How to earn $100k passive income in 15 years (through property)

In this special bonus episode, you'll hear the audio from the recent Property Live webinar where we looked at "How to earn $100k passive income in 15 years (through property)"In this podcast you'll learn:How to build your planWhat sort of properties suit your planAnd how to retire rich at 55Don'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

  Month, we have got me, Andrew Nichol, and we've got a new face.

• 0:03Speaker 01

  A new face.

• 0:05Speaker 00

  Yeah, a new old face. So if you are new to Property Live, you might not know this, but normally we host these monthly webinars with myself and Ed McKnight, my business partner. We've given Ed the night off. Now, this is officially the first night that I've been in charge of the webinar equipment myself.

• 0:22Speaker 01

  You actually seem quite comfortable considering.

• 0:24Speaker 00

  Yeah, well, I've got producer Dave in the background here, making sure everything stays on task and if anything breaks, it's okay. But as we're all piling into the room, I want to do a quick sound check. I want to make sure that everyone can hear us. So Liam's in the room. Now, normally Ed asks what colour shirt someone's wearing, but I'm going to ask, how do you like the new Ed so far? How do you like the new Ed smile?

• 0:49Speaker 01

  Probably at the end of the webinar rather than the start.

• 0:52Speaker 00

  So just to show me that we can hear, hey team, welcome aboard. Can everyone hear us? Put it in the chat group. Waveter, yeah, thank you, Holly McLoughlin, that's great. He's got more here, thank you.

• 1:04Speaker 01

  Hello, Holly.

• 1:05Speaker 00

  Yeah, there we go. Now, just a reminder, as people are coming into the room, chat tonight, we want everyone to chat amongst yourselves and actually build this community. But I'm going to jump straight into it while we're all coming into the room. Tonight's Property Live without Ed, the first ever. Tonight, we're going to talk about what the plan is to retire early. We're going to talk about how you actually make that happen. If you haven't got cash yet, you need to borrow money from the bank, which let's face it, that's most of us. We're going to talk about what actually affects cash flow from a property investment standpoint, and how do you actually sustain property if you're building a portfolio? And what about all the risks, all the things that might go wrong?

• 1:50Speaker 00

  And tenants are one of those things. And probably another thing that people are thinking about is, well, property prices have not been going up very quickly over the last wee while. What if they never go up again? That's, that's a genuine concern that caused new Ed to lose his hair. So I want to make sure that we cover all those things.

• 2:10Speaker 01

  Maybe it is the same, maybe he has just lost his hair.

• 2:11Speaker 00

  And in terms of the webinar tonight, we are live. There are currently 126, 7, 128 people in the room and it's building. And so we want you to all interact together. But tonight is only ever going to be the tip of the iceberg. We're going to talk about some high level stuff. This is not financial advice. Don't go out and go, I remember New Ed and Andrew told me to buy an investment property and now it's all gone wrong. There's so many things under the surface that we cannot cover in a single hour of a webinar. So just remember, this is the tip of the iceberg. And if you want to retire rich at 55, this is just the start.

• 2:54Speaker 01

  And if you're going to take advice, take it from Andrew, not me, because it's my, my first time on the webinar.

• 2:58Speaker 00

  Yeah. And to be fair, just, just to give a bit of background, Alex's background is, he worked for a company similar to Opes Partners, lives in our, lived in our shadow. And now he's joined, just kidding, if anyone there is watching, he's joined the team and he's got a lot of experience in property investment. And so we're really pleased to have him on board. It is his second day in the company.

• 3:19Speaker 01

  It's a pleasure to be here. Second day.

• 3:21Speaker 00

  Throwing him into the deep end.

• 3:23Speaker 01

  It might be my last, depending on how this goes.

• 3:26Speaker 00

  Now, in terms of why you should listen to us, we have news, if you, if you're new to Opes Partners, we've got the number one business podcast in New Zealand, the Property Academy podcast. It is a daily show that's been going for seven years now, producer Dave, almost seven years. We have had over 11 million downloads now. And there's been almost two and a half thousand podcasts. We've had a whole lot of webinars, started during COVID.

• 3:50Speaker 01

  How long have you done them for?

• 3:51Speaker 00

  And we, in COVID, we started, we did them weekly. I cannot believe we managed to do that. And then we, we, we came out of COVID and we had other things to do. So we did them monthly and we've just kind of done them as we can ever since. In our group, we've got 17 financial advisors. We've written a book. Well, Ed wrote a book and I put my name on it as well. And that's available in bookstores. I'll talk about that more later. I'm a financial advisor and managing director at Opes Partners. I'm a property investor and write for stuff. And that's, that's not to boast, it's just to kind of give you a sense of the fact that we know a thing or two. I've been investing for 23 years now, believe it or not. I know, it's hard to believe, given how young I look. And Alex's background again.

• 4:34Speaker 01

  I probably look older just about with my hair.

• 4:35Speaker 00

  A lot of experience in property investment as well. So although he's new to us, he's not new to the game. And so he's going to talk more about the property side of things later on tonight. Now, tonight, you're going to get the webinar for free. We have the Q and A at the end, so we'll answer as many questions as we can at the end. The recording will come to you tomorrow for free. And at the end of the webinar, if you stick around, we are going to give you a link to download our blueprint to retiring at 55. But you've got to stick around till the end to get that. And if you're watching this the next day, sorry, it's not available. This is something that is just, if you gave up your Tuesday night to spend it with Alex tonight. Now, to get the most out of the webinar, it's really important that we engage with each other.

• 5:19Speaker 00

  And so the chat is for you to all chat amongst yourself and also between some of our financial advisors are here, online, live right now. And the Q and A spot, that's for, that's for us to answer questions at the end. So your chat goes in the chat and your questions go in the question and answer tab down the bottom. So the reason I say that, and I agonize over this every time, it's only because in the chat, I see so many great questions as we go, and we're going to miss them at the end because people ask other questions or have other conversations and they get pushed to the top, we miss them. If you have a question, put it in the Q and A and I'll answer it at the end.

• 6:01Speaker 00

  The other key thing, just in terms of housekeeping, because I don't have to fire, I don't have to cover the fire drill, is make sure you put your chat to everyone rather than just hosts and panelists. If you do that, everyone can see it. If you just have hosts and panelists, only we can see it. We, the other, the other members that are watching at the moment, including our financial advisors, they're not going to see. So let's get started. I think one of the key things in terms of any kind of property investment journey is so many people start out and they start with, well, I'm actually just going to buy an investment property. I'm not going to think about what it is that I'm looking to invest in. And what I try and encourage people to do is actually start with your goal in mind rather

• 6:46Speaker 00

  than thinking about what it is you're going to set out to buy.

• 6:50Speaker 01

  Do you find that as an advisor, often people will come to you with a property and you're thinking?

• 6:54Speaker 00

  Everyone, everyone or most people. And the reason, the reason this is important is because so many people are actually just looking for, for a, a, a property because they do the traditional thing. They've bought a house for themselves.

• 7:07Speaker 01

  Yeah.

• 7:08Speaker 00

  Now they're going to go out and they're going to apply the, um, the common rule of, okay, there's a house down the road. I like living in, um, St. Martin's Street and I've seen a four bedroom house and I think that'd be a good rental. Now, anything could be a good rental. It might be able to rent reasonably easily, but that doesn't mean it's a good investment. And so I really think it's important that you start with the why in mind and then work backwards from there. So that's one of the key, key messages, um, that, that we kind of focus on, um, here at Opes Partners. So if we're starting with the plan, uh, we want to set the goal. Now, if the retirement is your goal, which I know it is for so many people, they want to actually get to a point where they can stop going to work and actually start enjoying their life.

• 7:52Speaker 00

  But I think also a key message here is there's no point getting to a, a stage in your life where you can stop working, but you're worrying about money. So I think the key thing is knowing what it is going to take to live the lifestyle, um, that you want. And one of the questions we always ask, uh, uh, investors is, um, if you're going to, if you're going to think about what retirement looks like, whenever it is, start with thinking when it is, but then also what is your perfect day in retirement look like? So if I think about your retirement, like, forget about the timeframe.

• 8:24Speaker 01

  I can certainly think of my perfect day in retirement.

• 8:26Speaker 00

  What does your perfect day look like?

• 8:27Speaker 01

  It would be, would definitely be sitting on a beach.

• 8:30Speaker 00

  Yeah, yeah.

• 8:31Speaker 01

  There'd be a drink at some stage throughout the day. Um, and it would honestly just be for myself and my family and hopefully grandchildren to be, to be comfortable once I'm gone.

• 8:41Speaker 00

  Yeah. But, but once you're gone, it's really thinking forward. I think that's one of the key things because once you start to put the, um, uh, the provisions around what it is you want, then we can work backwards and start to think about, well, what's it actually going to cost?

• 8:55Speaker 01

  I think the important thing as well is, is you want it to be stress free, like it's certainly not something you don't want to be thinking about your next dollar every day.

• 9:01Speaker 00

  Yeah, and I think so many people, um, they actually get to retirement and then they agonise over running out of money. So most retirement plans, if you ask most people, they're thinking, okay, my Kiwi Saver and my pension kicks in at sixty five. So I'm going to work till I'm sixty five and then I'm going to spend my pension, which might be in a year, eight hundred bucks a week if you're a couple roughly, and I'm going to use my Kiwi Saver and eventually that's going to run out. And then I'm going to have to make some adjustments to what it is that I'm doing now.

• 9:32Speaker 01

  Do you think people are slowly starting to wake up to the fact that that's obviously with, you know, your podcast, this webinar, um, wake up to the fact that that's probably not going to be enough in retirement? Because it was probably, you know, five, 10 years ago, a bit of a misconception that would, you know, get you so far.

• 9:45Speaker 00

  I, I actually think, uh, ye- yes, I do. Um, I think that we bury our heads in the sand though. I think if you think about, um, you know, the fact that often this is quite a confronting exercise for people. Um, if things are really, really scary, we tend to, by human nature, just ignore it. It's kind of like, um, that rash you were telling me about before, right? You eventually-

• 10:06Speaker 01

  Well, it's about to break out because I'm so nervous.

• 10:08Speaker 00

  You eventually go to the doctors because you're really concerned about something. And I think that retirement can sometimes be the same for people. People worry so much about it and they cut, they kind of do some back of the envelope calculations and think, I'm actually screwed. So therefore I'm going to ignore this completely.

• 10:24Speaker 01

  Yep.

• 10:24Speaker 00

  And then, um, the, the, I'll either, I'll either get to a point in my life where I really start to panic, or I'm going to, um, uh, do something and I'll be able to celebrate because I've worked hard to be able to, um, uh, get to where I want to. Now, in terms of, um, wh- where that leaves you is if you want to retire at fifty five, Kiwi Saver and Super's not going to work. Not only because it's probably not going to be enough for you because you're at a, a stage where you could have a really long retirement because you might live till ninety, uh, maybe even longer. But also you can't access either of those things at age fifty five. And if you don't want to be held to the date that the government tells you to retire, we need to think, how am I going to retire at fifty five? What am I going to do differently?

• 11:10Speaker 00

  So if you start with the what you want, now, a really common number is about a hundred grand a year. So if you've got a, a paid off house- And you, you don't have any major bills, so your kids have left home, hopefully at that stage, maybe, maybe not. A hundred grand a year seems to be that comfortable retirement amount of money that most people can, you know, see as being an appropriate amount.

• 11:35Speaker 01

  A nice round, comfortable number.

• 11:37Speaker 00

  And again, everyone's going to be different here.

• 11:41Speaker 00

  If you want to travel first class to Europe twice a year, that's not going to be your number. But for tonight, for ease of numbers, for Alex's first time, we're just going to use a nice round number of a hundred grand a year. Now, if you think about then how much you need to have in the bank to be able to do that, the rule of four percent is a really good one to be able to use. Have you got, did you use this previously, at your previous job?

• 12:05Speaker 01

  No, no, we didn't. I've actually never heard of the rule of four percent until this evening, so it's going to be insightful for me too.

• 12:10Speaker 00

  So the way it works is you work out, okay, how much do I want to spend per year? And you apply your number to that and then you multiply it by 25 and that will tell you the net wealth you need to have excluding your house or personal assets. That's the investments you need to have to live off it. Now, what that means is, you know, if that money's in a managed fund or potentially property, high yielding properties, you'll be able to spend your four percent a year and your money probably won't run out based on historic data. Now, to apply this to our hundred grand a year figure, a hundred grand a year times 25, that means you need 2.5 million dollars.

• 12:50Speaker 00

  So a hundred thousand dollars times 2.5, sorry, times 25 is 2.5 million dollars. Now again, if your number's different, just use a different number and then multiply that by 25. And it works backwards as well. If you think, okay, I'm actually near retirement, so I met a lovely couple last night who are in retirement and now we're thinking about, okay, if they sell down some assets, they're left with, let's say it's 2.5 million dollars. You can then work out how much income that works out to be by dividing by that 25.

• 13:20Speaker 01

  So that is 2.5 million dollars of equity rather than the total value of the asset?

• 13:24Speaker 00

  Well, that's, that's net equity. So, so you've got to remember, you've got to strip out your owner occupied house and people often find that quite confusing because your own house, you're always going to need someone to live and you're probably not getting an income from that. If, if, if you are, say you're getting 20 grand because you've got an Airbnb on the back of it, take the 20 grand off your hundred grand goal. Now, if you're thinking, what about inflation? What is, how does that get factored in? Or you might be thinking, okay, but what about tax? That's when it gets a bit more complicated and you want to use a tool like Opus Plus to be able to work this out for you. But just as a very basic rule of thumb to get you started, the rule of 4% really works.

• 14:08Speaker 00

  Now, let's talk about the two models that, that people often use. Now, um, the, uh, the nest egg is the most common retirement strategy where you're going to build up your assets over time. You're going to hold those assets for a number of years till you get to retirement or, or whatever your, your, your goal is. You're going to sell those assets and pay off any debt. And then you're going to live off the, uh, the, the money that you've got sitting in the bank at that stage. So you've built up your wealth, now you're going to spend your wealth. Now, the good, the good model, the good part of this, the pro of this is that it's pretty easy to work out and it's pretty easy to achieve. So for most investors, it might require two or three properties, depending on how long they've got.

• 14:53Speaker 00

  On the flip side, the downside is you've got to predict accurately when you're going to die.

• 15:00Speaker 01

  Hard to do.

• 15:01Speaker 00

  Now, not always, but, um, but if you get it wrong, you're either going to live too long and then you're going to run out of money or you're not going to live long enough to spend your money.

• 15:15Speaker 01

  I was going to say it's, it's not a bad thing if, if you don't run out of money, but potentially you could have been spending more.

• 15:20Speaker 00

  And that's it. Like, um, a great example of this is my dad. So, uh, my dad, um, built up his KiwiSaver, didn't have a huge amount of money, died three months into retirement. Now that is a great retirement plan, but not a very enjoyable one. So you've got to get the balance right. The golden goose is a bit more sophisticated. This is where you build your portfolio, you hold, you sell your assets, but now you take the profits and you reinvest those in high yielding properties, because we're a property company, or managed funds or shares or something, and you live off the returns. You live off the rent of its properties or the returns of its shares or managed fund. Now, the downside of this. Is you need to have more assets.

• 16:02Speaker 01

  Okay.

• 16:03Speaker 00

  Uh, because you're now, um, you, you need to have enough assets that there's sufficient money coming in that it lasts forever. The downside is, uh, sorry, the upside is it lasts forever. If you live to a thousand, because Elon Musk's figured out how to, uh, keep your life to a thousand, awesome. But, uh, it does require more work and more time. So if you're closer to retirement, that often might not be a model you can use.

• 16:28Speaker 01

  So it is the preferable strategy, but obviously time and I guess income to it.

• 16:31Speaker 00

  I mean, preferable, but also again, like for a lot of investors, they don't necessarily want to, um, uh, work so hard that they can't enjoy today either. So it really comes down to personal preference. Now we're gonna have a poll, so don't put the answer in the chat. Uh, producer Dave is putting a poll across your screen and, uh, of the two hundred that are in the room right now, I wanna know what age you think you can retire. What age you think you can retire.

• 16:59Speaker 01

  Well, I probably shouldn't say tomorrow, considering it's, um, my first, second day on the job.

• 17:05Speaker 00

  Might work because you might not live that long based on that answer.

• 17:09Speaker 01

  Not by that, no, I think, um, honestly, the sooner you're in a, the sooner I was in a position to retire, the better. Even if I didn't want to, you know, even if I was happy working to sixty five, peace of mind, it would be nice knowing when I'm fifty that I can retire then if I need to.

• 17:25Speaker 00

  I do think that also retirement means different things to different people. Like if you, if I, if I, um, think of the word retirement, I kinda think of golf and sitting on a beach and all those kinda things. I, I'm not really into beaches because it gets sunburned. I'm not into golf because I can't play golf. Um, but, but in terms of financial freedom, that's what's important to me. That's what drives me.

• 17:45Speaker 01

  Yeah.

• 17:45Speaker 00

  So I do think it's, it's horses for courses. Um, uh, producer Dave, do you wanna end that poll? So just to share some of the results. So in terms of people that want to retire before fifty, it's twelve percent. So that's actually quite a lot.

• 17:58Speaker 01

  People obviously happy with their jobs then.

• 18:00Speaker 00

  Yeah, about a quarter of you want to retire between after sixty five, oh, sorry, at sixty five. About a quarter roughly twenty three percent at sixty, fifteen percent of you at fifty five. Some of you say never, and that's, I relate to that. Maybe you don't actually, you're not motivated by that. But I think one thing I would say to that is when it comes to retirement and whether or not you're forced to retire, that might be a different story as well. Okay, so in terms of your wealth gap, what your wealth gap is, that's the difference between where your current investments are going to get you and where you're actually, where you're wanting to be.

• 18:41Speaker 00

  Now, this can be quite a daunting prospect for a lot of people. Again, this is why people bury their head in the sand. And so I think this also comes down to a concept that we call facing your future, where you stop going, I really hope this works out. And now you're thinking, I need to do something about this to ensure that I take control of my financial future, whether that be I do retire early or whether or not I keep on working past sixty five, or whether or not I just have the flexibility to pick and choose the hours I want and if I go away for a year with my kids. Now, let's talk about planning your portfolio. Now, in terms of what your outcome is,

• 19:25Speaker 00

  if you get a suboptimal result when you actually map out your KiwiSaver and your super, if you're working to sixty five, and maybe you've got a couple of investments, you might have a shares account. Have you got a shares account?

• 19:38Speaker 01

  I do. Is there any money in it? Probably not.

• 19:40Speaker 00

  So mine's got money in it, it's just doing terribly, right? So if you map out all those things you're doing at the moment, and they're not getting you to where you want to be, one very acceptable option is to say, well, I'm just going to lower my goal. I'm going to get more realistic with what it is I can spend in retirement. And for a lot of people I deal with, they might say, Seventy five grand a year is where I'm tracking, but I'm not prepared to take on any extra risk. So I'm just gonna, I'm gonna readjust, realign my goals to be what I've got at the moment.

• 20:15Speaker 01

  Yep. I think when you put it like that, though, it is relatively confronting because if you said to me and we were in a planning session, you know, would you like to lower your retirement goal? I mean, my first answer would be no. Um.

• 20:28Speaker 00

  But, but.

• 20:28Speaker 01

  At the same time, if you said invest more now, I'd certainly rather do that, depending on how much, obviously, because I still want to live a life as opposed to lower my goals significantly.

• 20:36Speaker 00

  Yeah. And everyone's different here as well. So I was talking to one of our financial advisors before coming here and she was saying to someone, okay, well, you, you could save yourself there. You're in a really good income.

• 20:48Speaker 01

  Yep.

• 20:48Speaker 00

  But you're gonna have to save a hundred and twenty four thousand dollars a year. Can you do that? And I said, yeah, we can do that. And she said, cool. Will you do that for the next nineteen years?

• 20:59Speaker 01

  Yeah.

• 20:59Speaker 00

  And apparently they said, well.

• 21:02Speaker 01

  Was that a hundred and twenty thousand dollars a year, did you say?

• 21:04Speaker 00

  For nineteen years.

• 21:05Speaker 01

  Okay.

• 21:06Speaker 00

  Yeah. Now, let's say you've got, you've got a really good income and you can do that. My next thing is, do you want to do that?

• 21:13Speaker 01

  No, potentially not.

• 21:13Speaker 00

  And do you want to actually rely on that? Because what if you lose your job?

• 21:17Speaker 01

  Hmm.

• 21:18Speaker 00

  What if you want to go away more now? And again, um, what, so a story I tell when we do our seminars is, um, years ago, there was, um, there was a time where we had a family Christmas and, um, there was, there's a card game called Family Feud. Have you ever played that?

• 21:35Speaker 01

  Heard of, heard of Family Feud.

• 21:36Speaker 00

  Family Feud. So basically what happens is, um, you draw a card and it says, um, what is the most popular car, um, for people to drive, for example, right? And then you will make guesses and you might say Tesla and I say the Mini Cooper. I don't know anything about cars, by the way. So these, these are my only things that I can think of. And it ranks them and it might say, oh, Tesla's number three. So you get fourteen points and Mini Cooper, that's number six. So you get zero points. Now, the first card, without a lot, this isn't a made up story for the webinar. Um, the first card, when we're playing this as a family, was how do you get rich? And I thought, here's the beauty of this. I can beat my family at this because I've proven it.

• 22:16Speaker 01

  Yeah, okay.

• 22:17Speaker 00

  And so I said buzz and I said, uh, property. And my sister went down the car and she said, uh, um, uh, real estate. That's number five.

• 22:27Speaker 01

  Ah, so they had ranked them prior.

• 22:30Speaker 00

  Well, the, the, the, the, the public of New Zealand rang them, right? And I thought, well, here's the beauty of, of this game. I'm going to discover four better things than what I already know is made me wealthy.

• 22:41Speaker 01

  Interestingly, we're not on the webinar talking about those tonight.

• 22:44Speaker 00

  Yeah. And then I said, okay, all right. Um, my dad gets to go now. What do you think, John Nichol? And he said, save. And no, he said, work hard, work hard. And I laughed and laughed and laughed.

• 22:58Speaker 01

  Which is the, you know, it's the, um, probably the natural answer for a lot of people.

• 23:02Speaker 00

  Yeah, his was number two. Okay, his was number two. Number one was save. So the terrifying part about that is that, that most New Zealanders think that working hard and saving will get themselves to retirement or rich. That's not the case for most of us. Now, in terms of those, um, those, uh, choices you've got, again, you can either lower your goal or you can invest more to be able to retire at that age. Now let's use an example of the, uh, well, well, Wellingtonians, which we've spoken about before. Imagine they want, uh, they earn a hundred grand each at the moment. They have a house worth eight hundred thousand. They bought a wee while ago. They've had a dip in house prices, so they're feeling a little bit sad about it, but it's gone from a million to eight hundred thousand.

• 23:47Speaker 00

  But their mortgage is relatively low because they've owned it for a while and they've been paying it down. Two hundred grand mortgage, two cars, two kids, no other debt.

• 23:54Speaker 01

  Pretty good life.

• 23:55Speaker 00

  Pretty good life. And now you'd be thinking, okay, well, can we actually get money from the bank? If we're those people, how do we do that? Now, if you're those people, you've got two options again. Do you use a advisor? So we've got a team where you might map this out and figure out, well, can you actually borrow the money to be able to do what you wanted to do? Or? Do you do a DIY at home version? Now, what you're seeing there is the investment ready spreadsheet, which we gave away at the last webinar. Now, it's not available tonight.

• 24:30Speaker 01

  I was going to say, I hope you weren't expecting people to make that on their own.

• 24:32Speaker 00

  No.

• 24:33Speaker 01

  I'm glad to hear you give that away.

• 24:34Speaker 00

  And basically, what this does is it maps out whether or not you can afford properties based on the inputs you put in there. Now, you could put in all these things that, that, you know, maybe you've got no credit card debt, but you know, you've got a 10 grand limit and it tells you, you might be able to do it. Remember, this is all just a spreadsheet and this is where you use an advisor. And I think that for most people, one of the key things is everyone's different. And I, I used that example before about the Wellingtonians. Because everyone's got their unique situations where maybe they're paying more into their Kiwi saver at the moment than they need to, and they might be willing to adjust it. Or they might be willing to cut down on going out all the time.

• 25:17Speaker 00

  Or maybe they're willing to extend their mortgage term to get into an investment property sooner. Not saying anyone should do that tonight. What I'm saying is these are the things that an advisor will tell you to do. Now, based on the Wellingtonians, which I haven't got the slide for, I'm pretty sure those kind of people could borrow enough to buy an investment property right now. If they go and see a mortgage advisor or work with the bank. But again, you've got two options. Do I go to a, do I go to an advisor or do I do it myself? And again, neither's right or wrong. Let's talk about now how we find the right property. So we've got a plan. We know we're going to buy a property. Let's say our budget's $700,000. How do we find the right property? So Alex, this has been your job at your previous roles.

• 26:02Speaker 00

  So tell us about that.

• 26:03Speaker 01

  Yeah, I think when you've got, you know, in the past, I've seen investors or buyers come along with a bit of surplus cash to spend. And often, and I've been, you know, tied up in this sort of scenario myself as well. The first thing you do is naturally go and trade me and look at all the properties you want to buy. And you can see even just looking at that slide there, that there's 46,738 results to choose from.

• 26:25Speaker 00

  Easy, so it's gonna be easy. All I have to do is pick one.

• 26:28Speaker 01

  It's funny though, Andrew, because I was, I was actually having a beer with a friend last week. And naturally, because I work in property, he was showing me all these bloody properties that he had been looking at. One was great, one was in Lynwood in Christchurch. I think it was five bedrooms and it was, it was. I thought it was a relatively good deal. It wasn't until you actually dived into the detail that there was a whole lot of things wrong with the property that the trade me adverts hadn't.

• 26:55Speaker 00

  Hadn't fully covered.

• 26:56Speaker 01

  That's the reason why it had been on the market for so long at that particular price. I think it was 650,000 or something. It was very cheap, but.

• 27:03Speaker 00

  On the surface, that sounds like a good idea. And this is where it makes it really hard. If you've got so many options. And I know people can actually get confused when they've got, you know, three options to choose from.

• 27:14Speaker 01

  Yep.

• 27:15Speaker 00

  How am I going to take that number of properties and decide what one I'm going to choose? So there's three key decisions I think you need to make.

• 27:22Speaker 01

  I think for investors, certainly, it's all about weighing up your priorities. Some investors are, you know, they might be reliant on cash flow. I want something that's slightly higher cash flow or higher yielding. And that's super important to look at. But obviously there's growth properties as well. So correct me if I'm wrong, but generally speaking, you'd consider an apartment a yield property. Although what I have noticed with apartments recently is that yields have come back a bit. And so they don't, they don't yield as strong as potentially they used to. And standalone, you know, houses or townhouses may have caught up in that respect.

• 27:56Speaker 00

  I, I think one of the key things is often people try and get the best of both worlds. And you can't really get that. So if you think about a growth property, it's something that's going to double in value faster than a income generating property, generally speaking. So a yield property, you might be talking about room by room rentals. You might be talking about dual key apartments. You might be talking about student accommodation, boarding houses. Those are all appropriate for student investors. And then you've got other investors that want as much capital growth as possible. They're prepared to put in a couple of hundred bucks a week right now to be able to get a much higher output at the end. Now, neither's right or wrong as a general sense. It's about what you want.

• 28:37Speaker 00

  The key thing I think here is recognizing that you can't have your cake and eat it too. We want to try and choose, well, what's the most appropriate for where you're at? And often, but not always, yield properties might be better for an older property, but not necessarily the right thing. For a younger person because you're wanting growth, but, but, but again, horses for courses. Um. Decision number two is, are you wanting new build or are you wanting existing? So what's your kind of thoughts here, Alex?

• 29:04Speaker 01

  I think it depends on the individual. Um. Obviously, if, if you're time poor, which a lot of people are these days, especially if you're working hard to retire nice and early. Um. Potentially new builds are the way to go. And saying that if you're a handyman, which obviously, well, I don't want to say obviously, but I am not. I don't know about yourself, Andrew.

• 29:19Speaker 00

  I would, I do. Do you not know?

• 29:21Speaker 01

  You did a few renos back in, in the day, then potentially, potentially renovating, you know, could be the way to go. What I have often, and what I have noticed. In the past though, is often, especially in a rising market, people will, you know, add a bit of value or think they're adding a bit of value to a house by renovating. In reality, it's just.

• 29:40Speaker 00

  It's the market. Yeah, yeah. That's absolutely the case. So often what I see is people buy a property. Five hundred thousand, they put fifty grand into renovations, they sell it for seven hundred thousand and they think, that's awesome. I had a great example of this in Auckland. Um. Really nice couple, very intelligent business people, and they'd made one point, uh, it was about a million dollars, say. Um. But then deductions from renovations and the sales cost, let's say eight hundred thousand dollars. Now, five hundred thousand of that would have been made if they'd just bought the average property in Auckland and done nothing. But it's, it's one of those things that, um, that people often think that they've had more of control over the market than is actually the case.

• 30:23Speaker 00

  Now, if you are handy and you are wanting to do more, uh, in terms of, uh, bringing up the value of the property or bringing up the income right now. Maybe an old property and doing a renovation project is right for you and new builds are not going to be the right fit. If you're wanting to be as hands off as possible, then probably at that stage, you are going to want to go for a new build. Also, it might depend on what the limitations are around your situation when it comes to lending, because new builds have the advantage of a lower deposit. Uh, uh, I can borrow eighty percent on them rather than seventy percent and you don't need to put any money into renovations.

• 31:00Speaker 01

  Yep. I have heard the term of the, the, the hands. Off renovation as well whereby somebody might, you know, hire a bunch of trades to do the work. But even then, project managing the whole thing, um, looking at quotes and that sort of thing is awfully time consuming and potentially will keep you up at night uh as well because you'll be constantly thinking, hey, could have I got a better deal if I use this builder?

• 31:19Speaker 00

  And you might get it wrong. I I can tell you as a very seasoned investor who knows how to read quotes and read estimates, um, I had an instance uh quite recently where a budget went from a hundred and fifty thousand dollars to two hundred and fifty thousand dollars in a very short period of time. Now, that could be crippling in terms of your margin if you only have a short term to invest. Decision number three is figuring out if you want to go to a small town or you want to go to a big city. Now, small towns, you get a really affordable price a lot of the time and often a better cash flow or a better uh gross yield. With bigger cities, you but you get more consistent capital growth um and

• 31:59Speaker 00

  and you kind of don't have those lumps of uh, you know, you might get ten years without a flat period of time with those smaller regions. Again, neither's right or wrong. If you live in a small town and you're going to do a renovation project, that's probably going to be where you invest. Um, in terms of how we do it, so we take those forty thousand properties from Trade Me and then we say, okay, well, um, twenty one thousand of those might be in our preferred areas. Right now, that could be Auckland, Christchurch, Queensland, somewhere that's undervalued. Then we say, okay, well, let's say twenty four percent of those are our preferred types of properties, new builds, that's what we specialize here in Opes Partners. Then we go through our screening process and might get down to um thirteen percent of those. And then all of a sudden, we get to a hundred and fifty

• 32:44Speaker 00

  that are approved by our real estate team that look at the properties and say which are the ones we're happy to recommend. Now, the key thing is here, four out of a thousand properties are the ones that we say, yeah, we're going to put our name to those. And we're not the developers, but we're willing to stake our name on the likelihood of this person going to be able to deliver that. Um, now that we've done that, we need to actually run the numbers and make sure it works from a cash flow standpoint. And so the way we do that is Opus Plus. Now you can sign up for this free and this is kind of the dashboard and what it looks like in terms of what this will demonstrate is when you're looking at your wealth, you can see how that's increasing over time based on the assumptions you use. I'd love

• 33:28Speaker 00

  it if it was a straight line like this, but that's what it's going to show you. But then on the right hand side of the table, you're looking at the cash flow. So after all your costs and factoring in for vacancy, how much of the cost is your rent covered? Now this one, this portfolio is positively get for most investors today. If you're borrowing a hundred percent, that is not the case. That's not the graph you see. But this is, this is the tool you use. And we set this, so far I've invested approximately, I never get a straight answer out of it, Ed, about a million dollars to bring this out and it's free for anyone to use. And you can analyze any property in New Zealand, with or without Opus, and you can run the cash flows and you can take it all, you can take the information

• 34:11Speaker 00

  from Trade Man, load it in there and see what it looks like and you can compare it to other properties. This is the tool my advisors and I use day in and day out to assess any property deal. Now, you always want to come back to the numbers because without the numbers, you're just making that gut feel decision. Does it feel right? Am I okay with this investment? And look, there, there's been, there's a podcast coming out reasonably soon, which is my, my look into investing in Timor, your hometown. I hope you gotta say nice things about it. Buying a church and renovating it and turning it into an Airbnb. All of the things

• 34:56Speaker 00

  that if any of you that are my clients are on here live tonight will be saying, he said, don't do stupid things like that. Yes, I did. And I, and I went through this exercise myself. And again, the numbers didn't work and that's why I don't want to spoil. You'll have to listen to the podcast, Alex. So the key thing is always run the numbers. That's the most important part of property investment. So let's talk about the detailed dive. Once you've got a property and you want to actually dig into it. One thing you don't want to do is try and do all your checks before you've actually got control of that property. And we call it the detailed dive. And we've got a list of probably about a hundred different steps that you need to go through. Now, some people won't want to go and meet the developer.

• 35:41Speaker 00

  They won't want to go on site. They won't want to go and look at the property. They might not have to do a renovation budget and get a couple of quotes. But all of the tips and steps are in Opus Plus to be able to help you through this. You've been involved in due diligence in the past. What kind of things do people look at once they've got a property on hold, Alex?

• 35:59Speaker 01

  Yeah, I think it depends on the investor, but a lot of the time it will be small things. As you said, it is important to take that property off the market, especially if it is a really good deal. Evaluation is really important. A lot of the time investors will use the due diligence, the process to get their ducks in a row in regards to finance. And there will obviously be a mortgage broker. Well, hopefully they're using a mortgage broker that can help them through that process. But what I've noticed is generally with due diligence is, you know, it might be 10 working days. For example, that's 10 nights that you can lie in bed and think about all of the things that could potentially go wrong with the property. And so those 10 days really are your opportunity to not only speak with your advisor,

• 36:40Speaker 01

  but also all of the other professionals in your corner to put your mind at rest. So you can sleep at night when you go unconditional on that property.

• 36:49Speaker 00

  So in case anyone doesn't understand what that means, having a property under DD. Explain what that means.

• 36:56Speaker 01

  Okay, sure. So when you have expressed interest that you, you know, when you have decided that you would like to proceed with purchasing a property, the first step would be to sign a sale and purchase agreement. That would be then signed by the vendor and more often than not.

• 37:11Speaker 00

  What's a vendor?

• 37:12Speaker 01

  A vendor in Opus's scenario would be a developer, but typically it's the seller of the property, right? As the investor or you're obviously the purchaser. But that's.

• 37:23Speaker 00

  So you hold it, so you hold the property.

• 37:25Speaker 01

  Yep.

• 37:26Speaker 00

  And then now I've got my two weeks.

• 37:28Speaker 01

  So now that that's signed, you've got two weeks essentially, potentially longer if you need it. Especially in this market, vendors are pretty open to extending that due diligence if need be. So that's your time to talk to all of your professionals, ask any questions you need to in regard to that property. But at the same time, you've got the peace of mind that that's under contract. And so there's not going to be, that is yours until you decide to either proceed with the purchase or you decide, hey, this property's not quite right for me. You may, you may decide to go ahead and cancel the property and, and look at other options. It's important to know that that DD clause is open ended. So you don't necessarily even need to give a reason as to why you're, you're cancelling.

• 38:11Speaker 01

  At the end of the day, as, as the investor, you need to be comfortable with your purchasing decision.

• 38:15Speaker 00

  Now, we're talking specifically about our process here, but if you're an investor and you're going out to, to buy a property, if you're buying an auction, you're unconditional. But if you're buying a property through just normal negotiations, you want to make sure you have a due diligence clause in there so you can go through all the checks yourself and make sure you are satisfied. Now, you might be thinking, well, why the hell do I, do I not just do the research before I make my offer? What, what do you think about that?

• 38:44Speaker 01

  Well, if you're fixated on a property, doing your research can take time. And so putting a property under contract with that due diligence clause, as you said, allows you time to get into the nitty gritty or the devil in the detail. I guess, and some investors I have noticed do, probably out of nervousness or fear more than anything, do do a lot of the due diligence before they sign the contract. And at the end of the day, they can just end up losing the property.

• 39:11Speaker 00

  Yeah, I think one of the key things is we're in a market at the moment where we're a buyer's market, right? So you can, you've got a bit more wiggle room as a purchaser, but that will change over time. Because as, as some of that excess stock clears out and post-election, there tends to be more buyers than before an election. So if we think about that, there will come a time in the not too distant future where someone might outbid you. There will always be another deal, but you always regret the deal you don't do as well. So potentially what you would wanna do is you wanna take control of a property and you do that by holding it, going through the process and then figuring out, is it the right one for me or is it not? That can be quite scary the first time you do it. So I do just wanna make,

• 39:53Speaker 00

  I, I do, I do just wanna explain that I understand if you are nervous and this is the first time you've done it, you might will need a bit more handholding. And again, you, you hopefully using an agent or you're working with an advisor to be able to do that. So that's, that's what the, the detail divers. Now you're probably thinking next, okay, well, I've got the property, I've done my DD, what about the stuff that goes wrong? What about the risks? What about the tenants? So let's talk a little bit about the persistence. So, Alex, you've dealt with developers for a long while. I've seen situations where a property's brand new, but that shower leaks and all of a sudden we've got the floors end up feeling like wheat bax. And how do you deal with stuff like that?

• 40:38Speaker 01

  Yeah, good question. Inevitably, are we talking about new build property specifically? Okay. Inevitably, things do go wrong. I think in the new build space though, it is important to note that everything's under warranty and developers are obligated to fix those issues. I guess that's one of the benefits that come with purchasing a new build property, not that it's necessarily right for anybody. If it was an existing property, for example, something goes wrong, you know, after you've purchased that property, then the onus is on you as, as, as the owner.

• 41:08Speaker 00

  Yeah, I think one of the key things is you can insure against a lot of things. Sometimes part of the insurance is actually just making sure you've provision for things like stuff going wrong and masonry and things like that. In terms of things that I've seen go wrong, often it's the stuff that I never thought was gonna happen. The, the biggest concern for most people is how often tenants pay their rent late. Now, 98% of tenants pay their rent on time. That is kind of the data that we've got, the best data that we've got. So that means there's only 2% of people that pay, a percent of tenants that pay late. And I think sometimes tenants get a bit of a hard time by landlords thinking, oh, you know, I've had this problematic tenant.

• 41:52Speaker 00

  We're talking about a small percentage of people. Now, if we look at the industry average, it's kind of six days or more that people are behind in rent. Not to toot our own horn, but Auckland property, sorry, Auckland team, Opus Property Management, they're in Auckland, we're below that average. There's been times we've been above, but we're very open with this. It's all on our website. And Christchurch Oil way below the industry average. And we don't shy away from this data. It's all available on our website. Now, let's talk about sticking with it because this is probably the biggest thing. If houses prices don't go up in the near future, are you going to lose sleep? Are you going to sell the property? Are you going to not follow through with the plan?

• 42:37Speaker 00

  Now, I think the key thing is if you hold a property for three years, the returns, the growth, they're very up and down. So if you look at the compounding growth over a three-year period, the best ever three-year stretch in New Zealand history, you're up by 15, sorry, 17.5%. I think it's pretty good.

• 43:00Speaker 01

  That is pretty good. That's a good effort. You're a

• 43:02Speaker 00

  I feel pretty excited about it.

• 43:03Speaker 01

  A campaign investor at that point, even though it was probably just luck.

• 43:05Speaker 00

  Now, the worst ever three years, negative 5.3. There are lots of people who have been investing over the last few years that this has been a reality. Maybe, maybe, you know, you're one of those people right now that's thinking, yeah, yeah, I have had, you know, negative 5.3%

• 43:23Speaker 01

  Yep.

• 43:23Speaker 00

  Per year for three years.

• 43:25Speaker 01

  I'm certainly in that boat. I purchased a property and it's certainly worth less than what I paid for it now. Maybe not 5.3% less, but it's one of those things.

• 43:33Speaker 00

  That's per year. And so that can be quite disheartening. And in fact, just before this webinar, so now I jumped on with some of my investors that I've been working with for a number of years, they have had some losses in the last property that they purchased. And so my job is to reassure them, yeah, that's okay. Well, so it's not okay, not ideal, but this is a 20-year plan. We're only three years into it. Now, if you hold for 10 years, The benefit of the best timing kind of reduces, but also the downside of getting it wrong, that gap narrows as well. So 10 years, best ever 10 year return, 10 and a half percent. You'd be pretty happy with that.

• 44:13Speaker 01

  You would.

• 44:14Speaker 00

  If you look at the worst ever per annum return for 10 years, 4.6% positive. Most people would be pretty happy with that.

• 44:22Speaker 01

  Yeah.

• 44:23Speaker 00

  The worst ever would be pretty happy and you might be somewhere in between. And that's just one of the key messages here is you don't know what tomorrow holds in terms of timing, but what we do know is consistency is far more likely over a long period of time, i.e. 10 years. Now, that doesn't mean if you've got three years to invest that you shouldn't look at property because maybe you can hold into retirement. But if you're guaranteed to have to sell within three years, I'd say don't invest. And if we look at it in a different way, in Auckland and Queenstown, we use a 6% benchmark for a growth property increasing over a 10-year period and we use 5% for anywhere else.

• 45:07Speaker 00

  Now, in Christchurch, for example, if you take that 10-year stretch, only 65% of the time has it achieved that 5% or more. Now, you might be thinking, well, that's funny, I've bought in Christchurch, I've done pretty well. Yeah, there is also, because we don't have a huge amount of data from Ryan's, we've got from 1992 to 2025, but that's what it has been if you take that 10-year stretch. We've had the earthquakes in there, it's kind of disrupted it. But if you kind of look at that 70% as a general threshold, that's what we consider to be acceptable or not. Interestingly enough, anyone that's invested in Auckland over the last wee while might have discovered that actually it's been pretty rough.

• 45:51Speaker 00

  But if you take that 10-year view, the benchmark for us there of 6%, Auckland has achieved that 91% of the time, not 100% of the time, but 91% of the time. That's pretty good in my mind.

• 46:05Speaker 01

  Pretty good odds, yeah.

• 46:06Speaker 00

  And then the next part is you need to keep expanding. Now, that's on the basis that you haven't closed your wealth gap yet, but. If you think about the number of people that actually want to retire at 55, there's so many. There's 200 people here right now. And I bet you there will be everyone here that will say, yeah, I'm happy to retire at 55. But actually, the reality is there are very few people that actually will. Maybe the numbers are different here in this room because you're proactively thinking about this. But the key thing is if you want something, you need to chase it. No one else is responsible for your future. Now, if we think about not just golden goose, but when we're talking about, you know,

• 46:50Speaker 00

  we're going to sell those properties over time, that's where we're here. But if we've got a growth property and we're selling it for a million bucks, well, now we need to turn that into a million dollars worth of income generating asset. And we're going to pay off the debt because maybe we've had an interest only loan. Now we want to generate as much yield as possible. Now, if you buy a yield property rather than a growth property, what's the difference? Well, growth property might be four and a half percent yield, might net you 30 grand a year after costs. A higher yielding property, say 6%, which would be on the lower side, that might generate you 40 grand a year worth of income. Now, Alex, take a guess, why do you, why do you think about yield? If you retire, why do I care about yield now?

• 47:32Speaker 01

  Well, you care about yield because you want to live off that income rather than sell, sell down the asset.

• 47:36Speaker 00

  Do I want the growth as well?

• 47:37Speaker 01

  Depends on your situation. I mean, anybody wants the growth, don't they?

• 47:40Speaker 00

  Maybe, but also you're probably thinking at this stage, well, I'm now 65. My kids are going to inherit the growth. I care less about that than I do the yield. But you might have spent the last 20 years wanting as much growth. So it can be quite a mental shift to actually get to this point. And so that's where you probably need some advice. Now, if you want that hundred grand a year income, you're going to need two properties paid off when you get to that age. And they're going to have to be based on the numbers that we're trying to achieve. 50 grand a year in your hand, that's two 1.25 million dollar properties. So it could be two multi-income properties, maybe in Wellington, where you might have multi-income student accommodation potentially.

• 48:25Speaker 00

  That's the hundred grand a year. That's the secret sauce. Now you end up getting to a point where you can now live off the income. Now, you might be thinking, hey, what are my thoughts? What am I thinking about next? What am I worried about? Well, we have over 2,400 podcasts that you can go back and type in any question you want and find out if we've got a topic. I'm sure we do. We've got over a thousand YouTube videos on our online right now that you can watch. And we've got over 560 articles on our website, including pretty much everything you can think of a property investment. And if we haven't answered it-

• 49:03Speaker 01

  There is a lot there. It's overwhelming.

• 49:04Speaker 00

  You can come and ask me and I'll tell you.

• 49:05Speaker 01

  As an outside source.

• 49:06Speaker 00

  And you might be thinking now, this all sounds good, but holy hell, how do I do this by myself? This is overwhelming. I'm gonna go and lie awake at night tonight and just stress like Alex says. So you can go out and you can find tools online like Sorted. They've got some great retirement tools. We've got things like the investment ready spreadsheet to see how much you can borrow. You just have to have a time machine to go back and get that from the last webinar. Or you can use Opus Plus to run the cash flows and figure out, well, can I actually afford this? Doesn't matter if the bank says I can borrow the money, but can I actually afford this? That's free. Sign up for that now. And I think the key thing is, if you go to Trade Me and you're gonna do this yourself, you need a mortgage broker. You need to know what you're gonna do

• 49:51Speaker 00

  in DD. You need an accountant. You need a whole lot of paperwork, property manager, a real estate agent, a whole lot of spreadsheets. Or you can use us. And there's no pressure tonight to use us. But we're the Swiss Army knife of the property investment industry. We've got people that you can use. We've got financial advisors in-house. We've got property managers. We've got the software. We don't do the legal work, but we can refer you to someone there. And we all start with a plan. So we're not about just you choosing a property that suits you first. That's actually a video of me in the background there.

• 50:27Speaker 01

  I wasn't sure whether it was you talking to her or-

• 50:28Speaker 00

  Yeah, no, that's me creating a plan for a customer saying, okay, this is your wealth gap. How are we gonna close it? And then there's, I think, Cathy, showing people, these are the types of properties that might fill that wealth gap. And it's free. And you might be thinking, well, how the hell is it free? Well, that's because if we help you put all this together, we'll get paid for doing the real estate transaction through our real estate team. We'll get paid for placing your mortgage. We'll get paid for doing the property management. You can pick and choose the services you want to use, but we have a model that allows you to do that. And you don't just have to use us. Just do something. If you want help, go and put it into Google. Propeller aren't around anymore, but you could

• 51:11Speaker 00

  click on us or you can click on the property factory, whoever they are. Have you heard of them, Alex? No comment. There are lots of other providers. Honestly, we just want people to be successful in property investment. And if you do it yourself or you use a professional, I just think it comes down to actually getting good advice. And the key reasons you might use us is we are data led. We want to make data-driven decisions all the time and take the emotions out of it. We don't go to Trade Me to find the properties. What we need to do is we need to go and source properties and make them available to you so that you're not competing with Trade Me. And we get good prices and good deals. But to be honest, if you're coming to us just for

• 51:53Speaker 00

  the cheapest price, go to Trade Me. You might not guess it, but the benefit of using us is to actually be successful. And this is the reason why if you use a financial advisor, you're far more likely to be successful because you stick to your plan. I'm not saying you won't get a good deal through us. What I'm saying is you're kind of losing the reason why people would use property investment firms like us if you're just thinking about the cheapest price. And we've got everything all in one place. We've got the partners which do the advice. We've got property management, mortgages and accounting and the real estate service.

• 52:34Speaker 00

  Now, if after all that, you're thinking, yeah, just help me do this because I don't want to do this myself, I'm going to put one final poll across your screen. If you click, yes, send me the link to book, we will, we will send you the link to book and tomorrow, we'll be in touch to schedule you with one of our team and we'll sit down and we'll build a plan with you. You can take that plan and do it yourself. If you're all good, you're wanting to do this yourself, you want to use some of those tools, all good, just click nope and I'll still answer your questions. You'll still get the, the guide. Producer Dave, can we just put that against the screen in just a minute as well? The download is coming for you and I think the last thing I want to do is thank everyone

• 53:17Speaker 00

  for being here tonight and being so involved. I want to answer as many questions as we can possibly get through. So let's take it away with questions now. I don't think I can actually exit onto that screen while the poll's still going. So can you see the questions there?

• 53:33Speaker 01

  I can see the chat, but I can't see.

• 53:36Speaker 00

  I'll show you.

• 53:37Speaker 01

  Hang on a second.

• 53:37Speaker 00

  Let me just get this. Yep.

• 53:44Speaker 00

  All right, Q and A.

• 53:46Speaker 01

  Perfect. Lucky one of us knows how to work.

• 53:48Speaker 00

  Yeah, go with that one. What was that saying?

• 53:51Speaker 01

  What if, this is a good question. Would a financial advisor even look at someone over 55 slash 65?

• 53:57Speaker 00

  Yeah. So, so my clients that I met with last night, I think they might actually be here. I saw a number four that looked like they were. So yet they were 65 and in their instance, they've got, they've been very, they've had very good income for a number of years. They've built up a portfolio. The advice they wanted from me was how would you go about moving these properties to an income? Because although the cash flow looked good. It was mostly going to maintenance now and it was going to debt repayment. So what we did is we worked out a strategy of what order to sell things and how to kind of get out of debt. Now that they can't earn an income to pay down the debt.

• 54:39Speaker 00

  Now, that isn't our traditional model, but absolutely we would still work with you because I want my advisors to again give great financial advice with or without the benefit of you working with all of our services. Now, those people might end up selling those properties, investing some high yield and we can help them with that. They won't take on debt, but they might use our property management services and then they'll tell all their friends and their three kids want to invest.

• 55:03Speaker 01

  Yeah, cool. Nice. Okay, second question. How does it work after you have, after you've got your first investment property? How long would it typically typically take to secure a second one?

• 55:13Speaker 00

  Oh yeah, that's a, that's a, um, a hard one to answer as a general sense.

• 55:17Speaker 01

  Yep.

• 55:17Speaker 00

  Normally when I'm putting together a plan for someone, I might plan a purchase every few years.

• 55:22Speaker 01

  Okay.

• 55:22Speaker 00

  Now, that is very finger in the air at that stage. So what I'll normally do is I'll build a plan and say, if you buy um, five properties over, I'm sorry, three properties over the next um, five to 10 years, does that get us to our goal? If it does, then you go and see a mortgage broker and see how realistic that is. Now, just remember today, you might be completely tapped out with your borrowing ability. But at least we know, okay, we're heading in the right direction. So um, if I can buy today's one, I think sometimes the key thing is to remember um, one is better than zero. Um, and you can't buy three without buying one. So um, just, just focus on the first one, but also don't buy something for the sake of buying something and then um,

• 56:05Speaker 00

  paint yourself into a corner when it comes to the next purchase.

• 56:08Speaker 01

  Cool. Another really good question from Andrew. You talk a lot about the age to retire, but what about the age to make a start? Is there, is there an age that comes to mind?

• 56:18Speaker 00

  Um.

• 56:19Speaker 01

  Sooner, sooner rather than later, I assume is the answer.

• 56:21Speaker 00

  My first rental property when I was 19. Now, it was much easier then, um, 23 years ago.

• 56:27Speaker 01

  Andrew's starting from 48.

• 56:29Speaker 00

  Forty eight. So, so, um, so Andrew, I think, um. What you might be worried about is, okay, well, if I'm going to retire at 60, that only gives me 12 years. One thing I would always say is just remember, because you're retiring or stopping working, doesn't mean you have to sell your properties all at once. So if you have three rental properties by the time you retire at 60, for example, you might only have to sell one and that might fund the first seven years of retirement. Then your second and your third property, where you've got another seven years worth of growth out of both of those, and you might sell the second one and then you get 14 years worth of growth out of the third one, if you've held that for another seven years. So there is some sophisticated modelling we can do around staggering

• 57:13Speaker 00

  the sales to be able to get as much growth out of them as possible.

• 57:17Speaker 01

  Okay, cool. Lee's got a couple of questions in regard to the accounting and property management process. She's asking if you have any package deals for the two?

• 57:26Speaker 00

  No, but only because we do charge a very fair rate on both of them to be able to make it work. So with property management, it's a flat fee, it's 7.99 and we pay a lease, we charge a tenant sourcing fee when you need a tenant, but there's no additional cost. And we've, we've built these to be kind of a no surprise model. In terms of the accounting, it's 1350 plus GST for your first return. For every additional property, it's only 250. So I've built these as an investor of portfolio, of portfolio of rental properties to try and suit people as they grow. So yeah, there's some setup costs in that first property, but after that, it becomes relatively cost effective.

• 58:09Speaker 01

  Okay. No, that's a good answer. It seems like a lot of people are very interested in your investment journey in Timor, your church?

• 58:15Speaker 00

  Oh, you don't know about the church?

• 58:17Speaker 01

  Few Timor fans?

• 58:18Speaker 00

  I did see someone, someone actually said.

• 58:20Speaker 01

  Wait until, wait until the podcast for sure, but.

• 58:23Speaker 00

  Nah, you're here tonight.

• 58:24Speaker 01

  Any insight you can give us tonight?

• 58:26Speaker 00

  There's only 200 people tonight, so I'm happy to share it with you because we get quite a few people download the podcast. So it doesn't mean a bit of a spoiler. So the way, what happened, I wonder if I've still got the spreadsheet on this computer.

• 58:38Speaker 01

  Now we're going to go rabbit hole, aren't we?

• 58:40Speaker 00

  Yeah, a bit of a rabbit hole, but you asked a question. So. What happened was some friends of mine here at the office said, we should do a historic building conversion. And I thought that is a great idea. Even though I've done a lot of renovations and some of them have been fun and some of them have been soul destroying. Here we go. I've got the numbers. Oh, it won't let me open it. Basically then, what I said was, if I'm going to do a historic building, I want it to be cheap because the budgets, the budget blowouts when it comes to renovations, they can be pretty extreme. And if you add the word historic, you pay a premium as well. Oh, here we go. I've got, I've got the spreadsheet I

• 59:23Speaker 00

  did for this. I'll share my screen. So the, the terrible spelling in this. So the purchase price, I did the model on 350. The property was in St. Andrew, as I think Grant asked before, whether or not that was the case. It is a beautiful building. And to be fair, if I were ready to retire, I might actually just go and do this. But actually, probably I would talk myself

• 59:49Speaker 01

  about this one. I've seen the building. It's pretty big. It looks labour intensive.

• 59:53Speaker 00

  Yeah.

• 59:53Speaker 01

  You've got better things to do.

• 59:54Speaker 00

  Yeah. And so the purchase price might have been 350. It was advertised for a bit, I think roughly 375 or something. The renovation quote, the best kind of quote that I got was around that 630 grand. So quite a lot. So your total cost was about a million dollars. Now, these are all the same. Oh, no, no, no. Here we go. Maybe I've changed it. Oh, yeah. I've changed it in terms of the cash flow. Now, the estimated end value, this is where it all fell down. I reckon on a good day with, you know, sending some chocolates and some wine to a, to a valuer,

• 1:00:34Speaker 00

  I might have had the value come out at 650, right? Which means that if I could get lending of 70% of the end value, which would be a pretty good ask from the bank, I have to put in this kind of money. So I'm putting in more than half. So what's my return of my cash investment? Now, this would be an Airbnb. That'd be the only way to make it work. And I tell people day in and day out, don't do your numbers on Airbnb and expect that to make a bad investment look good. So. I worked on a nightly rate of 500, 500 and 700 and three nights a week, two nights a week and two nights a week. It worked out to be a modest return on my investment.

• 1:01:19Speaker 00

  Now, my cash investment, but if I think about the fact that all this cash in and I could kind of get that in something with a bit more security that's going to get me better growth. But also, if there's my value, I'm already 350 K upside down. I came to a point where I went, you know what? This is such an emotive decision. This is not the right thing to do and therefore I didn't do it.

• 1:01:46Speaker 01

  Oh, there you go.

• 1:01:47Speaker 00

  Yeah.

• 1:01:48Speaker 01

  That's the question answered then.

• 1:01:50Speaker 00

  Yeah.

• 1:01:52Speaker 01

  Isaac's got a good question. He has just, he's, he's just transitioned into full-time income from, from a real estate role and he's asking what the best strategy would be for him. So should we be purchasing high rental yield properties as close to 10% as possible as put? Or, or should he be snagging quote unquote low value properties in the south, aiming, you know, aiming for new builds?

• 1:02:13Speaker 00

  So, um, so there's no way I could answer that with the, um, with the depth that it requires on this webinar because there's so many more things I want to ask. But, um, the way I would start is I'd be looking at, well, what am, what are you trying to achieve? And then what's your capital and what your borrowing ability is to be able to achieve that? So, um, for me, so if, if I'm working with an investor who wants to build as much wealth as they can over the next 15 years or 20 years, um, you would buy a, a higher growth property that you might put some cash into, assuming you can afford to do that. And that's where, you know, it's not like there's if this, then that. It's often if this and then this, then that,

• 1:02:57Speaker 00

  then you end up at a, a result. And so financial advisor's job is to figure out, okay, where are you heading? What's the options available to you? But then what is the most likely, um, uh, outcome if you do each of these and then make a recommendation? So I think it's, it's probably better to talk to a financial advisor. In full first, we can do that for free with you. Um. But again, you can use whoever you like and then get some answers because um. Number one, we're very specific. We are new build property investors. Um. If that's not for you, then absolutely use someone else. Or maybe sometimes people go, you know what, I could save myself there. I'm putting enough money into my shares. I'm just gonna do that.

• 1:03:37Speaker 01

  Cool. Good answer. Um. Fergus has asked. He's asked specifically about your portfolio, but generally speaking, are we investing in new builds, existing properties, or a bit of both?

• 1:03:48Speaker 00

  Me personally?

• 1:03:49Speaker 01

  Yeah.

• 1:03:49Speaker 00

  Uh. Yeah, yeah. So for me at the moment, I am only investing in new build. Um. Other than um dancing around that Tamara one, and that was purely out of an emotional um desire to um renovate a church. I spent a lot of time in churches when I was young. I'm now on probation for time served. I am looking absolutely at um uh just investing in new builds now. Um. Time is way more precious to me than um than the cash flow is nowadays. I'm looking for wealth that I don't have to trade my time for, um but everyone's different there.

• 1:04:21Speaker 01

  Yep.

• 1:04:22Speaker 00

  Um. Specifically for me, because growth over the next twenty years is the most important is, well, it should probably move in the next ten years. I'm investing in Auckland. Um. I've uh also purchased um something in uh Queensland last year. That's that's much more fringy than I'd recommend for a lot of investors. I've also um looked at a Wanaka uh uh investment recently. Um. For me, I I'm happy to put in a few hundred dollars a week if I'm borrowing a hundred percent. And I want the maximum growth on that. So Auckland, because it's undervalued, is where I'm looking. So Auckland or Christchurch or Hamilton, probably the main areas for growth investors right now.

• 1:04:59Speaker 01

  Very good. Thank you for the insight. Joy, Joy is asking, and this sounds a bit scary to me, not going to lie. For boarding houses in Wellington, specifically for students. Do they need to be new builds or does an older property work?

• 1:05:11Speaker 00

  No, older properties probably. Um. Probably in that case, Joy, you're looking for something that's quite a different model. You're looking at cash flow. You've probably got an established level of wealth and you're looking for income. So boarding houses um probably in Wellington. Generally speaking, they are older. That's not our bread and butter. That's not what we're normally recommending, but but based on your question, I'm guessing that's suitable for you. So, yeah, it could be either.

• 1:05:38Speaker 01

  Yeah, cool. Neve's asked, as a 21 year old, is it okay if I've got investment properties that aren't new builds?

• 1:05:45Speaker 00

  Yeah, absolutely. And our model is so specific to helping most people that we meet invest in something that's going to work from a capital growth perspective. They put as little money as possible into the deposit. They're able to grow their portfolio. It's not the right fit for everyone. And I think you go through a bit of a journey in investing. So when I was 19, I was buying existing properties. I was renovating them poorly. I was revaluing them back when you could get your own valuer to come around and say, yeah, I know Andrew's at a 50 grand value. And then I borrowed against that and I buy the next property. Very different world we live in today. And there are so many more restrictions from

• 1:06:25Speaker 00

  a banking perspective as well. So it might not be that you, sorry, you could never replicate what I did because the rules are so different. However, if I was starting again, if I was 21, again, like Alex here, I would probably go and buy property. I'd use whatever skills I had to improve the value and I'd repeat the process. It's quite a, it's a time intensive strategy. But if you've got time right now, because you don't have kids, you don't have, you know, the kids that I've got, that I employ, then absolutely, you want to be able to turn your money around into more money as quickly as possible. So it might be the right fit for you, Neve.

• 1:07:04Speaker 01

  Yeah, yep. Eric's asked a really good question. And this is actually a question I came across a lot in another role I was in previously. What's your views on purchasing investment property in Dunedin, specifically in the student market? I think a lot of investors currently are looking at student accommodation potentially as a way to increase that yield, at least over the short term. What's your views on that?

• 1:07:26Speaker 00

  So I don't want to bag an area just for the sake of saying I wouldn't do that right now. So again, depends on what you're looking for right now. So, so one of the key things that I look at, if I'm looking for growth and I am biased to my particular desire to build as much growth as possible in the shortest period of time as possible. So I'm always looking for, well, will this give me the highest return? Now, I would say that Dunedin probably is unlikely to do that over the short term because of this. So if we go into Data Hub.

• 1:08:01Speaker 00

  On our website and we go, so you just put Opus Data Hub, overvalued, undervalued. And then we look at Dunedin. There we go. What this shows you is how a region is performing based on its long-term average against New Zealand's median house price. At the moment Auckland's, oh sorry, Dunedin's overvalued. So that tells me that other areas are more likely to increase at a faster rate than Dunedin over the next five years. So now over the long term, they'll all probably even out. But for me, if I want to repeat the process, Dunedin's probably not going to be the right fit. Now, if you are looking for yield because you're retired, you're living on the income, or you're just really tight with income.

• 1:08:46Speaker 00

  Then maybe it is the right fit. So what I'd look at first is, am I, am I most interested in wealth creation? Or am I most interested in cash flow? If it's cash flow, sure, Dunedin might work. If it's capital growth, then probably not right now. I've had lots of people, I, I work with a lot of rugby players down in Dunedin who have bought those student accommodation properties. Some of them, I've learnt a lot about them. Some of the properties which have got, the houses have got names.

• 1:09:14Speaker 01

  Yeah, I, I studied in Dunedin and a lot of them did have names.

• 1:09:18Speaker 00

  Terrific.

• 1:09:19Speaker 01

  But generally the ones with the names were arguably the funnest ones to live in, but probably as a landlord, the worst ones to own.

• 1:09:25Speaker 00

  Yeah, the one was like called Deportery or Deportress or something like that. And it was like, they always had issues in terms of maintenance and people doing dumb things. But yes, they made really good income. So if you've got the stomach for it, sure. If that's what you're looking for and you need cash flow, okay. But if you're looking for growth, don't kid yourself, it's not the right time.

• 1:09:49Speaker 01

  Okay, cool. Andrew's asked a question and I can't quite understand what he means. But he said, when you say borrowing a hundred percent, do you mean a hundred percent of the 20%?

• 1:09:58Speaker 00

  Oh, great question. Yeah, I know what you're talking about. So Andrew's asked whether or not I'm talking about a hundred percent borrowing against rental property, which obviously you can't do. You've got to be able to figure out, well, how much money do I have to put in? As a deposit to get the maximum lending. Now, if you go to your bank and you've got usable equity in your house, the bank might give you a hundred percent. But there's still a reliance or a cross security against your house. Now, if you are investing in an existing property, that equity needs to be thirty percent that you're putting in into the new property. If you're buying a new build, it's twenty percent or potentially less, but let's just call it twenty percent. So you need fifty percent more deposit to invest in an existing property as a new property,

• 1:10:43Speaker 00

  based on the same value purchase price. Now, for some people, if you've got a million dollar property with no debt on it, you don't really care about that. You might still not want to put more attachment into your house, or you want to limit the attachment to your house to to give you a bit more comfort. But that's a personal preference. But when I talk about a hundred percent, I am talking about a hundred percent or no cash needed method, which is what we talk about on our website, where you're using equity to borrow the first part of your deposit and the rest against the rental property. If you go into Opus on the website, I'll show you one more thing on here. On our website, there's this really cool thing called our Opus AI chatbot.

• 1:11:26Speaker 00

  Now, if I don't get to your question tonight and you think, I've actually found this still over the last couple of days. Mean when he says one hundred percent borrowing on a rental property? And hopefully with the magic of Ed, AI and a million dollars investment in all of this tech, it will give you an answer that Ed and I might have seen. There's a little video of Ed there. I remember when he was here. You can watch.

• 1:11:59Speaker 00

  Producer Dave. It's working a bit slowly tonight, but this will give you an answer. And like I honestly, here we go.

• 1:12:08Speaker 00

  Okay, the concept of borrowing 100% and closing the leverage. Oh yeah, duck. Now, this is really cool. So it's actually told us the downside of doing that. Um, because there's pros and cons of leverage and there's a, um, there's a, uh, an article about what goes wrong. Cause leverage is a double edged sword. So if, if the property goes up, now you've got a really good return on your equity. If it goes down, it's the opposite. Oh, why he stitched me up.

• 1:12:35Speaker 00

  But, um, I think this is a really good tool to be able to answer all the questions that you might not have a chance to answer. You might not want to jump online and talk to a financial advisor and go and use that. Maybe I'll answer two more questions.

• 1:12:47Speaker 01

  Yep. It looks like we've only got one more anyway, from the Q and A. Another good question. Uh, this person's got about 500 squares of land with an old house on it. They're looking at building three detached townhouses, I assume at the back. Um, is that something they could work with you on?

• 1:13:01Speaker 00

  Um, you could use our mortgage team for that and our property management team, if it's in Auckland and Christchurch. It's not something we'd advise on because we don't give advice on development, um, projects. Um, there are some, um, podcasts where I've spoken about some of the, the learnings from my development projects. Um, my, my, my major learning, what I'd summarize on that is, um, often it's not as good as I imagined it was going to be. And actually there's some really interesting cases on these Sundays where people have done that. And, um, it hasn't been as good as, you know, just selling that land to another developer. Not to put you off, because it could be really, really viable. Um, if you email me directly and email me the numbers, there's a chance I'll look at it. And, um, actually come back and say, yeah, this is what I'd consider.

• 1:13:45Speaker 00

  Um, [email protected], um, that'll get through to me. Um, but as a company, we don't give advice on development.

• 1:13:53Speaker 01

  Okay. No, very good. That looks like that's all the questions from the Q and A. Fergus, it looks like you've asked, asked that in the chat and maybe Neve will come back to you. But other than that, um, that's all of the questions.

• 1:14:03Speaker 00

  Awesome. Alex and I are all done for tonight. Go and enjoy the rest of your night. Thanks for hanging in there and, um, yeah. Uh, uh, if you want to talk to us, just there's no.

• 1:14:11Speaker 01

  Thank you everybody. Appreciate that. Cheers.

• 1:14:13Speaker 00

  Bye.