How Property Nearly Ended Their Marriage (3 Real NZ Stories)

A US researcher looked at more than 4,500 couples. Arguments about money were the top predictor of divorce, even after accounting for income, debt and net worth. And here in NZ, 1 in 5 people say money has caused problems in their relationship. In this episode, Ed and Andrew look at why property puts so much pressure on couples. You’ll learn: 3 real stories where money pushed relationships to breaking pointWhy property hits harder than other financial decisionsHow to talk to your partner about money when the market is downThe lesson? Property is a joint decision. That includes the hard bits ... and owning your share of them. 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, Stephen Knight.

• 0:12Speaker 01

  And I'm Andrew Nichol.

• 0:13Speaker 00

  And this is a 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 the time that property nearly ended a marriage. Three real stories of where money put relationships under pressure and how to talk to your partner about money and a downturn. Now, I recently did a video about the truth about property developers. This was on YouTube and I was reading through all of the comments and I saw somebody say that some friends of theirs had bought a property marketed by a developer with a rental guarantee, which eventually disappeared. And they said that even though they told them not to go ahead with that investment, they decided to, but house prices eventually went down.

• 0:55Speaker 00

  They lost their entire deposit and things got so tight cash flow wise that selling ultimately destroyed this guy's marriage.

• 1:04Speaker 01

  Or actually ended.

• 1:05Speaker 00

  Because they bought a property, it went down in value, interest rates went up, the rental guarantee disappeared, and ultimately it caused some real relationship issues. How often do you see, when you're reviewing people's financial situation, how often do you see money ruining relationships?

• 1:24Speaker 01

  To be honest, that has been relatively uncommon of the thousands of people I've worked with, but it does happen. And look, I think financial stresses is the leading cause of divorce. I'm pretty sure that's, that's an accurate stat that I haven't just made up. And you get it because it kind of impacts everything because you're stressing about money, then you're stressed about, you know, where it's going, you're stressing about, you know, everything and you're probably being a bit more snappy. And so it has this big flow on effect. If you're losing sleep over it, I get it.

• 1:53Speaker 00

  So give me an example of that.

• 1:55Speaker 01

  Well, I do know a situation about a couple who were looking at investing and when they were kind of talking through considerations and risks, one of the clients said, the biggest risk is for us, for us is divorce. And, and the advisor just kind of laughed it off, thinking it was just, you know, a joke. But then it kind of actually, the advisor thought, hang on a minute, I think there's a bit more to this and said, hang on, can I just go back to that? What are we talking about here? Are you being serious? As it turned out, the husband really wanted to do this. He was very focused on the numbers. He'd figured out in his mind what needed to be the focus of the investment. But she didn't buy into that quite the same way. And she liked certain things about property and features of the house. And that was going to make her more comfortable investing.

• 2:39Speaker 01

  Even if the numbers didn't support that, she needed to be comfortable. And so they're on very different pages. And in the end, they actually decided, we're not going to do this. We're at such odds here with what the right thing is to invest in, that they just built a granny flat on the back of their existing property. And they were going to use that for, for her parents to stay, I think, or something along those lines. They just gave up on investing because they were never going to get to a common ground.

• 3:06Speaker 00

  So let me get this straight. They are in a meeting with a financial advisor and they're like, what sort of risks do you see with property? And the wife says divorce. Imagine that, right? She clearly did not want to be in that meeting then or talking about investing. And I think the lesson from this story, isn't that one person is right or wrong, but if you are going to make some big financial decisions together, you've got to be on the same page in this. And in this instance, they're on very different pages, yeah? But this is common. So the Commission for Financial Capability, what, what is now called the Retirement Commission, they went out and did a survey of over 3,000 people.

• 3:46Speaker 00

  And one in five Kiwis say that they have had relationship problems because of money. Now, the interesting thing about this is when you look at the households who are earning a lot of money, above average, so people earning $150,000 to $200,000 a year in their household, it is still 21% of people. It is the same proportion. It is still, one in five Kiwis say that they have relationship problems because of money. So earning more does not necessarily fix it or prevent you from having relationship issues as well. And give us another example of couples not being on the same page.

• 4:28Speaker 01

  So another couple who had been working with a financial advisor, this was one of our team, Dennis, and, and the, the husband sent a couple of emails prior to the meeting. So they, they hadn't met with Dennis yet, but he's, he's, he's priming Dennis. And he said, look, I just want to, I just want to give you the heads up. There's a possibility these conversations are going to get heated. Now, Dennis has been in the job for almost 10 years now. So he's, he's kind of seen everything. He's seen, you know, people having good times through property, bad time with properties. It's very rare that you'd get something, I'm sure that's probably the first time they've had an email, letting him know in advance it might get heated. And look, in this case, these guys needed to have a plan and, and, and they wanted advice on the direction they should take.

• 5:10Speaker 01

  And the, and the reason for that is because they'd never had a plan before and they just argued over the nuances of the potential plan that they've just conjured up in their mind, like things like principal and interest versus interest only mortgages. Like if you've never spoken to a financial advisor and looked at your situation and the investment, maybe you just, well, principal and interest, of course it'd be principal and interest. But there might be more detail to that consideration. It's not a one size fits all. And in this case, like if they were going to invest, that was going to take away from one of their goals to pay down the personal mortgage. And so they had to decide, what are we going to give up? Because everything in investment comes at a compromise. So what are you prepared to give up and what are you not prepared to give up?

• 5:49Speaker 00

  Well, the interesting thing in this situation, right? Is that the husband here was the one who was more conservative, right? He wanted to pay down the home mortgage more aggressively while his wife was keen to invest more. Now, typically when somebody emails in to their financial advisor before the meeting, it's the one who wants to invest that is saying, hey, look, I want to invest. My partner is not as keen. We might need to take her on the journey. In this case, it's the opposite. The person who's a little more conservative is saying, hey, look, this might get a bit heated because she wants to invest. I'm not as keen. I want to pay down the home mortgage aggressively. But the interesting thing from that email was that he said, we need a plan because

• 6:32Speaker 00

  otherwise we just argue over our point of view. Can't we all think of times in our relationships where you're saying something, your partner's saying the other thing, and you basically feel like you're talking at cross purposes? Whatever you're saying isn't seeming to get through. Whatever they're saying isn't really making sense to you either. And you're like, we're not getting anywhere because I'm not able to really hear you. It doesn't feel like you're really hearing me. We need to chart a path forward because otherwise we're going to stay in the same situation, right?

• 7:04Speaker 01

  And actually I've, I've had situations like this where someone is very, very focused on paying down debt, which is awesome. That's a good thing to do, right? But it does come at the cost of when you start to invest. So in those instances, I've modeled out, okay, well, if you pay off your mortgage in, in seven years rather than the 15 that you were originally paying it off at, if you do that and you wait those extra eight years to invest, what does that cost you? Or what could this potentially cost you? And if you need that money for later on, well, how are you going to bridge that gap? Because if you want to do this, you have to come up with a strategy to bridge that gap. Or you have to change your goal. And it really does come down to maybe sometimes just having a neutral party to give you the numbers. Then you decide how you're prepared to use those numbers and what you're prepared to push and pull.

• 7:48Speaker 00

  But it can go both ways, right? Because if you then start thinking about, the person who is really keen to invest might look at their partner and say, you're holding us back or you're holding me back from going ahead and investing and doing what I want. And if we don't succeed and we're still poor, I've got you to blame because you stopped me and resentment can start creeping in. But it goes the other way, doesn't it? Because if you do invest and the investment doesn't perform, especially in the short term, which can definitely happen, then the other person can say, you lost all our money. You have put us in a worse financial decision because you wanted to invest and I didn't. And the research shows us how dangerous this can be. So there was a researcher over in the United States and they analyzed responses from about

• 8:33Speaker 00

  four and a half thousand couples. And as you said before, this study showed that arguments about money were by far the top predictor of divorce. And so this, I mean, it's interesting, right? We're never taught how to talk to our partner about money. Not many of us talk about it because sometimes money arguments can almost come across as quite shameful. And yet this is one of the top predictors of divorce. But especially in times like now, if you invested back in 2021, when everybody was really keen to invest, because everybody was so excited about property and now property values, house prices have dropped, what sort of impact can that have?

• 9:12Speaker 01

  Well, I'll give you another case study of a couple who bought two properties at the peak of the market. And these properties have just followed the market basically to the T, but like to the T is down 300 grand between the two of them. So yep, that is a true loss if they sell those properties today, but it hasn't actually impacted them. It has kind of mentally, because there is anguish when you look at your banking app and you see that there, but it's a paper loss for today. But the problem is because they know this in the back of their mind, even though they haven't actually, you know, they can crystallize those losses, just even having a conversation about the properties just brings up all this emotions. And so they go and see their mortgage advisor or financial advisor, property manager, and the husband won't even come to the meetings now.

• 9:55Speaker 01

  He's so not into it and it affects him so much, he just can't be part of it.

• 10:00Speaker 00

  Well, you can understand how, you know, he might feel really stressed or upset. Or if he was the one who was pushing for it, you might feel a little bit embarrassed about the decision you've made and you might think, I meant to be really smart. Why did this happen to me? And I suppose the reason for, for saying that is just say it out loud. So you're like, if you're sitting there feeling like that, it's like, oh, at least I'm validated and it's okay to feel that way.

• 10:26Speaker 01

  Yeah, I have seen that just recently, actually. Like there was an investor who was very aggravated about a paper loss that he'd made on, on, on a property that he'd invested in, which again, it kind of just followed the market and it was kind of a couple of years into a long-term plan. And I didn't quite understand why he's been so hard on himself. And then I realized, actually he's not. His wife's very upset and she's got every right to be, but she didn't want to do the investing to begin with. And he basically said, we're doing it. And now he feels like he's let her down.

• 10:58Speaker 00

  And that's a bit of a hard one that it's going to take time to work through. Not just, I'm not just talking financially in terms of holding on for the long term so that the investment has time to recover. But also in terms of the partner getting to a position where they are able to accept what's happened and start to move forward and let it go. Because ultimately, that's what's going to have to happen, right? Like, they can't reasonably stay together if she's going to hold this over his head for the next 50 years. At some point, she's going to have to let it go so that they can move forward. You can't be like that for, for five decades or so for the, for the rest of your relationship until you die. You either break up or she's got to move on. Those are basically the only two options.

• 11:41Speaker 00

  Not, not that, not that this is Ed's, um, Ed's therapy session.

• 11:46Speaker 01

  Imagine you as a therapist, well, either break up or move on.

• 11:49Speaker 00

  No, but do you know what I mean? I don't mean this from a, I don't mean this in like a really mean way. And it's not that she has to do it today, but in order for them to move forward at some point, she can, she is so validated and feeling angry or upset about it. At some point, they will need to move on.

• 12:06Speaker 01

  And the hard thing is, I think when you get yourself into a situation like that, you think, you, you are more inclined to make a rash decision. Now, sometimes selling a property is the right thing to do in a situation like this. But just literally this week, I met up with a lovely couple that, um, had bought a property through a developer and they just wanted some advice because it's gone terribly for them. Like, it's probably down twice as much as the market is. But that's, again, the market is just the average. I mean, there's 50% of them do even worse than that. This is one of those 50%. And originally I was like, God, this is, this is going to take a while to recover from it. I don't know, maybe you do sell, which is not normally my initial kind of approach.

• 12:50Speaker 01

  And then I went away and I thought, I'm falling into the same trap that investors do. I'm looking at this like selling it is actually going to fix it. Of course it's not going to fix it. It's already down. So if we look from now onwards, what is the amount of capital growth you have to get for this to be breakeven? And it was like one and a half percent or something like that. And so I said to them, do you think it's going to do better than that? And they said, yep, it is going to take a long time to get back to where it was, based on these numbers.

• 13:18Speaker 00

  Yeah, I mean, you've got to consider the top ups or any equity that they had in the property as well. If they bought it all with cash, sell it up and put it into something, that might be a better investment going forward. Could be logical, but you've got to weigh all of these factors up, don't you? I think the other thing though is even if one member of a couple might have pushed for something or had an idea, ultimately it is a joint decision to invest. Because ultimately, if you use your own house as collateral, if you use the no cash needed method in order to fund the deposit, you had to sign the contract too, right? Both members of the couple would have signed the contract or would have signed a deed of nomination or would have signed the loan documents to go ahead with the investment.

• 14:02Speaker 00

  So even though one person might have pushed for it, ultimately it was a joint decision. And often it's quite easy to blame others, but harder to accept some of the blame, not all of the blame, but some of the blame yourself. And so we've just got to look at this and be quite reasonable.

• 14:19Speaker 01

  And like, do you actually think your partner, if it had gone the other way, would be making you feel like you're an idiot?

• 14:26Speaker 00

  And I suppose what you're saying is, would they lord it over you, saying, see you, dum-dum, I was right all along?

• 14:33Speaker 01

  Yeah, like you would, but other than that, no, no normal person would.

• 14:37Speaker 00

  And look, we're not going to, we're not going to solve any marriages.

• 14:40Speaker 01

  No.

• 14:41Speaker 00

  Andrew and I here talking to you about it, but I suppose what we're trying to say is, hey, look, property can make you a lot of money over the long term. It can also, if it goes the other way, it can lose you a lot of money in the short term. And because of that, that can cause relationship stress, depending on your situation, depending on how, how much risk you're keen to take on, depending on whether you've got an advisor to work with on your portfolio or whether you're DIYing it. We do need to take responsibility for our decisions, whether that was in saying, hey, look, love, let's go ahead and invest, or whether that was saying, I'm a little bit nervous, but actually let's do it. And we've got to be responsible for all parts of it, which is why over the last 15 minutes, you've learned the time that property nearly ended a marriage, the three real stories

• 15:26Speaker 00

  where property put relationships under pressure, and how to talk to your partner about money in a downturn. 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.

• 15:42Speaker 00

  Thanks for listening to the Property Academy Podcast. I'm your host, Sipit Knight.

• 15:45Speaker 01

  I'm John Nichol.

• 15:46Speaker 00

  We're going to be back here tomorrow with even more daily strategies, tactics and insights to help you get the most out of the New Zealand property market. Until next time.