5 houses in 5 years: How many can I actually buy?

In this special bonus episode, you'll hear the audio from the recent Property Live webinar where we looked at "5 houses in 5 years: How many can I actually buy?"In this podcast you'll learn:How many properties can you buy? How the bank decides whether to give you moneyAnd the free tool that tells you what to do nextDon't forget to ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠create your free Opes+ account and Wealth Plan here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. For more from Opes Partners:⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Sign up for the weekly Private Property newsletter⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Instagram⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠TikTok⁠⁠⁠

• 0:00Speaker 00

  Hello and welcome along to Another Property Live. We are so happy to be with you here today. We're going to talk about could you potentially buy five houses in five years? And we've got a very special spreadsheet that will spend a lot of money that we're going to be able to give to you at the very end of this webinar. Now, for you guys who have been here for a while, you'll know that I always like to do just a little bit of a sound test to make sure that you can actually hear us. So let us know down in the comments section, what colour is Andrew's t-shirt tonight?

• 0:33Speaker 01

  It's a jumper.

• 0:35Speaker 00

  They'll be able to see it. They're just going to write something so that we know that they can actually see us.

• 0:40Speaker 01

  I told you. Navy, correct.

• 0:42Speaker 00

  Okay, we're getting navy, we're getting some black, that's okay. So the good news is we know that you can see us and we are going to rip into it now. Now, the thing that, the reason that I wanted to talk tonight about how to use one house to potentially buy five more, or how to do five houses in five years, is because the truth of the matter is that over time, it's become more and more difficult in order to be able to grow a portfolio. For instance, if I was to take you back to when Andrew first started investing in property, then it was a lot easier to get started, and that's for a bunch of different reasons.

• 1:22Speaker 00

  The first thing, of course, is, or the first reason is that property prices have gone up over time. But the other thing is, it was a lot more, a lot easier back in the day to be able to get the deposit. And just while I'm sorting the slides out, Andrew, talk to them about how, when you started investing, the sort of deposits that you needed back in 2003.

• 1:42Speaker 01

  Yeah, so, so back when I first started, when I was 19 years old, I, I think I actually started looking when I was 18. I was working for a bank, I had a, a low income, like a basic income, I was a teller at B and Z. I think I was on about $34,000 a year at that stage. And back then, even though my income was relatively low, I could borrow up to 95% to buy my first investment property. So it was, it was Quite different. So now if I were to buy that property, because it was an existing property, I would have had to have had a thirty percent deposit as an investment property. Maybe I'd get away with a twenty percent deposit as an owner occupier. But I didn't live in it, so I was genuinely relying on the rental income to work, to make it work for servicing.

• 2:27Speaker 01

  And so therefore I would have, I I got away with a five percent when really it would have been a thirty percent deposit. So if I think about what it would have taken for me to save that extra uh twenty five percent, it wa- it was probably the difference between buying then and buying probably five, maybe even ten years later. And of course, the problem with that is houses keep going up regardless of the fact that I can't save at a, at a fast enough rate to be able to buy that investment property. So it really um is a lot harder today um than it was back then. But when you think about, you know, the, the other conditions that I was under, I mean, it was a higher interest rate. So, so there are, there are always good things and bad things about any market. It's about getting on and doing it.

• 3:09Speaker 00

  Okay, I've got myself sorted now. And one of the favorite things that I do, or one of my favorite things to show people is just about what property investing was like back in nineteen eighty six versus it is today, and it's much, much harder. So when Andrew started uh investing in two thousand and three, uh he's been able to grow a portfolio of forty three properties, whereas I started in two thousand and nineteen. And I've only up to six at the moment. And the trouble is that uh the later you start, it just gets a lot harder. The later you start, the harder it happens to be. And one of the reasons behind this, as I mentioned before, is that houses just are more expensive.

• 3:51Speaker 00

  If we look at the house value to income ratio today, or rather, back in two thousand and five, in Auckland back then, it was five point four times. In New Zealand, it was four point eight times. If we compare that to today, we're talking about in Auckland, seven point four times is the house value to income ratio. And the rest of New Zealand, we're talking about six and a half times. And as Andrew mentioned before, back in two thousand and three, you only needed a five percent deposit for Your first house and then a 10% deposit for your second and your third. Whereas in 2026, if you're starting today, you typically need a 20% deposit for your own home, a 20% deposit for a new build and a 30% deposit for other investment properties.

• 4:35Speaker 00

  And I think that's the reason why there are a number of people who are probably thinking, well, will the bank actually give me the money to buy five houses and how big of a portfolio can I actually grow? And that's the reason why I wanted to hire one of the top spreadsheet creators in the world, actually, to build a spreadsheet together so that you guys can build a forecast for how big of a portfolio you could potentially build over time. And that's exactly what we're giving away for free tonight, but only if you stay to the end, right? So if you stick through with us to the end at about 8pm tonight, I'll give you the link so you can download this, but we'll show you it throughout this evening. But Andrew, there are a lot of people here tonight and they might be thinking, well,

• 5:20Speaker 00

  who actually are we and what are we here for?

• 5:22Speaker 01

  So before I do that, I just see there's quite a few comments from a couple of people specifically saying they're having trouble with the audio and asking if it was pre-recorded. No, we're not pre-recorded. This is us here live. Hi. And if your audio is playing up, it's probably actually a you issue. We have a lot of people who are saying it's absolutely fine. So what I would suggest, I'm no tech guru, but just check that maybe your speakers are plugged in or put some headphones in or try logging out and logging back in. Producer Dave is checking from his end, his audio is working fine. We'll double check from our end. But again, I just want to make sure everyone has an enjoyable evening. If your audio is playing up, just try to fix it from your end. In terms of a little bit about us and why you should listen to us.

• 6:07Speaker 01

  So we've got New Zealand's number one business podcast, even still, we've been doing it every day for, is this year?

• 6:14Speaker 00

  Yeah, six and a half years we've done it so far, over 2,400 episodes.

• 6:18Speaker 01

  That is wild. Over 11 million downloads, 2,406 podcasts, over 50 webinars. We've got a whole lot of financial advisors, like up to 20 financial advisors in any time. And our book, Wealth Plan, it tells me it was four years ago that he wrote it. So anyway, Ed, he's our economist here at Opes Partners. He's a property investor regularly on News Talk ZB and writes for the Herald.

• 6:43Speaker 00

  Well, actually, they've said to me, they're gonna take me off running the articles.

• 6:48Speaker 01

  You're not interesting enough.

• 6:49Speaker 00

  No, no, no, they said we want to start doing videos with you instead.

• 6:52Speaker 01

  Oh, okay.

• 6:53Speaker 00

  People want to hear this melody of your voice apparently.

• 6:55Speaker 01

  I reckon you've got a face for articles. Anyway, my background, I'm a financial advisor, managing director at Opes Partners. I'm a property investor and I write for Stuff. They don't want my videos. What you're gonna get tonight, so the webinar is free, the Q and A at the end is some of the best content because it's the questions that you want answered. So stick around to the end and we'll make sure we answer as many as we possibly can before we race out to dinner. The recording, it will come to you tomorrow for free. It just happens automatically once producer Dave's trimmed it up and made sure it's all clear. So you'll get that tomorrow.

• 7:31Speaker 01

  And to get the most of the webinar, don't just interact with us, interact with each other. So the way you do this is in the chat, put your chat. In the Q and A, put your questions, I put your questions until we can answer at the end. Lots of people use the chat for the questions. We will miss those at the end and we want to answer as many as we possibly can. So if you see anyone putting a question in the chat, if it's a good one, make sure they put it in the Q and A so that we get to it at the end.

• 7:58Speaker 00

  Okay, and then on top of that, there's one last thing that I know is your absolute pet favourite thing to talk about.

• 8:04Speaker 01

  No, it's the Q and A is my favourite, but this, make sure you put select everyone in the chat because if you put it hosts and panellists, only we can see it. And again, we're going to be talking tonight. I'll try and answer as many things as I possibly can, but if you've got everyone in there, the community will help each other out as well.

• 8:21Speaker 00

  Okay, now, we are going to split this webinar into three segments. We're going to start with how many properties you could potentially buy. Then we're going to talk about how the bank decides whether to give you the money to keep growing your portfolio. And then we're going to talk a little more about a free tool that tells you what you need to do next to keep growing. Now, Andrew, we are going to fire up this spreadsheet, but to do that, we are going to use three case studies throughout this evening. So talk to us about our first couple who we're going to talk through.

• 8:47Speaker 01

  Okay, so we're going to give you some case studies and examples so that hopefully one of these might resonate a bit with you, but again. We're going to give you the tools later on so that you can do this yourself. But let's say we've got some average Aucklanders. They've got a house worth a million dollars. They both are working and earn eighty three thousand dollars each, which is the average household income in Auckland. They've got a mortgage of four hundred and fifty thousand, so they've obviously bought a few years ago, been paying that down. Two cars, two kids, no debt.

• 9:14Speaker 00

  Okay, and so what we get to do now is we need to fire up the spreadsheet and go through it. And so what we're going to start with is I've got the average Aucklanders. So when you guys first get the spreadsheet, the first thing you're going to do, by the way, is read the disclaimer and the very important information. I'll let you do that when you come to download it. So we've got our two people here, Jen and Sam, as we said, two cars, two kids. And they're wanting to invest, so I've already gone ahead and put in their salaries. And when you use this, this is going to be something you guys do as well. I've put in the fact that I've got a property at the moment, as we said, a million bucks and four hundred and fifty K mortgage. And if you did have like other credit cards or liabilities or student loans,

• 9:59Speaker 00

  you can put all of this in here to try and get a sense of your situation.

• 10:03Speaker 01

  So basically what we've done here is we've taken all the kind of bank criteria and consolidated it and kind of figure out, okay, well, some banks will let you use X percent of border income. Some will let you use X percent of your bonuses or your commissions. Your banks are going to apply a cost every kid and car you've got. All those kind of things to kind of give you an overarching theme of how much you might be able to borrow. Now, to be honest, some of you might use this and you might get an incorrect number out because it relies on you having the right input to get the right output. So, for example, sometimes I've seen people go, I don't know why it's giving me this answer. And they've put in the the net amount of income rather than their gross amount.

• 10:43Speaker 01

  Or maybe they've put in, they've put in their credit card balance rather than their limit. So again, this doesn't guarantee that you're going to get this approval from the bank. But you want to, if you're working through this and you're having any problems, just talk to a professional mortgage broker or someone.

• 10:59Speaker 00

  Okay, let's rip into it. So what you want to understand is. Um. You want to head over to the outputs. And there we go. My screen is finally sharing, which is very good. And what this does is it looks at how much you could potentially borrow across the three main ways that the banks typically. Uh. Analyze how much you can potentially borrow. Your uncommitted monthly income. So do you have enough income? Your debt to income ratio, which is how much debt you've got compared to your income, and the loan to value ratio. And the graph you really want to look at and really understand is this one here. Which looks at the the amount that you could potentially borrow. Now, what I've done.

• 11:38Speaker 00

  Uh. Ahead of time is jumped in here and said, okay, if you are looking to to borrow or grow your portfolio. There are two ways you could do it. You could put in some custom property purchases. Or we've just got some like template properties here. Obviously, the most uh affordable would be like a Christchurch two bedroom townhouse. Or an Auckland two bedroom townhouse, or whatever different types of properties. We've just chucked some um some templates in there. And then what you do is you come down here and you say, I want to buy one Christchurch property in year one. And then I'm gonna buy another one in year five, and then I'm gonna buy another one in year twelve. And so if I take all of those out and I show you what it looks like uh without anything in there.

• 12:21Speaker 00

  You then get a very nice graph and say, okay, it looks like we're gonna be able to spend eight hundred and sixty seven thousand dollars this year. On a property. So for these guys, let's go. And so they're gonna buy the most affordable one in year one. Okay, well, that's gonna mean that they've spent some of their money. They've bought their first property. When can they buy their next potential property? Okay, it's gonna be in year four, it might be in year five. So let's go put that into year five. They're gonna buy another property. Okay, so within five years, they've now bought two properties. And in a moment, hopefully that spreadsheet harries up and uh. And puts the numbers through. And then after that, in year twelve, it looks like they might be able to purchase their next property after that.

• 13:03Speaker 01

  And of course, what this is doing as well is it's looking at the future growth of their new investment property and the future income from the new investment property. Plus any additional properties. Applying the bank rules to that as well. Now, um, don't take this tall and say, okay, so I should, I can afford Christchurch. I'm going to buy three properties in Christchurch over a twelve year period. We're not saying that, we're just saying this is what it might look like.

• 13:28Speaker 00

  Yeah, and that'd be like in a spreadsheet scenario where you're like paying down a lot of debt. But basically what you need to know when you were using this is saying, okay, we need to make sure that this dark purple line is lining up with this light purple line, right? The light purple line is how much you can potentially afford. And then the dark purple line is ballpark what you're going to be spending on these properties. Now, uh, what's gonna, what's happening in the background is a couple of things. Obviously, over time, you're likely to be paying down your mortgage, which puts you in a stronger wealth position. On top of that, your properties might be going up in value. The spreadsheet is, is, is factoring in your properties going up in value. Slightly less than they have in the past, but still going up in value. And all of that puts you in a stronger position. Same with things like your income.

• 14:13Speaker 00

  Typically, incomes grow by about three to four percent per year. So even if you're unable to purchase an investment property right now, then potentially you can in the future. And I know sometimes that might be a little hard to see because I'm sharing on my screen and about seven hundred of you are, are sitting here. And so sometimes it's not quite updating exactly in real time. But it looks like these average Aucklanders might be able to purchase three properties over the next twelve years. However, if we were to go back into that spreadsheet and we were to say, actually, they're not going to purchase the most affordable properties available. Instead, they are going to be investing in something more expensive. Let's say they're gonna invest in Auckland three bedroom properties.

• 14:55Speaker 00

  Then if they were to purchase their first one in year one, then they might not be able to purchase their next one until year eleven or twelve. Let's put that in there. And.

• 15:08Speaker 00

  Let's say year twelve, are they going to be able to afford that? No, looks like it'd still be be too expensive for that. They might not be able to purchase that. And so if they start out by buying a really expensive property, perhaps they're not going to be able to buy their next one until many, many years in the future. But at least with this, it puts the control in your hands where you are able to say, okay, what happens if I buy one here or what if I buy an existing property? And you can put that in and kind of figure it out for yourself as you go along.

• 15:34Speaker 01

  And we've got some, um, uh, an example later on. We have someone can't buy, but we're going to show you some of the things they might do to get into a position to buy. So i- if you're not in a position at the moment or you're worried you might not be, we're going to cover that as well.

• 15:47Speaker 00

  And one question some people might have Andrew as well is, well, we're doing this example of like some average Aucklanders. Or we didn't say that they had any money, right? We didn't say that they had a hundred and fifty thousand dollars in the bank that they could go ahead and spend on investment properties. We just said they've got a house, they've got a mortgage. So some people who might be a bit newer to property investment might say, well, how the hell are they going to be able to afford purchasing all of those properties? And that's where it's really important to understand how equity works.

• 16:18Speaker 01

  Yeah, so uh, if we think about in terms of um, the the fact that most, most people that are probably on the call at the moment have got a property at the moment. That's probably the, the, the, the general sense. Now, bear in mind, I see in the Q and A someone uh, is renting at the moment. I'm going to answer that question later. It's a really good question. But let's say your property is going up over time and, and look, it might have gone down over the last couple of years, but it's probably gone up over time. Your mortgage has been diligently paid down over time. The difference between your house value and your mortgage, that's equity and some of that you can unlock. So the thing, um, uh, the thing about equity is, um, some of that can be used as a deposit for a future property. But the thing to remember is not all of your equity is equity you can access. So I'll give you an example.

• 17:03Speaker 01

  Again, if I use that million dollar example, and I know not everyone here is going to have a million dollar house. That's pretty fortunate if you're in that position. If you've got a, a, a million dollar house, a three fifty mortgage, your equity's seven hundred grand. But the bank's not going to go and lend you. Seven hundred grand. What they will do is they'll say, right, an owner occupy property, you can borrow up to eighty percent of that. That means that um the of the million dollar value, you've got to leave in twenty percent. So the what we call the bank value is eight hundred thousand, so minus the twenty percent. So the difference between the bank value, the eight hundred thousand and what your mortgage is, your three hundred thousand. That's five hundred thousand worth of what we call usable equity. That's the equity you can unlock.

• 17:46Speaker 01

  Now, you might think, well, I can't buy a house for five hundred grand. You don't need that. You need a deposit. So if you carve out a bit of a deposit, say a hundred and ten thousand dollars, and you take that to another bank potentially. That's your deposit. And if you're buying a new build, which is what we specialise in. Then that allows you to go buy a property with five hundred and fifty, four hundred and forty against the new property. A hundred and ten that you've bought from your bank is your deposit.

• 18:12Speaker 00

  And so what the spreadsheet is doing is doing this over and over and over again. Because one of the things that's been really difficult to see in the past is, well, if you purchase an investment property today. If it starts going up in value, then that might allow you to have more equity, more wealth that can help you get into the next investment property. And then as if you buy a property and the rent goes up over time, it'll start covering more of its costs. Uh at least in the bank size. And then you might be, that might help you get into the next property after that. And what's been really difficult to see in the past is, but how, how does that all interplay together?

• 18:51Speaker 00

  Which is why we had to go and hire one of the the top spreadsheet creators in the world, so that we could actually go ahead and create that.

• 18:58Speaker 01

  I can't believe there's actually some sort of competition for you Excel nerds.

• 19:03Speaker 00

  Well, do you know how I actually did it and met Nick?

• 19:05Speaker 01

  So what I hate to think.

• 19:07Speaker 00

  So what happened was, um I got approached by somebody who uh wanted to help me create spreadsheets. So I knew they create, they competed in these competitions. Now, you don't know this one, do you?

• 19:17Speaker 01

  I don't.

• 19:17Speaker 00

  And so what I did was I I was working with this guy and he's just a little, a little slow. Really liked him, but he's a little slow. So I thought, well, there are like ranking tables of like. Who are the top creators in the world?

• 19:29Speaker 01

  Yeah.

• 19:30Speaker 00

  And there are two others in New Zealand who are ranked really highly.

• 19:33Speaker 01

  Really?

• 19:33Speaker 00

  Nick Boeburg, who we use, and then there's another guy who works for ACC as an actuary.

• 19:39Speaker 01

  Really?

• 19:39Speaker 00

  But the ACC guy is not, not out there creating spreadsheets for people. So we ended up working with Nick Boeburg. So that's how we go. Now, one of the things about this webinar is we get to go ahead and ask you some questions. And so I'm going to get producer Dave to put a poll across your screen, uh, just so we can get to know you a little bit better. And the question we're going to ask you is, how many properties do you currently own at the moment, including your own home? Is it zero, one, two, three to four, maybe five plus? We like to ask this just so we can get a sense of how and where we take the rest of the webinar.

• 20:15Speaker 01

  And just for these polls, make sure you're putting that in the poll rather than in the chat. Um, I, I can see people answering the chat. That happens all the time. No big deal. Um, someone did have Elliot, I think, had a question that he put in the chat. If you put that in the Q and A, I'll, I'll answer that at the end because it was a great question, Elliot.

• 20:32Speaker 00

  Okay. And we are going to close that off in a three, two, one. Producer Dave will get it in that poll and pot it across everybody's screen, sharing those results. So it looks like thirty six percent of people tonight, uh, own just their own home or one property. Could be investment property, could be your own home. And then we've actually got quite a sizable group of people. Ten percent don't own any properties at the moment, but perhaps want to in the future. And then we've got some people who own one investment property or two properties in total. Um, three to four, five plus, actually got nine percent of people owning five plus properties. That's really cool to see as well. Now let's rip back into it because I want to transition across Andrew into the second part of the web.

• 21:17Speaker 00

  What are you?

• 21:18Speaker 01

  I'm just laughing that people are answering the chat.

• 21:21Speaker 00

  Oh, they're putting it in the chat. Oh, bless them. Oh, bless. I love that.

• 21:24Speaker 01

  I do like the interactions though. Um, there are a couple of people as well that have asked another question in the chat. So, um, thank you for the question, but please put in the Q and A.

• 21:32Speaker 00

  Okay. So now I want to talk about how the bank decides whether to give you money or not. And to walk us through this, I wanna talk about another case study, right? We're gonna call these the well-off Wellingtonians. So Andrew, what's kind of their situation?

• 21:47Speaker 01

  Um, so these guys, they earn a hundred thousand dollars each. They are earning good money. Um, they've got a house worth eight hundred thousand. Um, it's dropped from one point one, so they're feeling a little bit sad, but their mortgage is low. It's two hundred thousand, so they're feeling good about that. They've got two cars, two kids, so they're feeling mediocre about that, but no other debt.

• 22:05Speaker 00

  Okay, so let's jump back into the spreadsheet, cause I wanna show you what life looks for them. And the really interesting thing is that if I take you through, and I'll take out all of those properties that I've already added in, um, in advance of this, we can see that if they just look at the maximum amount of borrowing possible, about one point seven million dollars is what they might be able to borrow for investment properties. And I wanna just walk you through how that happens, because if we jump up into here, and this is gonna be really eye-opening for you guys. Um, any of you nudes who have been on these webinars before know, as I mentioned, there are three tests that the banks will run when they are deciding whether to give you a mortgage or not.

• 22:49Speaker 00

  There's your income, which is your uncommitted monthly income, which is basically, after you get paid and pay all of your expenses, even in kind of a worst-case scenario of interest going up, interest rates going up, how much could you, uh, how much money available do you have to go towards your investment properties if interest rates spiked? And it looks like, hey, they've got quite a good amount of, uh, of, uh, income. You know, one point seven mil is what they'd be able to borrow under this. Then we've got the debt-to-income ratio, which is after we give you this investment property, or after we give you the mortgage for this investment property, you go ahead and buy and get this rental income. How, how much debt would you have against your income?

• 23:31Speaker 00

  And it looks like that's actually the lowest of these three tests, about one point six million dollars. And then we've got what's called the loan-to-value ratio, which is the equity side that Andrew talked about before, which is if you max out the usable equity within your properties right now.

• 23:48Speaker 00

  How much, what's the maximum you might be able to spend? And here we're saying 2.2 mil. Now typically, usually what would happen is the bank would look at the lower of these three numbers, the 1.7 mil, the 1.6 mil and the 2.2 mil. However, in this case, because we've said in here that, I've called these, these two Andrew and Lauren.

• 24:09Speaker 01

  Whoa, hang on a second.

• 24:11Speaker 00

  Which is my mate Andrew here and his, his wife. They're investing in new builds. Now, of course, new builds, they don't have to follow the debt to income ratios. So the spreadsheet is smart enough to say, well, actually, what happens if you, if we just buy a new build, ignore the debt to income ratio, we are going to take the lower of the uncommitted monthly income and the loan to value ratio. Now, this is all like quite nerdy, techie stuff, right? But I think it's important for you to understand when you're using the spreadsheet, okay, what is holding me back? Is it more the income side? Is it more the deposit side? If it's you guys who are renting at the moment, you might find it's the deposit side holding you back. If you're somebody who has owned your own home for quite some time

• 24:54Speaker 00

  and you've paid down the mortgage, you might find that actually you've got lots of loan to value ratio or you've got lots of deposit, it's the income side holding you back. And so that's how we get down here and we say, okay, righty-o. They can, they can spend a lot of money. Let's find out, Andrew, how many they could potentially buy. And let's do it the same way where we start adding in properties. But maybe we start with a custom property, right? I think that'd be a bit of fun. I'm just going to change the script. So what sort of property might they buy?

• 25:25Speaker 01

  Um, so I went to Timaru the other day to look at a property just because I'm mad, right? I'll tell you a bit more about that over dinner. So let's just put that, this is not what I recommend anyone watching does.

• 25:37Speaker 00

  A Timaru property.

• 25:38Speaker 01

  So Timaru, it's actually a church. So let's say they put a Timaru church, it's $350,000.

• 25:45Speaker 00

  Wow, this really is custom, so $350,000.

• 25:48Speaker 01

  Yeah, can you put in for the renovation money there?

• 25:50Speaker 00

  Okay, so, well, what do you want to make the property price?

• 25:54Speaker 01

  Mortgage required, okay, so let's, the, the.

• 25:57Speaker 00

  What would the yield be?

• 25:59Speaker 01

  Oh, let's go for a five percent yield.

• 26:02Speaker 00

  Okay. And what about the growth rate? How much do you want to anticipate?

• 26:05Speaker 01

  Four percent.

• 26:06Speaker 00

  Okay.

• 26:07Speaker 01

  Um, purchase, okay.

• 26:08Speaker 00

  So you're gonna buy that in year one?

• 26:09Speaker 01

  Uh, yep. And put the mortgage there at five fifty.

• 26:13Speaker 00

  Okay. And is that because you're anticipating that it's gonna be a renovation?

• 26:18Speaker 01

  A big renovation.

• 26:19Speaker 00

  Okay, fantastic. So we should be able to put that in.

• 26:22Speaker 01

  Okay.

• 26:22Speaker 00

  And we can see straight away, the reason, by the way, that's kinked down is this is looking at the amount of wealth that you've created over time. But because you've, you've, um, assumed that they are spending more, they're taking out a five hundred and fifty thousand dollar mortgage, but the property's only worth three hundred and fifty thousand dollars. Obviously, that's going negative.

• 26:40Speaker 01

  Could you go back then? Well, let's add on a hundred thousand for value increase. So, because this, this will be a, um, this will be a vanity project that will make a good podcast out of.

• 26:50Speaker 00

  Okay.

• 26:51Speaker 01

  Okay, yeah, okay.

• 26:52Speaker 00

  And what we can see here is that, um, this is another great graph that you're gonna love, which is, um, the amount that they could potentially, uh, spend, which is the one point seven versus what they have actually spent, which in this case is four hundred and fifty thousand dollars. And because they've obviously spent money this year, they can't spend it next year. So they can't, they're, next year, they can only do one point two million dollars. Okay, let's add another property in. This is quite fun, isn't it? What sort of property do we want to add in? Do you want a template or a custom property?

• 27:19Speaker 01

  Let's do, let's do an Auckland, um, two bed townhouse.

• 27:23Speaker 00

  Okay. And when are they gonna do that?

• 27:25Speaker 01

  Uh, as soon as they can.

• 27:26Speaker 00

  Oh, let's add it there. Oh, what a great, oh, what a great, fun. They can afford that.

• 27:30Speaker 01

  They bumped me up to a three bed town, uh, townhouse.

• 27:33Speaker 00

  Okay, okay, okay. We'll bump you up. We'll bump you up.

• 27:35Speaker 01

  Yeah, okay.

• 27:36Speaker 00

  Okay, so they could afford that.

• 27:37Speaker 01

  This is me, so that makes sense. Okay, cool. And then it looks like I'm maxed out for a while. Let's say in year, um, so is this in today's dollars or is this inflation?

• 27:47Speaker 00

  This is all inflation adjusted. What could be quite useful for people, by the way? If you're trying to understand, well, when can I, when can I buy the next property? This orange line shows you the value of, of your desired property. You put that in.

• 28:00Speaker 01

  How do I, okay, could you, could you change that to seven hundred thousand? So I know, I know what that looks like.

• 28:06Speaker 00

  And the other thing I should just mention, Andrew, is that if If you say you want a $700,000 property, then this is obviously going up over time because that $700,000 property might be, or is highly likely to be more expensive in 10 years' time compared to what it is today.

• 28:20Speaker 01

  So I can do that in year six by looks of it?

• 28:22Speaker 00

  Yes, six or seven. So you want to add another one in?

• 28:25Speaker 01

  Uh, yep, add on another one in.

• 28:26Speaker 00

  Okay.

• 28:27Speaker 01

  You know me, I'll go as, I'll go as fast.

• 28:29Speaker 00

  What year did you say? I forgot already.

• 28:30Speaker 01

  Seven.

• 28:31Speaker 00

  Okay, seven. We'll add one of those in. Oh, this is a bit of fun. Oh, this, look, it's just because there are 700 people on there, the spreadsheet's thinking, it's thinking. Say a joke, Andrew, while, while it's thinking.

• 28:45Speaker 01

  Uh, um.

• 28:47Speaker 00

  I bet you what it's gonna happen is if I stop sharing my screen, it's gonna start working, right? Oh, that's very good. Uh, that's happening. And then what happens next after they, they buy that one in year seven?

• 28:55Speaker 01

  And then maybe, maybe we'd probably do one in kind of year, how long's the graph go for?

• 29:00Speaker 00

  Oh, good. Thank God the bloody graph started working again. I was panicking for a moment. There we go. Looks like they might be able to purchase the next one in maybe year 11 or 13.

• 29:10Speaker 01

  So let's do 11 or 13. And just, just one thing I would point out, as someone that works with clients all the time, one thing that um I often um get asked is, okay, well, why would you buy something in 13 years' time? If I'm retiring in 20 years' time or 15 years' time, so I don't have a lot of time left before I retire? Well, you don't have to sell everything all at once when you get to retirement. And one of the cool tools that we're working on in the background is a tool to show people how if they sell their assets over a number of years rather than all at once on their 65th birthday or the 60th birthday when they wanna retire, they'll have a lot more money and it can have quite a meaningful impact because of the power of compounding growth.

• 29:48Speaker 00

  Okay, so what we've got here is we said to them that they, uh, that this couple, they're gonna buy two properties in the first year. Then they're gonna be able to buy uh another property in year seven. That's because they wanted something that was a bit more expensive. And then they're gonna buy a, a fourth one in year 13 in this spreadsheet scenario. And somebody said, can you just explain these light and dark purple bars again? So the light bar is how much the spreadsheet says you'd be able to spend on investment properties in this spreadsheet scenario. The dark bar is how much you're actually gonna spend, right? So if you spend one point three million dollars on properties this year, even though you can afford one point seven, well, that means that there's one point three million dollars worth of properties you can't buy next year.

• 30:33Speaker 00

  So it goes down a bit. In this case, it goes down to to two eighty three. Then we it builds up over time as your income increases, as your rents potentially increase, as your house values potentially increase. Then when the it runs all its calculations, okay, we're gonna buy an eight hundred and seventy thousand dollar property in year seven. Okay, well, if you do that, the light purple bar goes down again. And that's because we've spent some of the money that that in that year, so we don't have it available the following year. So that's kind of how it works. And and you can see how it's quite fun to start, I mean, fun for us at least, to start going through a bit like, oh, okay, that is what my portfolio could look like. And the reason I wanted to create this is sometimes we hear from investors and that

• 31:15Speaker 00

  they're starting out, they get a mortgage approval, they wanna buy their first investment property and and that kind of it probably is a number of people on here tonight, because the biggest group are people who who are own one home at the moment or one property at the moment is that people say, well, if I've if I'm buying one today and I've got a mortgage approval and my mortgage approval, the the maximum mortgage I could take out is seven hundred thousand dollars. If I go and spend that, how am I gonna get to the point where I've got five rental properties or ten rental properties? And and what they struggle to see is that over time, they still might be able to grow their portfolio. But in the past, it's been quite difficult to see that, which is the reason why we wanted to create this tool and give it away for you guys tonight.

• 31:59Speaker 00

  And one thing that this does, which I I personally think is is really important, is it it tries to understand how does the bank look at your mortgage application? Because the truth of the matter is you and the bank look at your expenses very, very differently, right? So in this case, I'm looking at it, say, it's a six. And the banks look at it, no, no, no, it's a nine. And there's some very important reasons behind it, because one good thing that the banks do is they really stress test your mortgage. Application before they approve your mortgage. And the reason is behind that is they don't want interest rates to go up. And then it turns out you can't afford the mortgage that that you've taken out from them. And then it causes stress for everyone.

• 32:41Speaker 00

  So give us some examples, Andrew, of maybe how the bank might look at your mortgage application versus how we as consumers might look at, because this is what the bank, the spreadsheet is doing in the background.

• 32:52Speaker 01

  Yeah, so say you do have a thirty thousand dollar credit card limit. The bank will acknowledge that, great, thirty thousand dollar limit. As far as your balance, let's say that you pay it off in full every month. And so you don't actually have any debt at all owing on it. Well, the bank doesn't actually look at it that way. They say, yeah, but Ed, you could go out tomorrow and buy Angela something really nice for thirty thousand dollars. And the minimum payments on that are three percent. So therefore we're going to take out a three percent. We're going to assume you've maxed out your credit card at any time and take a three percent amount off that in terms of repayments every month.

• 33:32Speaker 00

  Yeah, and so if you, I'm sorry, I was reading one of the comments over there, Andrew. I was reading.

• 33:37Speaker 01

  I knew you were distracted.

• 33:38Speaker 00

  And so what the bank might see is you paying a nine hundred dollar payment per month, even though you're like, but I'm not paying any money per month to my credit card because I haven't spent anything on it. But they're like, yes, but you could, but you could. And so the difference between what the bank sees and what you see is like nine hundred dollars a month in this case. Give me, give me another example about, about how sometimes we think we could afford a mortgage, but the bank says, oh, maybe you can't.

• 34:06Speaker 01

  Yeah, this is one particularly when it comes to, you know, if you work out on the back of an envelope or even a spreadsheet, you think, okay, my loan's six hundred grand. My interest rates, whatever my interest rate is, seven percent, sorry, five percent. But the bank is going to say, yeah, but it might not always be five percent. So we're going to use a servicing test rate and that right now is about seven percent. You also might be paying interest only if you've got a rental property. So you might be paying five percent on interest only every year. The bank doesn't look at it that way. They say seven percent. As if you're paying principal and interest. And that might be over twenty five years rather than, you know, not considering it. So in terms of what you're actually paying per week, you might be paying four hundred and eighty four dollars a week based on that scenario,

• 34:51Speaker 01

  which you might think, well, that's great. My rent pays for that. I'm basically cash flow positive. No, no, no. The bank says, well, we look at it as if you're almost spending seven hundred dollars. So therefore you're negative two hundred plus you've got other costs to factor in.

• 35:04Speaker 00

  And so the difference could be like two hundred and eight dollars a week. Now, one thing that's really important to to mention is that when you get this spreadsheet, it's it's really fun to play around with. And while it's really good, probably the best in New Zealand, at least that I've seen, that people are giving away.

• 35:19Speaker 01

  Now you sound like Donald Trump.

• 35:21Speaker 00

  It's still not perfect, right? But the way that I think about it is there are three ways to figure out how many properties you can buy over time. Now, most of us are in the position where we've got no idea right now. I've got no idea how many properties I could potentially buy. Okay, that's fine. A little bit of a better way to figure out how how many I could buy is to use a spreadsheet to kind of create a forecast. The only better way that I know of to to to try and figure out how many properties you can buy is to go down to the Littleton Market in Christchurch, which is a wonderful farmer's market. Andrew goes there all the time and do what Andrew did over the weekend, which is use a psychic, which is get a tarot card reading, which is actually a lot of fun.

• 36:01Speaker 01

  Tarot card.

• 36:02Speaker 00

  Tarot, it's the T silent.

• 36:04Speaker 01

  Yeah, yeah, they say.

• 36:05Speaker 00

  Okay, interesting. But you could use a psychic. That's the only better way that I know of to figure out exactly how many properties you can buy. Now, of course, I say that as a bit of a joke.

• 36:14Speaker 01

  If anyone hears from the FMA or any of the banks, like he just suggested, you know, tarot card. That's what's known in the industry as a gag.

• 36:23Speaker 00

  But it's just to say, there's no perfect way to figure out you, Andrew Nickel. This is how many properties you will buy in your lifetime. But it's it's better than nothing. Now, it's important to say, but there are some big assumptions in all of these models. It assumes you do everything perfectly. And by that, I mean that if you were currently paying down a higher purchase that you went and bought a a settee set, i.e. a sofa. Or a couch set, a lounge set from Harvey Norman and it's got three gears left on it. It it's assuming that you actually pay that off. It's also assuming that you don't go to Harvey Norman and think, okay, I've just paid off that hire purchase. I'm gonna go get another hire purchase, right? I'm gonna go buy not a lounge set this time, it's gonna be, what else do you buy?

• 37:07Speaker 00

  It's gonna be a wonderful ceramic barbecue, which are very expensive. Are they? Yeah, if you buy a charcoal barbecue from Harvey Norman, oh, the most expensive ones go up to like four and a half grand. Right? Yeah, you would be wanting to get a higher purchase to go do that. Um, but it's assuming that you don't take on more debt. You can't put in there like, oh, I know what I'm gonna do. In six years' time, I'm gonna go and I'm gonna take out a whopping big um personal loan to go on holiday overseas. Um, on top of that, it's assuming that your income doesn't go down and that might not be realistic for you, right? If you're planning on going on maternity leave or or if you're worried that you might get made redundant in the future. This spreadsheet assumes that none of that happens, right? And on top of that, it assumes that you're not gonna have any more children.

• 37:51Speaker 00

  Cause there's no, not currently a way to say, okay, in three years, we're gonna have a little Timmy. And then in six years, we're gonna have a little Suzie, right? And so it's just, I'm just trying to to to kind of get across that while spreadsheets are great. It doesn't, they're not pretending to be perfect and it's it's assuming that house prices and incomes go up by five percent and four percent respectively every single year. Never any downturns, um, uh, always five percent house price increases. That is not going to happen in practice, right? But having said that, this is still better than than than guessing. And so I always say to people, treat it as a spreadsheet scenario rather than a perfect forecast. We're not pretending that this can predict the future, right?

• 38:36Speaker 00

  But it's gonna give you a much better understanding than just kind of wondering, I wonder how many properties I could buy. Or looking at somebody like Andrew who owns a lot of properties and thinking, well, if he can get to forty three, maybe I can get to forty three as well. Well, that might not be realistic in today's environment where you need larger deposits. And there are a lot, there is a lot more stress testing around. Mortgage approvals, right? And again, you are going to get this for free. But again, the deal is only if you stay to the end. And that's because we've got one more thing to talk about, Andrew, which is a free tool that tells you what you need to do next. Now, of course, that is still the spreadsheet, but it's a new feature that I want to show you. Um, so I'll let you dive into this.

• 39:18Speaker 01

  So in terms of income, um, that's what we call uncommitted monthly income. This is figuring out how much uh the bank.

• 39:25Speaker 00

  That's not what you were meant to say. You you were meant you were meant to say now when you.

• 39:29Speaker 01

  I wasn't listening.

• 39:30Speaker 00

  Now, when you decide that you want to buy an ex investment property, as I mentioned before, there are three things that the that the bank's going to look for. The difficulty is, it's quite hard to know um whether it's deposit or income or debt to income that's holding you back. And so walk us through the last scenario today that we're going to go through.

• 39:48Speaker 01

  Sorry, honey, I forgot about that. So in terms of um the King Contabilians, these are, these are a couple where um they might just not quite be there yet. So I wanted to show you exactly the things that they might do. So let's say they're both earning sixty thousand, they've got a house worth seven hundred thousand. And there's been so many questions. I was actually distracted before reading a question about someone that doesn't have much equity at the moment, wanting to know what they should do. Um, mortgage of five hundred thousand, don't laugh at me.

• 40:14Speaker 00

  I was asking you to laugh at Taro, it's the T sign.

• 40:17Speaker 01

  Oh, yeah, yeah.

• 40:17Speaker 00

  They'll just call it Arrow.

• 40:21Speaker 01

  Um, five hundred K mortgage, one car, one kid. Um, and they've got a ten K credit card limit.

• 40:28Speaker 00

  Okay, and so let's dive into the spreadsheet and uh actually show you what their scenario looks like. And it's really cool that somebody um literally just said, oh, good, this is a, this is a good example. This kind of aligns with where uh this person happens to be at. And one of the coolest things that we wrote into the spreadsheet is if we look at this graph. And I'll just wait for that to load because I know sometimes it takes a little bit.

• 40:54Speaker 01

  Wait a minute, I'll tilt my screen there.

• 40:55Speaker 00

  Just so I can see.

• 40:56Speaker 01

  Would you like a job?

• 40:57Speaker 00

  Well, what we can see is that right now, that orange line, right? That's above the purple line, which means that they do not have enough money to be able to go ahead and invest right now. Right? And that's because they're probably just purchased their first home, they're still paying it down. If we look at the uncommitted monthly income, about 262 K is what they'd be able to borrow under that test. Debt to income ratio a bit higher, LVR, $300,000. So under none of these three scenarios, would they be able to get to the minimum desired property that we've put in here of $550,000? Now, that's totally okay, right? Because as you know, over time, it's probably going to get better.

• 41:41Speaker 00

  If they do nothing, you know, by the time they get two years into the future, in the spreadsheet scenario, the LVR situation is looking quite good. But the best thing here, in my mind, is that the spreadsheet actually tells you what you would need to do in order to get it ahead and turn it into a yes today. So I've got two, I think we call them Sophie and Matt. Yeah, we call them Sophie and Matt. They're both on 60 grand. So this says that to get over the U M I or to meet the uncommitted monthly income test and pass that test, either Sophie would have to increase her income from 60 K to 84 K, or Matt could do exactly the same or some combination of that, right?

• 42:22Speaker 00

  So if between the two of them, they could get to a $24,000 pay rise, that would pass that test. Or if they paid off $235,000 of mortgages on their current properties.

• 42:34Speaker 01

  That might be a bit of a stretch.

• 42:36Speaker 00

  That's going to be a bit of a stretch, right? And then of course they've got some other stuff. So let's say.

• 42:41Speaker 01

  Let's say they're both, let's say Sophie goes to her boss and says, hey, look, I've been working here for ages. I've added some real value. I'm willing to go to five days a week rather than four days a week. And what does that, what does that do now?

• 42:54Speaker 00

  Okay, so if she could go up to $84,000, okay, she's now passed the U M I test. T I test, did it actually matter because they're looking at new builds? But let's say you changed it to looking at existing properties, the D T I would matter. But we've still got this pesky L V R situation, right? So they can borrow more, but it's the deposit side. So what could they do to get it, uh, to get that across the line?

• 43:16Speaker 01

  So, so let's say they, um, so let's say he's a builder and says, I'm gonna, um, do some renovations to the property. So we've got to increase the value of the owner occupied property by fifty K, is it? Okay.

• 43:27Speaker 00

  Yeah, so mortgage reduction of fifty K or increasing the value by forty K.

• 43:31Speaker 01

  So let's say they, um, they do some renovations and they take it from a seven hundred K to an eight hundred K property because he can do all the work himself, but there's some money they need to spend there. So let's say his mortgage goes up to, uh, or their mortgage goes up to five hundred and thirty grand, say.

• 43:47Speaker 00

  Okay, so we're gonna put the mortgage up because they're borrowing money in order to do the renovations. Said he's gonna do it, that's gonna mean we now pass the L V R test, which is really cool, right?

• 43:58Speaker 01

  What's happened?

• 43:59Speaker 00

  Well, wait a second, I haven't finished my point yet, which is they're just, they've just got enough to be able to pass that, that L V R test. So right on five fifty, but hang on a minute, you can, this is where you come in.

• 44:10Speaker 01

  Yeah, that's what, that's exactly what, I just jumped too early. But hang on a minute, um, now what's happened is they've borrowed more money, so it's affected their service sake.

• 44:19Speaker 00

  Isn't that interesting?

• 44:20Speaker 01

  Yeah, well, yeah, that's very interesting. And actually, Sonia, I love your comment here that, that you've spoken to so many people that just say, come back when you got more money. What a horrible thing to say.

• 44:29Speaker 00

  How terrible.

• 44:30Speaker 01

  Come back when you got more money and I, I completely get your point. So I'm glad that we're helping people like you, Sonia, to be able to work this out yourself. So, so now Sophie says, well, I asked for the money, Matt, you go to ask your boss now, what's he gonna increase it by?

• 44:44Speaker 00

  Oh, I love this, this is such a good example, I'm glad we did this one, Andrew. So to, to, because they borrowed more money to renovate the property, they've now got more debt. And that means that they need to earn, earn even more income in order to be able to, to buy the rental.

• 44:58Speaker 01

  Can they pay off their credit card?

• 45:00Speaker 00

  Oh, they potentially could actually. Did I put the credit card in here? I might have forgot. Oh, they could. They probably could do that. But just, but there's a really interesting point here, Andrew, which is notice how if they wanted to get over this test, either Sophie would need to increase her income by $4,000 or Matt could increase his income by $3,000. Now, God, how exciting. Why is that?

• 45:25Speaker 01

  Yeah, now this does take into consideration the tax that they're both paying. So it works, uncommitted monthly income works on your net income. So it knows that Matt's obviously paying less tax and so therefore he only has to have a 3K increase.

• 45:39Speaker 00

  And that's because Sophie's marginal tax rate would be probably 30%, I think it says.

• 45:45Speaker 01

  That's a good example, isn't it?

• 45:47Speaker 00

  Whereas Matt over here, his marginal tax rate, let's just go down to the bottom because it's actually got all of the assumptions in here. His marginal tax rate would be 17.5%. So then Sophie says, Matt, I've already talked to my boss. I can't go back to him. So then Matt, okay, okay, Sophie, I'll go. I'll go talk to the boss.

• 46:05Speaker 01

  Even though he's been knocking off early to renovate that house of his.

• 46:07Speaker 00

  Anyway, so then he does it. Now, all of a sudden, whey, hey, hey, it's marginal. It's marginal, but they're just, they got it. Oh, let's put it in. I'm so proud of, oh, good on you, Sophie and Matt, you fictitious examples of people. But I'm so invested in your, in your situation and your life's goal. And so they buy the property and over time, the spreadsheet assumes they're going to create some wealth because that property could, might go up in value. Oh, Sophie and Matt.

• 46:33Speaker 01

  Well, Sunny said, this is exactly what we did. So Sunny, good on you.

• 46:38Speaker 00

  Oh, Sunny, Sunny, and you're not even fictitious, which is the good thing. God, I was really stressed at the start of this webinar. I tell you what's happened, because my slides up here weren't working.

• 46:48Speaker 01

  A spreadsheet wasn't working and now look how relaxed he is. Wow, thanks to Sophie, Matt and Sunny.

• 46:54Speaker 00

  I'm just thinking like how cooked it is that we've got the spreadsheet. We're so excited about it. But I think that, I think,

• 47:05Speaker 00

  the thing that I wanted to mention though is just a couple of key takeaways before I send this out to you guys, which is you might be able to buy more properties than you think. And a couple of times when I've sent this spreadsheet to people or I've worked with them. They go, do you know what? I thought maybe I'd only be able to buy one because that's what my mortgage pre-approval is at the moment. And then over time, they're like, oh, but if things go, you know, ballpark where they have in the past, maybe I'd actually be able to buy quite a good, build quite a good portfolio. That gives me the confidence to keep going. And then similarly, I'm really glad that you guys like that part where it tells you what you need to do. And when I say it tells you what you need to do, I mean, based on the inputs you put in, right?

• 47:46Speaker 01

  Yeah.

• 47:47Speaker 00

  So like this spreadsheet's not a mortgage broker, right? So it's not going to tell you, oh, um, Sonny, this is exactly what you need to do. It's more to give you an indication, but I know that you guys are smart enough to know like, yeah, that's just what we want, right? We want, we, we want something to tell us what we might need to do rather than going to a mortgage broker who just says, um, come back when you've got some more cash, because how unhelpful is that? But you might be able to buy some more properties than you think.

• 48:13Speaker 01

  And, and also I just want to say, um, sometimes there can be a few complicating, um, considerations. Like someone asked before, does it tell you where to put the debt versus the debt limit? Um, if, always err on the side of caution there. If you're not sure, um, put, put the higher amount in there, but I think like it does say.

• 48:31Speaker 00

  It says limit and then it says balance.

• 48:33Speaker 01

  And if you get really stuck, talk to your mortgage broker because this is similar to the tool that mortgage brokers use. So they can probably give you some guidance.

• 48:41Speaker 00

  Um, you can also, um, I'll just say though, if you go to, go to like, we've obviously got a mortgage advice team, right? At Opus Mortgages, but if you go to one of our competitors and say, hey, can you help me use this Opus?

• 48:52Speaker 01

  No, do it.

• 48:54Speaker 00

  They'll probably get a little browsed off.

• 48:55Speaker 01

  No, do it.

• 48:58Speaker 00

  You can also use this to motivate yourself to keep going. Like if you, if you could, uh, uh, not know, but get a sense that, oh, maybe in three years, if I keep paying down my mortgage at the rate I am, maybe I'm going to be able to get ahead. You know, I find that quite motivating and the last thing that you want to say is just, you do need a way to crunch the numbers, which is why we're going to give it to you. Uh, but just before we do, even after recording 2,400 episodes of the Property Academy podcast, releasing 1,200, um, uh, videos on you. Youtube and writing 560 articles on our website. People still ask me, Ed, what the hell does Opus do? And so I just want to take two minutes to walk you through it. If you're new here tonight and you're like, yeah, I wonder what these guys actually do.

• 49:41Speaker 00

  There's one or there's two main things that we do at Opus. The first thing is we help people create a property investment plan. So we're going to give you a spreadsheet tonight, but actually our advisors have got like a whole bunch of these models to help you figure out. What could you potentially do in the future? And what does your future look like if you do choose to invest in property? And this is an example of one of our tools, which is called Wealth Plan, which helps you calculate what your wealth gap is. Do you have enough to live the retirement that you want? And then after we create property investment plans for people, we then help people find new build properties that work for you. So on the left here is actually, that is a real video of Andrew in a client meeting, helping somebody calculate their wealth gap.

• 50:24Speaker 00

  And then on the right, we've got one of our old advisors, Cathy, who's actually now retired herself, helping investors look for new build investment properties. Now, it doesn't cost money to work with us, right? If you work with us, it might cost money in terms of purchasing a property of one of the developers we work with. But actually getting a portfolio planning session, taking that first step, creating that wealth plan, that doesn't cost anything, right? And the way that we then keep the lights on, because a lot of people are like, well, if you're not going to charge me to create a wealth plan, how are you going to keep the lights on? Well, at Opes Partners, if you decide to go ahead and invest and decide to purchase a property, then we earn a fee through that. We also have Opus mortgages where we can help people get a mortgage.

• 51:07Speaker 00

  And if you do that, then the bank pays us a commission for that. Same with lots of mortgage advisors in New Zealand. We've also got Opus Property Management where we can help rent properties for you. In which case, you know, you might pay us a fee for that. And we've got Opus Accounting. So we've got this kind of wraparound service, right? To try and help you guys out within your investing journey. Look, I'm not going to keep rabbiting on about it, but if you want the link to book one of those free sessions, I'm going to ask producer Dave to put one final poll across your screen. And if you click. The top one, I'll send you a link tonight where you can book your free session. If you click the bottom one, we won't send you that link tonight, but that's okay. We're still gonna send you the spreadsheet. Uh, it just means that we won't bother sending you that link to say, hey, you wanted to book in.

• 51:51Speaker 00

  Here's the link where you can book in. So that's just a way that you can make the right choice for you. Now, you've sat here, you're all, how many have we still got on to it right now, Andrew? Probably about 700 or people.

• 52:04Speaker 01

  I clicked it. I'm being booked in at the moment. 708 people.

• 52:08Speaker 00

  708 people. Producer Dave, can you take?

• 52:10Speaker 01

  Release the spreadsheet.

• 52:12Speaker 00

  That's right. I gave you the link before. Pop that link down into the spreadsheet. Hopefully we don't crash Dropbox because you don't even have to put in your email to get that.

• 52:22Speaker 01

  What did I say? Dropbox.

• 52:23Speaker 00

  Dropbox. Dropbox.

• 52:26Speaker 01

  Tarot.

• 52:28Speaker 00

  Oh, Andrew. Um, and if you are here, we'll also send you the link to that spreadsheet tomorrow. If you weren't here for this, you don't get the spreadsheet. That was the incentive for you to, to, to, to stay here and learn about investment property. But if you want to keep learning about property, listen to episodes, uh, the next episode of the Property Academy podcast. Episode 2406 went out today. Episode 2407 goes out tomorrow. Subscribe to our YouTube channel. We release two new videos every week. Um, it is the number one property channel in New Zealand and our book is in, is in, uh, stores. If you want to check that out, wealthplanbook.com, uh, you can buy that and there's free shipping within New Zealand. With that, we're gonna start answering some of those questions that I know you guys have been putting in there.

• 53:11Speaker 00

  And Andrew, over to you to go through the first question.

• 53:14Speaker 01

  Great questions. Thank you to everyone that, um, heed my call to, um, put them in there. Um, someone said, um, does the spreadsheet take agents' consideration? Um, and I see that someone followed up by saying they might be in their 50s. So no, it doesn't take your agent to consideration. And why that's important, um, why, why someone would be asking that is the older you get and the closer you get to retirement, the more the bank might limit the number of years that you're paying debt over. Now, um, we actually, we've done so many, um, podcasts on this. One of the great tools on our website is the chat. Um, the AI chatbot. So if you go on there and say, I'm a little bit older or getting nearer to retirement, how will that affect my ability to invest?

• 53:57Speaker 01

  It will scour the minds of Ed and Andy and pull back information and give you some links to articles and podcasts we've done on that. Um, one thing to remember is if, what the bank wants to know is when are they going to get their money back and how? So if you don't have thirty years to pay back a loan because you're retiring in fifteen years, they just want to know what the exit strategy is. And if it's a rental property, you're probably going to sell it and pay them back then. So that's an acceptable, um, uh, exit strategy most of the time. So talk to a broker about that. Um, but no, it doesn't take that into consideration. Um, and someone also said, we didn't talk about lowering that credit card limit. But again, you could do that, um, when you've got the spreadsheet, put in your existing situation

• 54:39Speaker 01

  and then maybe have a look at, hey, what if I do reduce my credit card limit from ten K to five K? Cause I never really use it anyway. See what, um, see what that does. Um, someone asked about the book, I'll put a copy here, it's wealthplan.com.

• 54:51Speaker 00

  Um, and I, I saw another question in there, which was, um, which is can you, can you get access to the spreadsheet if you don't have Dropbox? Yes, if you just click that link, you should be able to download it. One question I sometimes get as well, which is why we don't send out too many spreadsheets anymore, but I wanted to make an exception for tonight. Um, is that, uh, if, if you upload that into, say, Google Sheets, because you don't have uh, an Excel subscription, some of the formulas may not work. And that's because sometimes a formula in Excel won't work in Google Sheets and vice versa. So it really does need to be in Excel. Now, I understand that not everybody has access to Excel, um, which is why if you want to, to

• 55:34Speaker 00

  test out, uh, not the investment ready model, but some of our other stuff, you should also check out Opes Plus. This is our free app where you can use it to analyse any investment property in the country. And if you actually just go to opespartners.co.nz and then you go into, is this showing? Yes, it is wonderful. And then you go up here into Opes Plus app, you're gonna be able to sign up for that. And, um, and that can be very useful as well. Um, what else is piquing your interest?

• 56:02Speaker 01

  Yeah, I'm, I'm gonna try and answer this as best we can, um, but Ed will have some other things to say. Someone said, um, cover the effects of the war on house prices this year.

• 56:14Speaker 00

  Oh, that's a really good question. So I literally just did a video on YouTube, which got released about six, seven days ago. Um, which is really cool. And in that video, I go through the four most recent oil crises that we've had. So I think the, the first one I talked about was in nineteen seventy-three. That year, uh, oil spiked and property prices went up something like, I think it was over twenty percent that year in New Zealand, right? And then the next time there was an oil crisis, which I think was in about nineteen ninety-one. We saw property prices go down about seven to eight percent in the aftermath or during that oil crisis. The next one was in two thousand and three. I'm looking at my producer because he listens and edits all of these things.

• 56:56Speaker 00

  Uh, and we saw property prices really go up that year. And then the next oil crisis after that was, uh, twenty twenty-two. Which was, uh, when the, we had the Russian Ukrainian war and house prices went down about seven percent again this year. And what I was saying in that video is that oil prices, uh, obviously go up and down. And two of the, the, the main oil crises that we've had, um, we saw house prices go up at the same time. And the other two, we saw house prices go down. And the main thing I was saying there is oil prices don't impact New Zealand house prices in New Zealand. Um, the reason that house prices spiked back in nineteen seventy-three, when we had the first major oil crisis,

• 57:37Speaker 00

  was there was a lot of inflation going on. If we look at nineteen ninety-one, house prices went down because the New Zealand economy was already really, really weak. In two thousand and three, uh, New Zealand house prices were already increasing. We had that oil crisis and house prices just kept on going up and down. And I was basically saying, if we look back at history, it doesn't have that much of an impact. Like, if we see the price of oil spike temporarily because there's a war, it doesn't necessarily cause lasting damage to the New Zealand property market. Now, it does have other impacts that might hurt you as a New Zealand consumer, right? So one of the things that Andrew and I have talked about on our podcast and in that YouTube video is New Zealand, um, if we see the price of diesel.

• 58:19Speaker 00

  Go up, that really does impact us because we have to pretty much import lots and lots and lots of things uh into New Zealand. Um. It takes oil and it takes diesel to ship goods from China over to the port of Toorong. It takes diesel to move those those uh the goods off the ships using forklifts and onto some trucks. And then even more diesel to to move those goods from the trucks over to your local warehouse. And then, oh my gosh, there's another forklift which takes diesel uh to unload those. It takes diesel to move um to to to get the farmer's tractor to go. And then it takes more diesel to for the the uh the milking trucks, Fonterra's milking trucks, to pick up the milk and take it to the factory.

• 59:00Speaker 00

  And then process it and then then uh uh to power the trucks to go from the Fonterra factory to your local supermarket, right? And so there is there is uh oil and there is diesel and there are petrol prices that impact the cost of all goods around us. And so what the Reserve Bank uh of New Zealand is really looking at is if we start to see oil prices go up, which we have. If we start to see diesel prices go up, which we have, at what point does that have spillover effects and flow on to the wider economy? They are watching and waiting at the moment because it's a little bit of a a finely balanced. God, you didn't think that this was going to go on this long, but here we go.

• 59:35Speaker 01

  Nor did Paul Bass the artist.

• 59:36Speaker 00

  It's a little bit of a finely balanced um uh um view at the moment. Because on one hand, we've got prices going up, but on the other hand, the New Zealand economy is still pretty weak. Businesses don't have the same ability to pass on and just raise uh uh prices of goods at the moment. Because consumers are willing to cross the road and go somewhere cheap. And so that that diminishes the ability for businesses to increase their prices. So that's kind of the the the broad view of how it impacts house prices, uh which is not that much. And also how this impacts your back pocket and and and your kind of everyday life. Sorry, Andrew, I really went on.

• 1:00:13Speaker 01

  No, no, see, you're right. Um um. So someone's asked a question around um the other costs of about owning rental property. So um council rates, um your insurance, accounting fees, maintenance and and how the spreadsheet accounts for those. So.

• 1:00:29Speaker 01

  It doesn't factor those in um as you don't put the actual costs in there. You can run those through Opus Plus. But what it does do is it treats um the it treats it the same as the bank would look at it. So the banks don't look at those rates on an individual basis. What they do is they take the the gross rent and they deduct twenty five percent. They do it uh uh what we call a rental shading or rental haircut. And then they use seventy five percent of the actual rent to allow for those costs. So so yes, it does, but just not in the way that you're probably used to. Um if you wanna know what the cash flow on a property is, and some people actually um someone said here. Um I've just talked about using my, oh sorry, they've, as you must, have talked about rent covering the mortgage. Uh I I don't know who they is, Stephen.

• 1:01:13Speaker 01

  Um but then um uh then um there's a shortfall between the rent, paying the mortgage and all the other costs. That's often the case, depending on how much you're borrowing. So um I think like the stats are about, what is it? Ninety five percent of properties um if purchased with a hundred percent debt uh um require a topper.

• 1:01:32Speaker 00

  It's actually ninety nine percent of Auckland properties.

• 1:01:35Speaker 01

  Oh, right. So so so if you think about that, for most investors, when they're starting out, they borrow a hundred percent. I still borrow as much of it as I possibly can. So you're probably topping up on a weekly basis. If you wanna know the numbers um for that, I'd recommend using Opus Plus. So get a free account, enter in a property, you can post in from Trade Me the link. And it will pre-populate as much as it can, and it will make some assumptions and give you a cash flow. Um we are really um, we try and help people um use really honest numbers or or realistic numbers around cash flow. Because often what I see, particularly if you're trying to sell a property, like if a developer's trying to sell a property. They'll give you the best case scenario.

• 1:02:17Speaker 01

  Um and and you won't factor in things like vacancy, you won't factor in things like maintenance and accounting. And they'll say, well, it's a new property, you shouldn't have that. Well, you shouldn't, but you might do it, and you will at some stage. So put it into your spreadsheet and be realistic with your numbers. And for anyone that doesn't know what um Opus Plus is, um Bruce, it's on our website. You can go to Opes Partners and it says Opus Plus at the top. And that's our online app to basically track your rentals and assess rentals.

• 1:02:43Speaker 00

  Now, there's a couple of really good questions here. I mean, one person said, what's the password for the spreadsheet? So you can use the spreadsheet to run all of the numbers that we talked about tonight without actually needing the password. What the password just does is hides all of the calculations. A, because we spent over $12,000 building them, so we don't want everybody willy-nilly and copying it. Otherwise, you might see a lot of other mortgage advisers or a lot of our competitors passing off the same spreadsheet. We want to give you the tool without saying you can also copy it or let other mortgage advisers copy it and then we spent 12 grand for nothing. So we're not going to give you the password to look at all of the calculations behind it. The second reason we don't give it out is that in the past, when we have given spreadsheets, people go in and change

• 1:03:26Speaker 00

  the calculations and then email me saying, Ed, what have I done wrong? And then I find out that they went and changed the formulas. So it's A to protect us, but also to protect yourself in terms of making sure that you're not changing calculations. And then you get to say, oh, but Opus's spreadsheet said that I can buy 20 million properties over the next, you know, 10 years or something along those lines. And the other question that I saw was somebody asking, there was an anonymous attendee asking some questions about Iran, but I didn't kind of understand quite what you meant around this. So if you chuck it back in, we'll try and answer the question. But I see you want to, you've got some more that you want to answer.

• 1:04:02Speaker 01

  Yeah, Jason, Jason said, hey, with new builds becoming smaller and developers increasingly delivering more compact townhouses, there's growing concern of oversupply. And there was an article in the paper just on Sunday that Ed and I had a good old chuckle about. Now, not a chuckle because I think you shouldn't be concerned about it, but a chuckle because sometimes the headline doesn't actually match up the data read and some of the sources are absolute nonsense. So Ed and I recorded a podcast today, it'll come out in the next week or so, which is about exactly this townhouses. And Ed actually did a video, do you want to post the video in the chat, which actually talks about this? Now, Jason, my opinion

• 1:04:45Speaker 01

  is there's no such thing as an oversupply. There's more of a risk of an overpriced market. So people might have built something and they're just unrealistic. About the prices, Ed will talk about that in his video. We talk about it in the podcast. But I think that, yes, there's been a lot of construction when the time was, when development was going really well. And then, of course, interest rates rose, people got spooked off, people might be a bit nervous at the moment. So, yeah, there might be a bit more competition. I really think it comes down to what you buy and where you buy it. But also, it's not a case of, that's not a, that's not a market that satisfies a big segment of it, because that's just not true.

• 1:05:28Speaker 01

  Like, if you think about Christchurch, for example, twenty five percent of the entire market is townhouses. And where have we seen growth over the last couple of years? Christchurch. So it's not that townhouses are forcing the market down, that's actually just not the case. But I can understand how someone would arrive at it. But when you read into that article from Saturday's paper, Sunday's paper or stuff, they were talking about, well, they take longer to sell than houses in Auckland. Yeah, it was like three days difference. Like, who cares? And they dropped a percent more than houses. Yeah, okay, like, that's a rounding error. The market dropped twenty percent.

• 1:06:08Speaker 01

  So I kind of think it was kind of a nothing article with a quote from a real estate agent in Christchurch talking about the Auckland market. I don't know that I'm going to rely on his information. So just kind of take it with a bit of context, but, but completely fair question from a consumer.

• 1:06:23Speaker 00

  I've got a really good question. Somebody asked about single people. Does the spreadsheet work for single people? It absolutely does. You just put in your one income. And there was another question from somebody saying, well, if I am a single person, do I have any hope of getting into the Auckland market? There are a lot of single people who will end up purchasing, right? But it is harder. And that's because you've got one income, obviously, as opposed to two, and that can make it more difficult. A to, to save up the deposit to get your first home and then to pay down the mortgage. But there are single people out there who invest in property and invest quite successfully. Ultimately, it really comes down to, well, what's your income? How much debt have you got at the moment? And what sort of deposit? So if you've, if you've got a more. Mortgage free home and you're forty five, I'm like painting a really, really, you know, like

• 1:07:08Speaker 00

  good position of somebody, right? But if you're forty five years old, you're single, you've got a mortgage free home and it's worth a million bucks. So you've got a good income. You might be able to buy a lot of investment properties really, really quickly. Whereas if you're in the other position where you had a lot of debt and like a lower income, then it'd be very difficult. So that's kind of why we're kind of giving you the spreadsheet as well, so that you can figure that out for yourself. Um, another question which I want to pick up from Sarah, there's somebody really aggressive.

• 1:07:35Speaker 01

  Yeah, I just, I just want to answer that. Yes, you can speak to the team. Um, uh, if you, if you've got a particular question that you won't have answered, that we can't answer tonight, um, which your question is, can I talk to someone? Sure. Just give the team a call tomorrow, they'll answer.

• 1:07:49Speaker 00

  Um, there's a great question. I just wanted to call that.

• 1:07:51Speaker 01

  Yeah, yeah, I just, I, I've dealt with it.

• 1:07:53Speaker 00

  I was gonna ask as well, there's a really good person, um, Sarah has asked, of the forty three properties that Andrew owns, what percentage of them are townhouses?

• 1:08:03Speaker 01

  Oh, um, I would say more than half nowadays. That's pretty much what I buy, um, almost exclusively now. And the reason for that is I'm buying in more expensive areas. I bought in Queenstown last year. Um, I've bought in Wanaka, I've just signed up for Wanaka. I've bought in, um, a lot in Auckland. Um, by the way, don't take those as endorsements for Queenstown and Wanaka. I've done that because I want to have a, um, I want to have an affordable product. Um, in those markets, but they are really expensive and it's not for the faint hearted. Um, where, where I'm looking for, um, at the moment is growth, um, particularly in Auckland, because it's highly undervalued. Oh, someone asked about how the undervalued market, uh, uh, model works, which we'll, we'll cover next.

• 1:08:47Speaker 01

  So that's what I'm going for. Um, having said that, a lot of my clients, I might be recommending Christchurch houses or Christchurch townhouses because of affordability. But for me, um, um, the, the majority nowadays, um, are almost exclusively over the last seven years will have been townhouses.

• 1:09:08Speaker 00

  Oh, really?

• 1:09:09Speaker 01

  I think so.

• 1:09:10Speaker 00

  Over the last seven years, you said?

• 1:09:12Speaker 01

  Oh, yeah, I would have thought at least eighty percent, if not, if not more. Other than the church that I'm looking at.

• 1:09:18Speaker 00

  I was just saying to somebody, oh, you're gonna buy that church with them?

• 1:09:21Speaker 01

  Yeah, well.

• 1:09:22Speaker 00

  Oh, wow, I look forward to hearing that about over, did it? Um, there was another great question, which is, can you use the spreadsheet for a first property? The answer is yes, but, so the but part is, this will not tell you anything about buying an owner occupier property, right? And the reason behind that is, uh, this is looking at like properties with some rental return and a yield and those kinds of things, it's factoring in the deposit requirements for an investment property. Now, if you have, you have got some money that you wanna put in as a deposit for an investment property, then this will factor in like, okay, you're buying your first property, you don't need to have your own home. It's just that what we often find is that the people who do decide to purchase a rental property,

• 1:10:02Speaker 00

  on the most part, tend to have their own home already, or an investment property already, right? Um, but there is a caveat with this, right? Um, be very careful, because if you put in like your KiwiSaver and like, oh, cool, I'm gonna use the KiwiSaver as my deposit. Well, no, you can't, because this is gonna be an investment property, right? And you can only use your KiwiSaver for, uh, if you're buying your own home as opposed to investment. Um, what else is, um, is catching your eye?

• 1:10:27Speaker 01

  So, uh, um, someone asked before about, um, if, if they're buying their first property as a rental property, so a rent vester, exactly how Ed and I both got started, Colin, um, how, how, uh, how best to structure that? Um, both, well, I, I borrow, I always purchase in my own name, did you do the same thing? Uh, uh, if you're buying your first property as a rental, so.

• 1:10:49Speaker 00

  Oh, yeah, I did, I did, I did just.

• 1:10:50Speaker 01

  Generally speaking, um, there's not much benefit, um, to buying in a trust or a company, other than it's, you know, it might offer another layer of protection if you're self-employed. Um, but generally speaking, most people would buy in their own name at the start. Um, if you put it in a trust, um, you might think it's protected, like, relationship property. You probably actually need to have a relationship property agreement or a contracting art agreement over and above that. Talk to a lawyer and accountant about. That and if you're working with us, we can help you with those introductions. But generally speaking, just your own name. Um, Oliver said, how does the spreadsheet compared Opus Plus? They kind of measure two different things at the moment.

• 1:11:30Speaker 00

  Oh, they do, definitely do. So if I was to go in Opus Plus, do you know what? I'm just gonna log into my.

• 1:11:35Speaker 01

  You do that. While you're doing that, I'm gonna answer the question around overvalued, undervalued as best I can. So, um, what we do is we take, um, what New Zealand's median house price is, and we look at how a region is, um, or, or town or city is, is, um, valued compared to its long-term average against the New Zealand's median house price. So for example, let's say Auckland is, or a, a long-term average is 10% above New Zealand's median house price. Then we might expect, okay, New Zealand's median house price might be 900,000. We add 10% to that, 990. Sometimes, because the markets aren't perfect, it'll be 1.1. So it's overvalued, it's over where we would expect it to be.

• 1:12:20Speaker 01

  Sometimes it might be 900, it might be undervalued. So that's the time that you probably wanna buy. Now, um, it's, it's not a perfect crystal ball, but it's a really good indicator. And we did an awesome podcast years ago where we said, okay, someone buys.

• 1:12:35Speaker 00

  How to make an extra $1 million in property.

• 1:12:38Speaker 01

  Yeah, that's, I, I'll, I'll put the link in the chat. And basically it looks at someone just following the, um, the average market versus using this guide. And they don't win every time, but they do end up with an extra million dollars. So it's the difference between 1.5 million or 2.5 million dollars over the 20 years. And it makes a big difference.

• 1:12:59Speaker 00

  And I've got the graph up here for you, overvalued, undervalued.

• 1:13:01Speaker 01

  Yeah, and that's what it looks like there.

• 1:13:03Speaker 00

  So Auckland to us looked really overvalued back in 2016, now looks really undervalued. Now I'll just show you Opus Plus because this is the, the free app that you can use to analyze any investment property in New Zealand. So I'm in my account now. And here are some properties that I've like recently been looking at. So if I was to come in here, um, which is like a, a new built property for $739,000, what you're able to do is. Look at the cash flow and also look at how much the property might go up by over time. Um. We could also, if you're, if you're a real number nerd, you can dive into the cash flow and actually look at what those numbers look like in terms of the mortgage and if it's principal and interest or interest only. And you could look at the return on investment and kind of really dive in deep.

• 1:13:47Speaker 00

  Now, if you're not as much of a number nerd, you might just focus on what we call the OPUS property rating, which is whether we consider a property based on the numbers you've put in, which might be like the rent and all of those various things. You know, do we consider this to be a high opportunity, a standard opportunity or a property that requires review? And so that can be really useful when you're trying to understand, well, okay, I'm looking to buy an investment property. Let's put in, um, you know, three properties, four properties and see, well, which one appears to give the higher return on investment? And then one of the really cool things that you can do, I'll just jump in here and set it up for myself.

• 1:14:22Speaker 01

  While you're doing that, um, someone also asked the question before, I've just remembered. Do I have to refinance to unlock a deposit to buy a rental property? No, not at all. Um. You can, you can arrange or we can help you arrange a top up with your bank for that deposit, whether or not you do the remainder of the loan with, um, your bank or a separate bank, um, as we often recommend, split banking. Um, then that's up to you. Someone also asked before about split banking, you know, that I think they had an owner occupied property paid off, which is awesome and a couple of rental properties. Yes, I would use another bank for your next property. If you put split banking into, um, OPUS's search function, you'll find a whole bunch of content on that.

• 1:15:02Speaker 00

  Okay. And I just wanted to come back to OPUS Plus for a moment. If you go to the compare properties feature, then you could add in a couple of properties that you're looking at and look at them side by side. First of all, in terms of like, how many bedrooms do they have? And, you know, how high is the opportunity? And it looks like this one over here, the, the five one six Richardson Road appears to have a higher return on investment or projected return on investment compared to this other property, which I've just happened to put in, in, in Mangane Bridge at the moment, right?

• 1:15:31Speaker 01

  Oh, sorry. Someone asked about readiness score as well, just while you're there.

• 1:15:34Speaker 00

  Oh, cool. So the, the, the readiness score, uh, is on your desk. And what that does is it runs this, it actually runs the same calculations of the spreadsheet that I gave you. And it it tries to figure out how ready you are to invest, right? So if you're sixty six percent or above, that suggests that you've got a pretty good shot at being able to purchase an investment property. And if it's below that, then there might be some some things to work on. Now, that doesn't mean that it's an automatic no, and you're not able to invest at all. It just means based on the numbers you put in, of course, we should always be working with mortgage advisers to see. Is there a way that we can tweak our mortgage application to be able to make it more likely the bank says yes? I'll give you like one small example.

• 1:16:15Speaker 00

  Let's say that you've got that thirty thousand dollar credit card that we talked about at the uh uh just earlier on in the evening. But you haven't spent any money on it. One option might be to reduce that credit card limit down to ten thousand dollars. A mortgage advisor might be able to see that and say, hey, look, this is what we're going to do because this is going to help you get that mortgage across the line. But uh Opus Plus, as it stands, isn't smart enough to say, hey, this is what you could potentially do. Um mainly because it's not a financial advisor. Um. Let's, I think we've got time for two more questions.

• 1:16:46Speaker 01

  Okay, two more questions.

• 1:16:46Speaker 00

  Can you believe there are still four hundred and seventy nine people on here asking great questions?

• 1:16:51Speaker 01

  I'm sure, Aaron, I'll just answer yours, um which is better, Christchurch or Auckland? Um now, just because, again, I'm investing in Auckland right now. Um everyone's going to be different, and this is where it becomes personalized financial advice. I can't give you an answer to that without actually understanding your situation. So there are many reasons why you might invest in one of those areas or the other, or somewhere completely different. So um so I'm into Auckland right now because I want as much growth as possible and I don't mind a top up. Um but if you were restricted by cash flow, um you might invest in Wellington at the moment, which is not an area that I recommend for people looking for growth in the short term. But I but I I would say that because I'd want to make sure that, okay, we know we've got some high growth properties.

• 1:17:36Speaker 01

  So so it really does depend on your situation. That's where you have to talk to a financial advisor to get appropriate advice. Um and someone asked a question, uh Cheryl asked, why do Opus focus on new builds? Um there's so many reasons, um uh it's not the right solution for everyone. If you want to um get a good understanding of it, go and put that in the in the chat because, sorry, in the in the Opus chat box. Because it will give you the answer that we would give you. Um and it will give you articles to help you either figure out, is it right for you or is it not?

• 1:18:07Speaker 00

  And so those are the two questions. We are going to wrap it up there and we're not going to go get some dinner, but thank you so much for being with us for another Property Live webinar. We're going to be back again next month with a whole new presentation with a whole lot more to talk to you guys about, but thank you for being with us and sticking with us for the last hour and 20 minutes. You guys have a good night and we'll see you later. Thanks so much.