He Owns 13 Properties At 80. But Now He's Selling Up. Here's Why [Case Study]

Peter Lewis has been investing for 35 years, owns 13 tenancies, and until recently had never sold a single one. Now, at 80, he’s starting to sell down – slowly, over the next decade, on his own terms. In this Case Study Sunday, Peter shares how he’s turning a lifetime of property into an income, and how he decides what to keep. You’ll learn: How to turn your properties into an income for the rest of your lifeWhy this investor has started to sell down his portfolio after 35 yearsHow he’s deciding which properties to keepThe lesson? It took him 20 years to build real momentum ... because in property, the quick wins are about as rare as winning Lotto. Let us know your thoughts by leaving us a voice message on the Property Academy Hotline⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ https://www.speakpipe.com/PropertyAcademy For more from Opes Partners: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ https://www.opespartners.co.nz/newsletter-sign-up⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Stay ahead of the NZ property market⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ https://www.opespartners.co.nz/private-property-sign-up?utm_source=podcast&utm_medium=promo&utm_campaign=pp_signup ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Instagram⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ https://www.instagram.com/opes_partners/ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠TikTok⁠⁠⁠⁠⁠⁠⁠⁠ https://www.tiktok.com/@opespartners

• 0:08Speaker 00

  Hello and welcome along to the Property Academy Podcast by Opes Partners. I'm your host, Ted McKnight. And I'm Andrew Nicoll. And this is the show that helps Kiwis go from zero to five investment property. So you could be financially free and stick around for the next 15 minutes because you're going to learn how to turn your properties into an income for the rest of your life, why this investor has started to sell down his portfolio after 35 years and how he's deciding which properties to keep. And joining us for this case study Sunday is Peter Lewis. Peter, welcome back to the show. Yes, good morning to you. And Peter, you've been in property investment for many decades now. You were the Vice President of the New Zealand Property Investors Federation for many, many years. And just before we hit record, I remember last time you came on the show, maybe two,

• 0:52Speaker 00

  two and a half years ago, you were talking about now moving into a phase of your life where you were enjoying life a bit more, going on more holidays. How has that been going for you? It's kept me very busy, actually. I've had several overseas trips, which was always interesting to see how other people in the world live. And it also gives you some insight when you rent property to people from those countries, you can actually see why they do what they do. Yeah, so that all really helps. What do you mean by that? Well, we have felt like Pacific Islanders, like in Tonga, for instance, you don't buy real estate and you don't rent. So there's no, there's no real estate agents or tenancy managers in some of those countries.

• 1:35Speaker 00

  So when they come here, they are dealing with a completely different environment. And you sort of wonder, why do they do what they do? Well, of course, if you look at how they live back in their home country, then you can see what they do. For instance, tenants who sit there with all the windows and blinds drawn all day. Why do they do that? Why don't they let the sunlight in? And their answer, of course, is in the country where we come from, the bad boys drive around through the windows and if they liked something they can see, they break in and steal it. So of course, when they come here and you go into a house and all the windows and doors are shut, that gives you some insight. And you have to point out, that may be the case in your country, but it's not how we live here. That's really interesting. So all of a sudden, when you think, why are these people doing this?

• 2:20Speaker 00

  Are they up to something? Actually, it's just something that's ingrained in them because of the way that they've had to operate in their country. Yes, I had a woman from South Africa who was quite amazed that we use dehumidifiers in New Zealand. Why do you use dehumidifiers? Back home where we come from, the air is so dry, we actually use humidifiers. So of course, it's a different environment. And Peter, you have been a hands-on investor like forever, right? Has it been hard for you actually sitting still and being able to enjoy yourself? Or do you go on these overseas holidays and wander off from the tour and start trying to fix someone's tap for them or something while you've got a minute spare to make yourself feel useful? Yeah, it's good to be kept busy.

• 3:04Speaker 00

  If you're out of the nine to five rat race, yeah, I do get a buzz out of going out and doing small tasks. One of the problems I've found, of course, as I age, is that the people who I relied on to do a lot of this work for me, and they're now retiring. My best handyman ran me up in the end of March and said, he was retiring because he's getting too old. He's five years younger than me.

• 3:27Speaker 00

  He's bought himself a mobile home and he's now off touring the country. You know, so that's one of the challenges you find as life moves on. And last time you told us that you'd never sold an investment property, but I understand that that's starting to change. Talk to us about that decision. Well, I've now got to the age of 80. Geez, you look good for 80. Yeah, I did not realise you were 80. I was thinking 70 at a max. No, no, no, I'm 80 and I can still do a lot of the things I used to do. I need a few, a bit more rest in between jobs, but I can still do it. But I'm looking forward now, obviously I'm mixing with other people of similar age. And I can see that as you do age, you lose capabilities.

• 4:11Speaker 00

  Like if you live long enough, you're going to lose your driving licence probably. And that makes it more difficult to operate what is effectively a business. So you've really got to look at forward planning. What's the next 10 years going to bring? Like any business, you want to extract the maximum return for the minimum effort and your expenditure also drops. I've now done, I think my last long overseas trip, which was to the country of Laos up in Asia. And as I flew out of Singapore on the way back, I said, goodbye Singapore, that's it, I won't be back. Now it's just going to be the Gold Coast and Fiji, I think. So yeah, your expenditures drop and you don't need as much income as you used to need. And you want less hassle.

• 4:53Speaker 00

  And despite what people think, running a number of rental properties is a hassle. So yeah, you look at making life easier for self. And one way you can do that, of course, is reduce the number of customers you have, which means reducing the number of rental properties that you're running. Now, I can imagine that if your expenditure's dropping, you're selling down some properties that you've held for, for three decades, perhaps even longer. I'm kind of thinking, and correct me if I'm wrong here, you're probably going to struggle to spend all of your money throughout the rest of your days. And I mean this in a very kind way, right? So how are you thinking? I've never really had that problem, but still. Oh, well, that's, that's good. I mean, enjoy, enjoy your money. But I'm just wondering how you think about any money that might be left over?

• 5:38Speaker 00

  I'm, I don't know whether you've got kids or how you think about passing it on to them. Just whether you've got any thoughts around that side of it? I've been, as you're probably aware, I'm involved in aviation for many years. I have basically set up a trust, which is an aviation archive. I have a commercial building, which is now housing that archive. I've got friends who are either dying or moving into rest homes that want to donate their collections to that archive. And that, I've set it up so it's self-funding out of rental profits. And yeah, I guess that's what I'm leaving to posterity. So a substantial proportion of what I leave behind will be going into that good works.

• 6:21Speaker 00

  Basically, I've set it up with a trust. I talk of having a 200-year life. There are three trustees, of whom I'm one. And I guess in a hundred years' time, that will be my landmark in life. Do you know what? I always listen to these investors who have been in the trenches for years, who have been beaten around by the media and by the government sometimes. And people would look at them and go, oh, that Peter Lewis, he's got all these properties, he doesn't need that number of properties. And then you take all that money that you've, that you've built up and all that, through all that sacrifice you've made, and you go and do something for other people like that. And it just amazes me that the perception is that rich fat cat landlords are just making

• 7:06Speaker 00

  all this money because they want to sit on a yacht and smoke cigars. Yes, one of my dreams was I would have enough properties so I could go lie on the beach under a palm tree with a good book in one hand and a pint of clodder in the other. But unfortunately, it's very hard to do that if you're used to sort of being busy all the time. I understand. I'm still keeping busy doing this now for the majority of my time, shall I say. So I shall do that until it's up and running and I can hopefully, when I'm 99, be sitting in the corner watching it work. And Peter, how are you deciding what properties to sell and when? And are you doing anything before you sell them or just putting them on the market as is?

• 7:48Speaker 00

  My goal has always been to keep every property in the condition that I can re-rent it in two weeks. As such, I've sort of done a lot of maintenance every year. Last year, I spent something like $85,000 on repairs and maintenance. That's not improvements, that's just repairs and maintenance, repainting new roofs, all this sort of stuff. So yeah, and they are, as I've pointed out previously, houses that would appeal to your average working person. There's nothing flesh about them. So yeah, generally I'll probably sell them in the condition they more or less are when the last tenant walks out, allowing for a bit of fair weather and tear repair. Though I certainly don't intend to do any major renovations in kitchens and bathrooms and things. I'm quite happy to sell them to basically first home buyers and life goes on from there.

• 8:33Speaker 00

  $85,000 across 13 tenancies, we're talking about six and a half grand spent on maintenance per property. That's an extraordinary amount, hey? Well, you've probably got to do a new roof on one and that's 15,000, 16,000. You do an exterior paint job on another one, that's eight or 9,000. I mean, I try and rotate them like I, traditionally I've painted one house every year on the exterior. So you keep up with it that, that way. You know, you get a house that you spend, apart from a few tap washes, nothing on up to say five years, then it needs a new roof. Well, that's 20 grand, you know? It's lumpy per unit, but it evens out over the whole portfolio.

• 9:16Speaker 00

  Yeah, I think maintenance on property, rental property is wildly underestimated. All the budgets I've seen always estimate a minimum amount. But if you own a house for 30 or 40 years, these things do come up. And I know you've been a very hands-on landlord for your investing career. When you sell a property, you know, one of your big costs is, is the agent's fees. Are you selling with an agent or are you doing that yourself as well? I've got one property, which is probably the one I'm going to sell first. I've had an agent look at it. I haven't made any commitment. I'm thinking at this stage of the game, putting out a flyer just around the neighbours and say, this house will be for sale shortly. If you want to change or know anybody that is interested, let me know. I'm not advised to agents.

• 10:01Speaker 00

  They have their function, the good ones and bad ones. Yeah, I think it's just a matter of what comes up. I'm not particularly keen on auctions. I've never bought a house at an auction. I think it's just a matter of when the market, whatever the market is doing at the time I choose to sell. I do plan to sell down over a period of time, like I'm looking at the next 10 years, basically. So I'm not in a rush to dump the whole lot of the market at once. And when you do sell a property, so I, like you, have had lots of my money tied up in property for years. Taking that money and going and do something else with it is quite a different thought process for me. Are you just putting that money in the bank and just using it as you need to? Are you paying down debts if you've got any still? Or are you going completely left field and investing in shares now? I do have some shares.

• 10:46Speaker 00

  Every six months I get a dividend. And I say to my wife, hey, good news, we've got the dividend from the shares. We can now afford to have lunch, providing we share the muffin that comes with our coffee.

• 10:56Speaker 00

  The return is minimal, but anyway, I do still have a smallish amount of mortgage owing, which obviously I will pay off first and then have what I keep basically mortgage free. I do monitor the British political scene because some of our political parties take ideas off the British scene. And certainly they are coming up with some quite innovative ways to punish landlords who have mortgages over there. And I suspect that this could well happen here in the next few years. So my aim will be to have everything mortgage free. But it's good to have money in the bank for a rainy day. And I don't really intend to invest much elsewhere. Just enjoy life. If I'm having to spend money doing something, then I can afford to do it, really.

• 11:40Speaker 00

  It's giving choices in life. Money is a tool that gives you choices. And look, I know that always leading up to an election, and you've seen more of these than me. There's always a lot of political chat about all sorts of things that probably don't end up happening. And if they do, they might change later on. But some of the stuff that we've seen over the last few elections has been pretty, pretty extreme in terms of if you've got money tied up in properties. You might not have the cash to be able to pay extra taxes, but there's proposals around taxing them. Land tax is one of them that we've spoken about on the show. We're seeing some of that stuff go on and be mentioned as potentials. Has that changed the speed in which you intend on selling down properties?

• 12:21Speaker 00

  It's certainly made me think more deeply. I mean, the whole idea of this tax breaks for landlords, which was, I once swear, ridiculous. A hundred percent. Fortunately, we've had a minor change recently is that all the sins in life are blamed on landlords. Well, now all the sins in life are now blamed on supermarket owners.

• 12:39Speaker 00

  Which has been a good change, just as we could say. Nice for it to be pointing in a different direction for a bit. I actually happened to another guy who had to pack and save and he's not particularly happy. But anyway, yeah, so we may get a bit less beaten up. But what tends to happen, and I've seen it happen overseas, is that landlords get beaten up and they get driven out of the market. And then of course you get places like Queenstown or Waikiki Island where people can't find a place to rent. So then everything eases off again. It goes too much and too little, too much and too little, which is what happens a lot politically. But yes, we are handy whipping boys, but there are consequences.

• 13:19Speaker 00

  Back in the days I took economics, we were told with taxation, there's the imposition of a tax and the burden of a tax. When you buy something, you pay, the seller has to pay GST. But the burden is on you when the purchase, you actually pay that GST, even though the vendor sells it. Similarly, if, if, if you put imposition on landlords, it ends up as even Labour Party now admit having an effect on rents. Yeah, but people tend to ignore that until the reality stares them in the face. But yeah, I've been through a lot of political changes around the taxation aspect on landlords. Some of us will survive, others won't. But I think the big change that we're now seeing is the emphasis on rent return rather than capital gains,

• 14:01Speaker 00

  which fortunately is something I've always chased. Anyway, I've never been after capital gains. I've always been after the rent return and I think that's a realistic way to look at investing in the future. Yeah, it's interesting when you look at people that have invested for a long period of time, particularly because, you know, the rent or return obviously improves over time or tends to improve over the time because incomes go up. At the start, when you buy a property, often people will end up topping up a property. But you know, if, if they're budgeting for things like the maintenance that you say, you know, you need to factor in because over, over 30 years, you're going to have a maintenance bill. If you were to take a look back and say, okay, over the last 30 years of my wealth, if you took a stab in the dark, how much of the, your, your wealth that you've created has come from revenue that you can actually spend after cost?

• 14:45Speaker 00

  And how much of it has come from capital growth? Well, never having sold an investment property, I've had no return from the capital growth because it's all, it's all theoretical. All, all my return has been from income. You do get more competent. I've not put up my rents obviously for the last 18 months or so. And yet I've made more profit out of my rentals last year than I have ever made, even in a static market. How have you done that? Because you become better at running things. You become more skilled. They say it takes 10,000 hours to really master a skill, but I'm sure I've achieved that. And, and you become, become more competent. You can see what's happening. You can take steps to avoid it. You can deal with problems better. You can deal with tenants better.

• 15:29Speaker 00

  You just become more skill fit at whatever you do when you've done it for a long time. And as I say, I looked at my tax returns and I've done better out of my rental properties, the same number at the same rents than I did the year, the previous year or the year before. So I'm quite happy with that. Obviously it would have been nice to have some rent increases, but in today's market, that's probably not viable. I've not had to drop rents, but I have not realistically been able to increase them, which I would normally have done. But yeah, that's not doing too badly. Do you know, I really think that particularly because new investors right now, right? We've had such a long downturn, four years of really harsh downturn. And a lot of people that have been investing for, you know, five years, even, even some that have been investing for 10 years.

• 16:11Speaker 00

  I kind of look at going, I just can't see my way forward. You know, it's hard to get tenants now. Rents have dropped a lot for, for some investors. How long in your 35 years of investing, how long was it a bit of a grind? And how long did it take to actually get momentum where your income could actually fund some of your lifestyle? It took me, I would probably say 20 years. But then I always moved slowly. I mean, I bought one property and then I didn't buy another one for seven years. I think I'm really good at what I do, but I mean, I've never bothered with, you know, mentoring or going to courses and whatever. Thing you learn by mistakes. The trick is not to make the same mistake twice. You try and learn from one's own experiences and from other people, which is why I got involved with the property investor associations.

• 16:55Speaker 00

  You can always learn from, from other people. I've learned quite a lot. I recommend that people do that because you realise that you're not alone. Other people have had this problem or that problem and they can say, well, I tried doing this with that problem and it didn't work. So it lets you learn what not to do as well as what to do. Yeah, I think it's like any business, whether you're a surgeon or a lawyer or an architect or whatever. You've got to learn the skill and it is a skilled job. And the longer you can survive in it, the more skilled you become. And eventually you can make a good living out of it, provided you do it the right way. Yeah, but that, that 20 years, I mean, that, that is just, it just goes to show that the people that go into property

• 17:35Speaker 00

  thinking that it's an overnight win, it's an easy thing, are just looking at the couple of times where someone that they've, that they've met at a bar says, oh, I made this money quick. That isn't normal. It takes a long time to actually build wealth, a passive income through property. And am I right in thinking, Peter, that if you've been investing for 35 years and you're 80 now, you started at 45? Roughly, yeah. And the other thing that's interesting there is that, that kind of shows you, like, you've got 13 tenancies at the moment. That's a good chunky number of tenancies. And it just goes to show that if you are in it for the long game, if you started at 45 and it took you 20 years for the property portfolio to really start building some momentum and paying out some returns.

• 18:17Speaker 00

  You know, that's great. It means by 65, it did start doing that. And it's a good reminder for young, young ones like me, where you've been investing longer than I've been alive, that actually we need to be going for the long term. And perhaps it's okay if you've only got one or two properties over five years, maybe you're flying then in that case. And if you stick to it, perhaps you can have the same success that Peter's had as well. Yes, everybody searches out the stories about how I made five million in five months in property. But that's like looking for, searching for stories about those who would lotto. Yeah. It occasionally might happen, but it's pure luck that it, that anything else.

• 18:58Speaker 00

  If you look at most people who have made a financial success of their lives, it has taken them many years. And this is what a lot of people don't understand. They're looking for the quick result. And I've had people come to me and say, how do I make money in property? And I say, well, the first of all, you've got to think about what you're trying to achieve. And then you've got to make a 10, 20 year plan to do that. But of course, a lot of people don't want that. They, they want the quick hit and that's it. And the final thing I just, I, I think is really interesting is that I think people, when they're doing their projections, they think, okay, well, I, I'm 20 years and I'll be 65. I have to sell everything right then and there. Now, obviously, if you're going to take a mortgage into retirement on rental properties, you need to still do the numbers on the cash flow, make sure that's sustainable. And there's added risk there.

• 19:43Speaker 00

  But you're 80 and still got mortgage. You're 15 years into the retirement age that we often use. And you've still got, even though it's a small amount of debt, you've still got a mortgage. The bank didn't just call it in. 80 is, is the new 60.

• 19:59Speaker 00

  I mean, I'm still healthy. I'm still flying. I'm still getting out and about. There are obviously people who are not for various reasons, but if you've got the good genes, you can do it. Well, Peter, thank you so much for coming on for another Case Study Sunday. And if you are listening to this and you've been inspired by Peter's story, I can guarantee there are other people who will be inspired by your story as well. You don't necessarily need to have 13 tenancies and have been investing for 35 years, even if it's only been for a couple. People want to hear both sides of it. People have been in for the long term and also how you're finding it right now. Send me an email, [email protected]. I want to get you on for Case Study Sunday. Because over the last 15 minutes, you've learned how to turn your properties into an income for the rest of your life,

• 20:41Speaker 00

  why this investor has started to sell down his portfolio after 35 years, and how he's deciding which properties to keep. Right, let's wrap it up there, but please don't forget to rate, review and subscribe to the podcast. Really does help us get the message out to more people.

• 21:00Speaker 00

  Thanks for listening to the Property Academy Podcast. I'm your host, Tim Bicknight. And I'm your Nickel. We're going to be back here tomorrow with even more daily strategies, tactics and insights to help you get the most of the New Zealand property market. Until next time.