buyers wanting to buy their own home.”
    I said “well in reality, it’s pretty much the opposite of that! As far as investors go buying properties, they will usually not pay as much as a first home buyer will. If I was in a multi-offer situation with a first home buyer, they would 9 times out of 10 be willing to pay a lot more than I would, so would be able to buy the home. The issue many young people have is they don’t have the discipline or the know how to save up for a deposit. Everything is so easy to buy these days on no deposit, or credit, pay it off over 5 years. Many of them don’t even understand the concept of saving. They live week to week and so are not able to ever save for a deposit, and as shown on one of the slides in my talk, it was exactly the same in 1996 in that article I showed everyone. People back then said the same thing ‘young people cannot save enough money for a deposit to buy their first home. That was 23 years ago and nothing has changed!

    I then went on to say “many landlords are getting rid of their rentals because of all the new regulations coming in from the Government, they don’t know what’s going to happen next and are afraid. The amount of people being housed by the Government is still growing every week. There are so many motels just in Hawkes Bay that are now being used to accommodate all these people that can’t find a home to rent. The Government is paying all these motel owners, motel rates of $1,000 - $1,500 a week for each family! If they had a property they could rent off a landlord, it would only be about $400 - $450 a week. There are at least 12,000 people like this and the list of people that can’t get a property to rent keeps getting bigger. Rather than doing everything they can to make things more difficult for landlords, they should be encouraging them to buy rental properties so they don’t have to put them into emergency housing.”

    Regarding this subject, on the Sunday morning with all the speakers at the front of the room to answer the 200+ participants questions, we also had a few questions for the other speakers. One question I had for Jolene which we never had time to ask was this one that I was going to ask her: - “with all the probable changes coming to tenancy laws even more biased in favour of the tenants, what are your views on lobbying against these types of things. The PIA is always trying to fight these types of changes or get petitions started. I have my views on it all, but would like to hear your thoughts about this, as we are both aligned to how law of attraction works”.

    Jolene was never asked the question, so I don’t know her response but I think it would be similar to mine. My thoughts on it are yes, I agree that it’s unfair of the government to do this and it could potentially make the situation far worse than it already has. But it’s not my job to push against something I don’t want.
    When people understand how the law of attraction works, they realise that the more you shout ‘no’ at something, it doesn’t make it go away. In fact, the bigger it will get and more of it you will attract.
    It’s like the war on drugs, the war on violence, the war on cancer and the war against poverty. They keep getting bigger and bigger by the very focus on what they do not want!
    Only by acceptance and peace in your own mind, can you deal with it and make sensible choices in the ‘now’. Mother Theresa said “I was once asked why I don't participate in anti-war demonstrations. I said that I will never do that, but as soon as you have a pro-peace rally, I'll be there.”
    It’s similar to a yacht making its way through the ocean on a windy day. The person sailing the yacht knows that rather than fighting against the wind, which would have the opposite affect and get him nowhere, to simply adjust the sails.

    So, getting back to the woman I was speaking with at lunch, we also chatted about her money beliefs.
    By the time we finished talking, our half hour lunch was almost over.
    That Money beliefs section was only 2 slides out of my presentation which had 268 power point slides in it. There was a lot of info in that one hour 40 minutes talk and many of them could have been expanded and discussed in a lot of depth.
    It got me thinking after that, it may be an idea at some stage to do the same power point presentation, but to do it over 4 hours. Maybe over a morning or afternoon and during the talk, have a lot of discussion and interaction with the audience about all the topics so people really get an understanding of it for themselves.

    So, today only a day after the weekend conference, we have received so many messages and emails of appreciation and gratitude from the attendees. I asked one of the people that messaged both Katrina and myself if it was ok to share his email with others as a testimonial if we ever wanted to use it. He said yes, you can use it whenever you like, so here is his e-mail: - 

    “I just wanted to further extend and personally thank yourself and all presenters for such an amazing, insightful and inspirational weekend. I did not know what to entirely expect but without a doubt knew I would be in for a treat. Little did I know that it completely blew expectations out of the water and coming up for the weekend may have been one of the best decisions I could’ve made, worth infinitely more than any dollar amount. I’m gutted I wasn’t able to attend the dinner and Q&A session the following day but can only imagine the amount of knowledge that was further passed around and can see from all of the successful feedback and posts.
    I was 110% engaged with every speaker, even on the topics I thought I had no initial interest in. Yourself and all of the community are also so very down to earth, it’s such a pleasure and privilege to be around. You were right about being mind-blown, I spent my entire 4 hour drive back to Wellington after the conference absolutely stunned with so much information to process.
    Coming from a Structural Engineering background that I’ve since left, I’m still very early in my investment career. I developed and traded my first property in 2015 with 2 rentals now and 2 new builds in for subdivision consent on one of the existing rentals (all in Wellington). From this weekend, I am applying immediately, everything I learnt and restructuring all of my mindset and goals, which is now so much more clear.
    I was going to head out this week to purchase Graeme’s ’20 rentals in one year’ book then saw you had posted on the Summit page that they would be up for purchase after the conference. I really don’t want to bother you further and can imagine how exhausted you must all be after the weekend, your post just had me hooked after you noted that Graeme would sign the book.
    Is there any chance I could purchase a signed copy from yourself and Graeme? I would be more than happy to pay retail price + shipping costs. Graeme and yourself are an absolute inspiration and leading role model to me.
    Thank you so, so much once again. I do hope our paths will cross more in the future.
    Could you please also extend my personal thanks to Graeme. Other than publicly posting (which may have been a little long), I wasn’t sure how to get in touch with him and I have PM’d his facebook account just to say thanks.
    All the best,

    That’s just one of the many e-mails, Facebook messages, texts etc we’ve received and it just shows how things like this can really change people’s lives.

    The feeling I got many times over the weekend was very much like when I attended the ‘Money & You’ Seminar and ‘Creating Wealth’ by Robert Kiyosaki in the early 1990’s. This was well before he wrote Rich Dad Poor Dad which he did in 1997.
    The transformation for myself with those two seminars almost 30 years ago now was most likely how many of the 200 participants over the weekend felt.

    It was an incredible event for me, all the helpers and the other speakers to be part of.
    I’m thankful mostly to Katrina however, who kind of tricked me into speaking at it

    But for the people attending as participants, it was most likely the same kind of transformational weekend for them, as it was for me attending those life altering courses all those years ago.

    Safe and happy investing 

    Graeme Fowler
    Facebook Property Chat Group NZ


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