The Market Today

Perspective is a marvelous thing to have in real estate. For every market that takes a downturn (and remember this current downturn is only a dip in sales volume, not median prices), there will always be another cycle that will swing back up again. That's the way it has been and always will be.

An international investor once told me; " you can make money in any market", and I tend to agree with him. For every buyer who is put off buying because 'the market's bad' or because interest rates have gone up, I meet another investor asking me to find them a good buy and write up an offer. Procrastination does end up costing you money. The next time you put off buying a house 'because of the market', cut out the picture, write down the price you could have purchased it for, put it up on the fridge and wait for a year. When the year is up, take it down and see how much the house is worth then.

For example, I bought my first house in Queenstown in 1999 for $150,000. The market was awful then – just speak to any real estate agent that was around at the time. That house now has a registered valuation of $475,000. So, to my way of looking at it, investing in property is not such a bad idea.

However, when it comes to selling in this market, vendors who set their price expectation too high will inevitably be disappointed, whereas those who listen to constructive advice backed up by the facts will continue to achieve good success.

Getting Started

I am frequently asked how to get started in the property game. The interesting thing is that for every five people that ask me that question, only one actually takes up the opportunity and buys a property. In a country like New Zealand where (currently) the advantages to property ownership are significant, it still surprises me that more people don't choose to buy a second home – or rental investment. It really couldn't be simpler.

Firstly, work out what type of investor you want to be, for example, a long term investor or short term trader (do up and flick on). Note, there is a big difference in the eyes of the IRD, so get good tax advice before you do anything. A good accountant will also advise you on how to set up an LAQC (Loss Attributing Qualifying Company) and Family Trusts.

Talk to someone who is already investing in property and ask them to give you a hand creating a worksheet of all the aspects that you need to reference, such as (if it is a residential property) asking price, rental return, yield any twists (eg, L3 land – so better for development potential further down the line, or has potential to do up and add further rental value) etc. A worksheet will keep you focused and mindful of what you're trying to achieve.

Next, sort your deposit. Remember, banks like to see a little 'hurt money' – proof that you are capable of saving a deposit and knowledge that you can service the loan. Use a broker – my one deals with 15 different institutions and she often secures me a better rate and money towards legal fees.

Study the market and learn about locations, property types, best yields etc. Then find a good property, do your due diligence and write a decent offer with the expectation that you will confirm. If you miss out, repeat the process until you have success. Talk to real estate agents who have passion and knowledge about their markets and ask them to feed you new listings that are coming through. Once you have built up decent equity in your property, repeat the process again (and again and again).

As Dolf de Roos (property investment guru) so aptly said "The deal of the century comes along about once a week". I think that philosophy sums up property investment – if you are good at what you do, you will always find an opportunity to make money in any market.

Happy investing!

Jackie