Back to the home page REVIEW: Property Investment: Your Questions Answered™ More than a hundred investors came together in Auckland City late last week (2 April) to hear three property experts share their view of the current market, strategies for safety and success -- and answer questions. Empower Education's Property Investment: Your Questions Answered™ with investor Olly Newland, accountant Mark Withers and lawyer Tony Steindle covered a wide range of topics. Those attending benefited from the long experience -- and different styles -- of the three property experts. The focus was 'What's going on in the market RIGHT NOW?' and how other investors are responding. They also discussed the pressures investors and owners face at present, gave attention to emerging trends and risks, and looked at options available to deal successfully with them. The format of the evening meant that following a 45-minute introduction and 'market update' from the three experts, the floor was open for questions. Some questions had been emailed in advance and others were asked live on the night. An audio set of the session is in production and is available to order now. Some of the topics discussed: The interest rate dilemma: Fix now for as long as possible? Or stay floating in anticipation? Or a mixture of both? The experts told us what they were doing themselves and talked about inflation expectations and how best to hedge against them. Olly spoke on why we need some inflation 'to get out of the mess'. Is the present crisis almost over? Will a recovery kick in after winter? The experts gave us their best pick. Negotiating in this market -- the experts shared some of the most effective negotiating tactics they and their clients use to close a deal -- whether buying or selling. The changing apartment market -- and its widely reported 'half-price sale' -- came in for serious discussion. Mark Withers pointed out that not all locations are created equal. Investors would do well to AVOID certain types of buildings and land types and focus on others. He shared the latest from-the-coalface (unpublished) data on sales in the bellweather Auckland CBD, plus important distinctions about leases and licences to occupy -- all factors potential buyers would be best to know BEFORE they go hunting for a 'bargain' apartment. There was a useful discussion about sources of online property research and information, and several ways to help spot trends that you can profit from, as well as recent changes to the law and tax rules -- and what they mean to investors. Buying in the current market and dealing with banks were two big topics of the night. Olly, Mark and Tony shared some of the advantages of using non-bank lenders and how to access them. They named names for a bunch of alternative sources of finance and discussed their experiences. Mark talked about how the banks look at borrowers at times like this, and their 'values' (i.e. what the bank cares most about). There was a lot of discussion about managing your lending relationships in tighter times, the proper use of Statements of Position, and how to fend off your lender's efforts to grab extra security. A lot was said about the practical management of the lending relationship. Olly Newland shared his approach and some of his old tricks -- tactics only the author of The Rascal's Guide to Real Estate would be willing and able to share. But the property lawyer and accountant stuck their oars in too ... with eye-opening comments. Several investors spoke up about their experience of tightening lending criteria and finance generally and how the banks are applying their revised rules. The experts discussed how to get what you want by giving the banks what they need -- but NOT giving away too much, nor being intimidated by their demands. Break penalties and the various banks' different approaches to these were discussed, and tips given for making the best of things. Someone asked: Is New Zealand property going to be the next big thing? Foreign investors (Australian, European and Asian) are increasingly buying in NZ. Our foreign investment rules are changing -- what could this mean? Mark detailed recent Australian tax law changes which make investing here even more attractive for Aussies. Will there be an influx? How would a 'super city' amalgamation in Auckland affect the local residential property market? There'll be some unexpected flow-on effects from that, the panel said. Also, the government has signalled changes to the Resource Management Act (affecting the whole country) -- changes which the three experts say will have a BIG impact when they wind through. They talked about what the effects could be -- they're not all good for investors, however. There was a lot of laughter and good humour during the evening and also some rueful war stories as the panel related salutary tales from their 'How that mess could have been avoided' files and drew out important lessons for us all. Things like: clauses to protect your deposit from the risk of disappearing in the collapse of a distressed vendor; properly documenting unequal interests when buying as tenants-in-common or in partnership; anticipating your exit (and that of others) from a joint investment; properly watching over revolving credit facilities etc. The experts discussed financing arrangements when entering a partnership so that your personal guarantee is limited to your share of the debt -- and crucial things to do differently during a downturn or when a deal looks in danger of collapse. A question about how to use vendor finance as an option in a cooler market provoked an interesting exchange of views, sharing of practical tips and advice -- and drew a surprisingly dark and sober comment from the normally effervescent Mark Withers. There was a spirited and fruitful discussion of valuations -- the place of the CV versus a Registered Valuation -- and vital reasons offered as to why you should consider formally appealing a 'too low' CV (and happily pay the extra rates). Olly raised the issue of 'who else is looking at your CV?' and gave an illuminating answer. Mark told us about his recent experience with a registered valuer who has been 'blacklisted' by at least one bank, apparently, and simple steps you can take to avoid that problem affecting you. He also revealed a little-known legal advantage gained by using a registered valuation in certain interactions with the IRD -- and how the Tax Act can work in your favour(!) Someone asked the question, 'Is a fixed interest mortgage always fixed?' The answer was NOT what most of us would have anticipated. In response to another question, the panel launched into a frank assessment of typical returns across various property sectors. Our experts favour particular sectors. Here, as elsewhere in the evening, they each conveyed their own preferences and views -- and we learned from their differences. The perennial question: 'Is it better to try to sell a bare section or build a house on it and sell the package?' sparked a robust discussion -- which led to some clarification of the tax treatment of subdivided land and important things to consider if you're faced with that choice. The recent rash of new commercial property syndication offerings led to dialogue about how to judge a syndication offer -- it's not just the management fee, as Tony Steindle's long years of experience forming syndicates has taught him. He suggested four tests by which to measure a syndication offer. (Olly also offered his more, um, streetwise guidelines.) All in all, the evening produced worthwhile ideas, enlightening discussion and up-to-date information. We all heard a good number of things to chew over and consider as investors (or property buyers or sellers) facing the challenges of today's market. The guidance these experienced investors and professionals gave is highly valuable. They provided helpful recommendations and pointers for anyone who wants to make best use of their time, energy and money -- and steer clear of avoidable traps. An audio set of the session is in production and is available to order now. Property Investment Q&A™: Your Questions Answered (April 2009) audio set Two audio CDs (approximately two hours total running time). The cost is $69 + P&H and you can order it here. Best wishes, Peter Aranyi Empower Education 7/4/09 PS You can see details of the speakers' others books and audio programmes on our website. --- A handbook for changing times ... How to Survive and Prosper in a Falling Property Market Get the inside story on what happens as the property cycle turns... and how to invest for profit and safety in a changing property market. $39.95 + P&H In How to Survive and Prosper in a Falling Property Market, veteran investors and expert authors Andrew King, Mike McCombie, Mark Withers and Tony Steindle share essential facts, advice and wealth-building strategies for today's property investor. Clear and accessible, this up-to-date and comprehensive handbook will show you how to both safeguard and increase your real estate values as the market changes. Visit our website to download the table of contents and a free chapter. Other articles... March Newsletter A tale of two mental states (continued) ... a lesson from Barack Obama Nov 2008 TIME to be Optimistic or Pessimistic? Oct 2008 ----- Empower Education - Empowering You For Success PO Box 39-155 Howick Auckland New Zealand. Phone 09 535 2415 info@EmpowerEducation.com www.EmpowerEducation.com Copyright 2009 Empower Education. All rights reserved.