In this on demand webinar we discuss everything you need to know as a first time property investor, and how we can help you define and achieve your goals.
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3. Dennis Wong
• Product & Training Manager.
• Property investor for the past 10
years.
• Personal experience with
renovations.
• Great amount of industry
experience.
4. Material contained in this presentation is an overview only. It should not
be considered as a comprehensive statement on any matter nor relied
upon as such.
This presentation contains general information only and does not take into
account your personal objectives, financial situation or needs and you
should consider whether the information is appropriate to you before
acting on it.
Before acting on any information you should consider seeking advice from
a financial adviser and your accountant before making any financial
decision in relation to any matters discussed in this presentation.
General advice disclaimer
6. • Guided and mentored thousands
of clients to plan and purchase
property since 2006
• Helped clients build wealth
through properties
• Provides superior real estate
information
• Assisted clients reduce debt and
retire early
• Over 260,000 members
Real Estate Investar
12. Why invest in property?
• Superannuation at retirement -
$600,000
• 20 years of retirement - $30,000 per
year
• 1 holiday per year - $10,000
• $20,000 remaining or $416.67 per
week to spend
Would you be happy with that?
13. Why invest in property?
• $600,000 in superannuation
• 1 investment property – annual net income of $19,580
• Superannuation $30,000 + Rental Income $19,580 = $49,580 per year
14. Why invest in property?
Portfolio of 7 properties worth $3.5M
$100,000 of rental income coming in
15. Setting achievable property investment
goals
• What is your actual goal?
• Hint: If you are watching, it should
involve buying a property!
• How do you plan to achieve this goal?
• Is it reasonable to expect you can
complete that goal?
• Do you have the time?
• Do you have the know how?
16. Setting goals, some helpful tips
• Start at the end!
• Identify where you are now
• What are the steps you need to take to
get to your goal
• Your goal should be comprised of
several smaller goals
• What do you need to complete those
smaller goals, write out those details
• Start!
• The number one reason most people
fail is they don’t do that last step!
17. Common Terms
• Capital Gains – is the profit from the sale of a
property.
• Capital Growth – the increase in value of a property.
• Cross Collateralisation – when the collateral for one
loan is used as collateral for another loan.
• Average Days on Market – the average time it takes
property to sell or rent.
• Depreciation – is the wear & tear on your investment
property where investors can claim the depreciation on
their investment property against their taxable income.
• Equity – is the value of ownership built up in a
property. Calculated by current market value – loan
balance.
18. Common Terms
• Listing Price – price listed for sale.
• Median Price - the middle price.
• Negative Gearing – form of financial leverage
where investors can borrow money to purchase
an investment property & the rental income can’t
cover both the loan repayments & on-going
expenses.
• Offset Account – is a transaction account that
is linked to a property loan & any money is used
to offset the amount you owe on the loan.
• Positive Gearing – rental income is greater
than the loan repayments & on-going expenses.
• Redraw – allows you to borrow money you’ve
already repaid into a loan.
19. Common Terms
• Rental Yield – rental income as a % of the property’s
value.
• Gross Yield – calculated without expenses or loan payments
• Net Yield – calculated after expenses & loan repayments
• Settlement – the day ownership of a property is officially
transferred.
• Vacancy Rate - % of available properties available for rent
• LMI – lenders mortgage insurance; for buyers without a
large enough deposit to protect the lender.
• LVR – loan to value ratio; amount of money borrowed for a
home loan compared to the value of the property.
• PPR – principal place of residence; the home you own &
living in.
20. Property Acquisition Process
• Finance Approval
• Select Property Investing Strategy
• Select an asset class of property
• Research suburb data & choose location
• Search for properties
• Analyse numbers
• Negotiate with Listing Agent / Auction
• Engage in Conveyancer / Lawyer
• Sign the Contract
• Building & Pest Inspection
• Property Settlement
• Find a Property Manager
• Track & optimize your portfolio’s performance
21. Finance: Loan Types
• Interest – only paying the interest or the cost to
borrow money from the lender.
• Principal & Interest – paying both the cost to
borrow as well as the loan itself.
• Variable Rate loans – the interest rate changes
during the life of the loan as the market interest
rates change.
• Fixed Loans – the interest rate is fixed & doesn’t
change if the market interest rate changes.
• Split Loans – allows for a portion of the loan to
be on a variable interest rate and the other
portion on a fixed rate.
22. Finance: Loan Types
• Package Loans – link other bank accounts with your loan; lenders will offer
discounted interest rates, credit cards, offset accounts, redraw facility & other
benefits. Often attracts an annual package fee.
• Offset – help reduce the amount of interest you pay whilst having access to
funds in another account.
• Redraw – allows you to withdraw money that has already been paid into a
loan.
23. Finance: Loan Types
• Offset – help reduce the amount of interest you pay whilst having access to
funds in another account.
Over $27,000 in interest savings!
• Redraw – allows you to withdraw money that has already been paid into a
loan.
Loan Account Offset Account Pay Interest on Interest Paid over 5 Yrs
Property 1 $500,000 N/A $500,000 $125,000
Property 2 $500,000 $110,000 $390,000 $97,500
Loan Account Required Principal
Payments
Extra Principal
Repayments
Loan Account
Balance
Withdraw
Property $500,000 $3,000 $10,000 $487,000 $10,000
24. Finance: Mortgage Brokers Vs Banks
Bank – can easily speak to the loans manager
to organise a loan. Most people will approach
the bank they have their savings with.
Mortgage Broker – acts as an intermediary
between the borrower and the bank / lender to
find them best product.
25. Finance: Mortgage Brokers Vs Banks
Benefits
• Has access to a wider range of
lending products
• Negotiates with mortgage lenders
based on your position
• Presents a shortlist of best deals for
you to choose from
• Translates any mystifying financial
jargon
• Advise the best product for you
• Help & support you through the
whole loan application process
• Save you time & stress
• Their service is generally free
Cons
• Brokers receive commissions
from lenders for bringing them
business, so they may have
favourites
• Non-commission paying lenders
may be ignored even if they
have the best deals
Mortgage Brokers
26. Finance: Mortgage Brokers Vs Banks
Benefits
• A loan officer can match you with
the best internal product available
• Established relationship with your
lender
• Experience working with bank,
policies and loans
• Lower interest rates (not always)
• Linked accounts with existing
profile for automation and ease of
access
Cons
• Limited product range – only
have access to your bank’s
product offering
• Potential for being overcharged
(not transparent with
commission)
• Having all your eggs in one
basket
Bank
28. Strategy
Identify what you want to achieve out of
purchasing an investment property:
• Cash flow / passive income
• Building equity
• Manufacture growth
• Replace salary by a certain date
• Assist with retirement
29. Strategy
• Positive Cash Flow – the rent from an investment property covers all
your expenses and loan repayments, leaving you with surplus cash in
your pocket.
• Renovations – purchase an old, run down or outdated property with the
intention to renovate / refresh to increase the value of the property in line
with newer or renovated properties in the suburb. Also gives you ability to
increase rents.
• Discount – purchase a property below asking price but more importantly,
below market value.
• Sub-divisions – when developers or land owners create new allotments
with a block of land. Most common subdivision is splitting 1 lot into 2
sections with 2 titles.
30. Strategy
• Strata-Titling – great to manufacture equity where you purchase a set or
block of units that are all on one title & splitting the title so each unit now
has its own individual title.
• Dual Income – purchasing a property where investors can earn two
incomes.
• Capital Growth – purchasing property in a growing area where the value
of your property is expected to increase over a long period of time.
• Development – buying land or existing buildings and then making
improvements to them or creating new buildings to then sell.
37. Build a Team of Experts
• Mortgage Broker / Lender
• Accountant
• Solicitor / Conveyancer
• Quantity Surveyor
• Property & Suburb Data Company
• Buyer’s Agent
• Property Manager
• Contractors – plumbers, electricians, painters, pest controllers,
building inspectors or handymen
38. Insurance
• Landlord – covers loss of rent & damages from tenant.
• Building – covers unexpected events that damage
your building.
• Contents – covers items inside the property.
• Holiday Rental – specialises in insurance for short
term stay properties
• Income Protection – covers you if you are unable to
work for a period of time due to illness or injury.
• Life – cover mortgage repayments in case of death.
39. Negotiation Tips
• Real Estate Agent isn’t your friend
• Don’t make or be pushed into a rushed decision
• Be information rich
• Ask lots of questions
• Understand the seller’s motivation for selling
• Know your price limit
• Start lower with your first offer so you have room to
negotiate
• Not always just about price, also use the terms of
your offer to negotiate (settlement time, deposit,
conditions, furniture, unconditional).
40. Research – Love the numbers, not the property
• Average Days on Market – Sales & Rental
• Vacancy Rates
• Median Price – Listing & Sold
• No. of Auctions
• Clearance Rates
• Level of Discounting
• Comparable Sales
• Low, median & high price ranges
• Sales History
• Listing History
45. What type of investor are you?
Pros
• Save you money
• It can be a huge amount
of fun
• You have access to every
property in New Zealand
• It can become a passion
for you
• Learning experience
Cons
• You can make mistakes
• Each mistake can cost you
time & money
• It can be time consuming
• It can be mentally &
emotionally draining
• More likely to buy in boom
& bust areas
• More likely to invest with
your heart than your head
DIY Investing
46. What type of investor are you?
Hands Off Investing
Pros
• Save you time
• Develop a property
investment strategy
• Experts look out for your best
interests
• Research & experience can
save you money
• Work inside the industry
every day
• Make buying property simple
& stress free
• Deal with real estate agents,
developers & builders on your
behalf
• Access to off market
opportunities
Cons
• Fees (buyers agents
generally charge 2-3% of
purchase price) +
engagement fee
• Can be expensive, charge
you for every property you
purchase
• Some buyers agents won’t
let you have a say in what
you purchase
• Some buyers agents are
actually property marketers
49. Premium Membership
• Complete end to end solution to help you
purchase profitable investment property
• Team of industry experts working for you
• Achieve the outcome without the stress or
hassle
51. Pro Membership
Access to Corelogic RPNZ included
100% tax deductible
Unlimited phone & email support
Xero non-GST Cashbook included
www.realestateinvestar.co.nz
52. Poll: Would you like…
Premium Membership: Strategy Session
OR
Pro Membership: 1-on-1 Demo
53. Questions?
Register for a personalised 1-on-1 demo –
https://info.realestateinvestar.co.nz/pro-membership
Book a free strategy session –
https://info.realestateinvestar.co.nz/premium-membership
Editor's Notes
We are focused on helping investors achieve their goals, and above all help them acquire their next investment property. We aim to help setup a systematic approach to reducing debt and building wealth. Ultimately our goal is to help you purchase the perfect property, at the right time, at the best possible price."
Favorable conditions – low interest rates, immigration, growing population, renovations due to tv – contributing to people wanting to invest in property to create wealth.
Assumption is you retire at age of 65, there is talk the age may change to 67 before you can access your Super but I don’t believe this has been finalized yet. And let’s assume a life expectancy of 85. Own home outright & relatively healthy.
1 holiday per year – 4 weeks. Remaining 48 weeks.
Average value per property $500,000. Average of $14,285 of rent per year or $275 per week. Property will give you choice and options. Sell or keep and enjoy the passive income. Capital growth is what will make you wealth over time but cash flow is the oxygen you will need to get there.
LMI – if the borrower can no longer pay the repayments, there is a chance the value of the property could decline so when sold, the funds won’t cover the loan so this is how LMI protects the bank. When selling your PPR you are exempt from paying CGT.
5% interest rate
Contents – as a landlord you only need to insure for items you own the come with the property. Don’t need to have cover to include the tenant’s contents. Building Insurance – fire, storm & flood. Make sure you read the fine print in terms of what your insurer defines as a flood. Some might not cover flooding from rivers bursting their banks. If you’re part of a strata, check with the Body Corporate the level of building insurance that is covered. Income protection usually covers up to 75% of your income.
