Archive for the ‘Personal Development’ Category
It’s been a very good weekend for me. As well as helping my folks at one of their rentals, my beloved rugby team Auckland beat Otago in the Air NZ Cup, did lots of filing (yup paperwork suffered in our house move early last month) and some financial planning and goal setting.
On Friday night after the rugby game, I starting compiling the information for today’s goal setting meeting. I looked at my share portfolios in NZ (hey there are some good NZ shares too for growth and cashflow), Australia and the US. Then to another 4 websites to get my managed funds, REITs and mutual funds.
Then the easy part to establish the equity in my trusts’ properties today, and the cashflows from them. And great news I have hit the million dollars in equity now , before I am 30 too. I am very happy about this, but am even more excited about the future as I increase my financial and Business knowledge to build my skills.
My goals
I want to have $500,000 in passive cashflow per year inside 10 years. To get this cashflow I will do this from residential property, commercial property, small business ownership (owning not operating), NZ and international direct share ownership as well as some managed and mutual funds. Yup pretty big thinking. About the same as getting a million dollars before I hit 30 when I was 25.
Other goals include starting my own family with my wife, spending more time with my wife, grandmother and parents, mastering large scale property development and teaching other people to be millionaire through Business, property and financial investment products, as I really thrive when teaching other people to succeed too.
“Unlike money, you can only spend time once – before it is forever gone.” David Whitburn
How am I going to do it
Thousands of small calculated steps as usual. By taking lots of small steps even though to some it may not look like I am doing much, it is glaringly obvious to me that I am, as I see the improvements in my life towards achieving my plan. I ask myself, who am I living life for – myself or other people?
What do you want?
The great news was I have hit one million in equity, a goal of mine I set aged 25 to hit before I was 30 years old. I thought I could do it at that time, but having less than $100,000 equity at the time and just a $65K per annum job as a solicitor, I knew it would be an uphill battle. And I knew that it would not come from savings as paying 39% tax on every dollar I earned, and at that time having cravings for gadgets and technology and travel, I knew that savings from my job wasn’t going to cut the mustard. So ask yourself what you want, and how you are going to achieve it. Phil Jones’ blog on financial planning is actual quite powerful with its 25 questions it seeks answers for:
- What wealth vehicles are you going to use to generate wealth?
- Real Estate
- Business
- Share Market
- Are you going to use one of those strategies or multiple?
- How will you allocate your time between the wealth strategies?
- Will you use leverage through loans?
- Will the loans be Interest Only, Principle & Interest, Table, or cashflow Mortgages?
- Will you try to eliminate debt before investing?
- How long will you focus on debt reduction?
- What are your wealth goals, are they specifically defined time and dollar value goals?
- Is the long term strategy to be debt free or have a large portfolio that has lower debt to value ratios?
- Are you planning to live off cashflow? If so how much do you need and whats the plan to get there?
- How are you planning for tax?
- Are you using all possible strategies to reduce your tax?
- What is your asset plan, do you need to adjust it?
- Are you working together with your partner or in parallel to them?
- Do you have separate bank accounts or joint ones?
- Do you have a prenup? If not what happens if separation happens?
- Do you have a will? Have you updated it recently? Does it reflect your current wishes? Will it guide your children correctly and limit their ability to blow the inheritance when they are young?
- Do you have life insurance? Who and where does it pay?
- Do you have medical insurance?
- Do you need income protection insurance or rental protection insurance?
- How are you planning to assist your children?
- What is the strategy for a crisis?
- Are you going to invest in NZ and overseas, in your town and around the country?
- What makes a good investment, how will you recognise one?
- If you invest in shares are they growth stocks or dividend ones? Whats your entry strategy, what’s your exit strategy?
Do yourself a favour and answer the questions to analyse what your financial framework is – and make your plan from it.
How did I get started?
A lot of people that know me have asked why I invest in shares and managed funds. To answer this question I need to take you back in time to when I was at University. But back at Auckland University in 1997 I reflected on what I had done the year before. In 1996 I had studied my butt off doing both Law intermediate and Med intermediate. I worked hard enough and guess I had enough intellectual firepower to get the grades that year to do either. I choose to stay in Auckland, where I had $50/week accommodation, thanks to Mum and Dad, I was 2 bus stages away from Uni, had more friends in Auckland, Auckland is internationally regarded as the country’s best University, and I had a $10/hour job at Deloitte (Big 4 accounting firm). Like most students I had a lot of time up my sleeves, even though I did a Law Degree and Batchelor of Science degree at the same time. Yes, I am geek, but I am proud of it.
I got into the social scene and political scene at Uni, making lots of friends and literally many hundreds of acquaintances. Wine Tasting Club, Tramping Club, Tennis Club, Indoor Soccer Uni Team, Chemistry Student Representative, Auckland University Law Students Society, Founder of the Croquet Club, Young National Party, etc. And you know what – they were all poor students. In fact it became the metaphor – everyone just thought that since they were students they were poor and that is ok. Well here’s the thing, I thought this was a load of rubbish. I got sick of people saying “I am poor because I am a student.”
So I thought about ways I got be a ‘wealthy student’. A lot of people don’t know but students actually get a whole heap of benefits from leverage. We could get student loans from the government easily with no income testing or research into the likely chance of payback into the loan (eg. why oh why do hip hop dance and twilight golf courses qualify for student loans – I will save that for another blog). Banks were offering students Interest-free loans of $500 to $3,000. So I had 5 bank accounts with Interest free overdrafts at one stage.
Event management company
With another well networked friend (who is now a legendary commercial construction project manager in the UK) we set up an Event Management Company and having run friends parties, big 21st birthdays and student parties we ventured into the commercial market getting clients like Housing New Zealand, the Navy, Deloitte and doing joint ventures with Auckland University Alumni, Law Students Society and then ventured into spec events. We got 91ZM on board with a $25,000 sponsorship pack in of radio advertising and puchase of tickets from us. We had the great people at Lion Nathan sold into our proposals that we would knock out in a couple of hours over a beer appealing the the Emerging Drinkers market – a term we coined and milked. Yes we had thousands of dollars in free beer for including Lion’s name on the ads that we didn’t have to pay for. In fact it got better as the Akld Uni Students Asscn (AUSA) paid for our printing and ads in their infamous but widely circulated free magazine Craccum. Those were the glory days and I made tens of thousands of dollars whilst studying at Uni. It really wasn’t that hard.
Some people still thought I was a wanker because I had money, but I can assure that all of those events went off. The only damage done was to the museum having to open an hour and a half late after an absolutely amazing Law School Students Ball. We had an ancient greek theme, and all you can eat and drink for $55. It sold out within 2 hours at the fire capacity of 450 people. Lion Nathan made the day with Champagne on arrival and a wide variety of beer and wine on tap. The Spit Roast Catering Company was magic with the all important stomach lining. Unfortunately a few dozen plates broke and the floor was covered by an inch of alcohol by 2am. Despite a Massive clean up – the museum couldn’t open in time. We got letters from the Museum and their lawyers. Not what a 21 year old wants to see.
| “Obstacles are those frightening things that become visible when we take our eyes off our goals.” Henry Ford |
Whilst most people would be freaked out, and luckily having great access to the legal system and parents friends including QCs, judges and top law firm partners – this, like most litigation didn’t phase me much. I keep going until I left Uni. However with the change to full time work I took my eye of the ball and goal, and got hyped into the personal development as a wage slave. I joined a share Club (non-pooled) at Deloitte and put tens of thousands into direct share investments and a couple of managed funds. I did this for nearly 3 years full time until I saw the light and started my foray into property in late 2002.
At that time my US Shares were decimated. They including Nokia, Coca Cola and alas some bio tech companies bought in 1999. I got greedy and suckered into the end of the a Massive bust in the US sharemarket, and got slammed by the double whammy of the NZ dollar going from 39US cents to $1 NZD to 72US cents : $1 NZD. Lesson learned.
So I didn’t pull that money out. I saved $7,000NZD and got a kiwibank home loan for $135,000 (and $1,500 low equity fee capitalised into the loan) to fund the puchase price of a Manurewa property. I did the renovations in the weekend and evenings during the week when I could escape from my big office at Russell McVeagh in the Vero Building. I figured out the capital gains I got were going up 8 times faster than my salary, and for one 6th the time during the renovation. By working hard as an employee lawyer I was actually costing myself money! Stupid eh! So I bought a second property, quit my job never to return and made similarly great money!
The rest is history. I guess that what I do now is living history for me and my wife, and I am really enjoying life. I know my next million will come a lot quicker than the 29 years it has taken to get this first million, and I will have fun along the way making it.
The Minister of Excessive Regulation, Clayton Cosgrove, is proposing a number of changes to the current Building Code. “A new Code will shape our future buildings and how they perform, ranging from how energy efficient they are through to how they stand up to natural hazards,” says the Minister.
Fresh of the heels of a new Building Act and amendments to raise the standards for timber treatment, weather tightness details and a raft of other things that make building new houses and renovating them more expensive, they want more!
CO² emissions and energy efficiency will suddenly become important. So get ready to add more to your budgets for new renovation / building projects. Double glazed windows, more expensive building wraps and insulation is looking likely.
What’s happening
The Department of Building and Housing has released a discussion document proposing changes to the Building Code (see www.dbh.govt.nz) that will impact property investors. These include changes to make houses more energy efficient, minimising CO² emissions from houses and introducing new performance standards for houses. Unfortunately this will further increase the cost of constructing new homes, adding thousands to new building prices.
From a technical perspective, the current New Zealand Building Code is the First Schedule to the Building Regulations 1992. It comprises 35 clauses containing technical requirements and two clauses of general provisions.
The Building Act 2004 sets out the law on building work. Building work means work for the construction, alteration, demolition or removal of a building. All building work – both the design and construction of new buildings and the upgrading of existing buildings – must comply with the Building Code. ‘Buildings’ include housing, community facilities, commercial and industrial structures, outbuildings and structures such as bridges, platforms and dams.
The current Building Code sets out performance standards that buildings must meet, for example, it specifies how strong an earthquake a building must be able to withstand, or how much natural light there should be in a bedroom. It covers aspects of buildings such as fire safety, access, moisture control, durability, services and facilities. The Building Code is performance-based and has been since 1992.
My thoughts
Similarly to what I told NZ property Magazine, some of the changes such as temperature settings on hot water cylinders to prevent scalding and earthquake proofing, are common sense. However whilst it may be “nice” to have buildings a little bit warmer and producing less of a carbon footprint – I can’t help but see Massive problems and further unwanted cost increases.
There will be extra costs for architects and engineers to draft for the energy performance and technical changes to make building tougher, as well as for council to police these – ie. more council fees, again! In addition there will be more costs to construct these.
These extra costs will stop some investors, developers, and/or builders from going ahead with their projects, and will dilute returns. Therefore these costs will be passed onto tenants in many cases through increased rents to hit desired return levels, and having projects not go ahead will broadly speaking mean less supply, same demand – so UPWard price pressure.
Try building a new house in a remote town like Mataura of 85sqm. That building will likely cost you minimum of $110K in the cheapest nastiest compliant cladding excluding council and development professional fees. Yet existing 85sqm houses on similar sized sections you can already buy for less than $110K including the land! This is hardly going to encourage new buildings to cater for the population influx NZ is expecting. In addition house relocations are going to be significantly tougher and more expensive if this code is approved and enacted.
Not what the Government is aiming for in terms of addressing the “Affordability Crisis”, and making life easier for the first home buyer. But that is the cost of buying votes from the Green Party to secure a majority Government. I really don’t like MMP.
SUBMIT NOW – time to have your say
I am submitting for FUZO (www.fuzo.co.nz), myself and leading a strong panel from the Auckland property Investors’ association. I have contacted the Minister’s office and got much information from them, in addition to that on their www.dbh.govt.nz website.
I recommend that you go to http://www.dbh.govt.nz/bcr-2007-consultation and read at least the summaries for yourself. Then decide on how these will impact you and submit for yourself on these points that Interest you.
Do nothing and the Government can then say their were not many submissions against this, so we are totally justified in costing you another 3-5% more for every house you build, and much more than that every renovation you do. Enough is enough – and if this isn’t the last straw for you after the introduction of development contributions by local government, the introduction of the Building Act 2004, changes to compliance documents of the building code, councils making more inspections and much tougher, charging for wastewater, now they are looking at CO² emissions and energy performance when many houses have been standing prior to World War II.
So – use the links to DBH and make your voice heard.
The last couple of weeks have been a busy time. I’ve been overseeing some of the renovation of my home and also on a rental of ours after tenants left, continuing to project manage infill developments for Fuzo clients and playing an integral part in the professionalism of the Auckland Property Investors’ Association Incorporated (APIA).
Renovating
Great fun from the teamwork, getting the family to help out. At one stage we had 11 people on the project, so that was fantastic. The most interesting thing I learned was when we stripped 3 layers of wallpaper in the living room and dining room, we found that the walls were not straight. So I got a straight-edge and found in fact they were out by 10mm in a couple of places. Not good at all. So a “few” hours wasted in the wallpaper stripping, as we want the house to look great so no more gib in those rooms.
Lesson learned is to get a straight edge. On older houses I would recommend replacing the gib particularly is wallpaper is on it, as gib itself is inexpensive and it is far cheaper (assuming you have no ‘free’ labour) to stop the join in the gib, rather than apply a full skim coat of plaster ready for paint (or wallpaper) finish.
Tenants left a house of ours last week too. Unfortunately the house is tiring now, so time for little plastering, a lot of painting and a modernised bathroom and toilet to maximise our rent.
Developing
My wife and I are having a great year and a lot of fun with renovating and development. In fact, so much so that we are on the look out now for another subdivisable central Auckland property to buy, renovate and sell the existing house, and build a FUZO subdivision new home on the backyard to again create Massive equity.
I enjoyed spending time with a couple of magnificient property investors in Nicola and Greg Loft last week. We toured their Auckland properties, monitored progress of a renovation of theirs, and went on a road trip and had a fantastic seafood lunch at Swashbucklers. Yummy. Some fantastic food and company.
APIA
APIA is in the process of professionalising itself at the moment. About 20 months ago we employed a CEO. This has helped as we have been a volunteer organisation, largely championed by the legendary Andrew King – a tireless worker and influential lobbier and networker in property investment circles. Sadly after 7 years of being the Chairman and President of APIA, Andrew is resigning. I have a really enjoyed working with Andrew and am sad to see him leave the role, but I know that he will still be a passionate APIA supporter. So we will be electing a new President in the next couple of months.
In the meantime I have been elected by the APIA Board as their interim Chairman. I am really enjoying the corporate governance side of this role. My Dad has been enjoying being a company director (mostly) over the past couple of decades so luckily I like this too, and can count on him for support when tough issues need to be discussed.
This year the APIA Board has had a couple of issues of conflict that I cannot go into for professional reasons. They are getting resolved though. This makes for big changes in APIA, but by having job descriptions, and performance expectations and monitoring we will achieve fantastic results for our members. Gone will be the days of being a passenger with APIA, whether on the Board, or in any role. This will be very exciting for all APIA members to see. I know it will acheive alignment of the Board and all staff to the APIA Constitutional objectives, and from there the platform should be laid to grow our membership and have a greater array of services to members.
Author and speaker Martin Hawes is presenting at APIA tonight. We look forward to him sharing his thoughts on planning for the retirement years, a variety of asset classes and property investment strategies to succeed with. Hope to see as many of you there as possible tonight – guest tickets $40, if you become a member your $40 is refunded. Go to www.apia.org.nz for details on how to join and the benefits you receive from being an APIA member. Love to see you there.
PS: With some dubious weather lately what an amazing wimbledon final Federer vs Nadal – so close, by the Fed-express did it again at Wimbledon for 5 in a row there. Next year Rafa!
After another busy and fantastic day, and the adrenalin rush of a new megadeal, I was pleased to get home, log onto TV3 news online to learn about Michael Hill’s latest exciting development. Also I have finally learned how to use the insert photo feature in the blogs – so I will provide you with some more visual content from now on.
Michael Hill is planning to construct 17 underground houses on his golf course (“The Hills”) in Arrowtown. I think this is a very clever development that deserves a mention for some quality thinking.
Think of the pristine landscapes around Arrowtown, the snow capped mountains, lakes, rivers, streams and beautiful environment. So often an intensive housing development in a rural setting would detract from this. Here’s some scenery of the Queenstown Lakes District – not an ugly place. In fact it was the place I got engaged, and here is the view from the precise spot (Bennetts Bluff, Lake Wakatipu) where I went down on one knee to propose to my fiancee Bridget:
The Hills
Here’s a picture of Michael Hill’s stunning golf course in Arrowtown:
Normally houses would harm a magic landscape like this, however Michael Hill and his Auckland architect (Andrew Patterson who designed the cutting edge Clubhouse there) have today lodged building consent for 17 subterrean houses.
Around 80% of the houses will be underground and have few doors, which will help with heating. The rooves will be grass or pebble and finished to a top executive standard. The sizes of these houses will be 350 – 700sqm in size. The excavation and retaining work needed, schist exteriors in above ground parts and top quality finish desired means these houses will be very expensive to built and therefore also demand a top quality price.
The proposal is to develop these over ten years. Click Here to see more on this fascinating development.
We need more lateral thinkers like Michael Hill in New Zealand. He has a magnificent environment in The Hills. And he is allowing more people to share in it, without detracting from the environment with underground housing.
I hope the building consents go through smoothly and quickly so this staged development project can begin – I can’t wait to see it.
Hope everyone has a great weekend. I’m off to my sister-in-law’s birthday party tomorrow, featuring virtual ten pin bowling on Ninentdo Wii as her girls are to sick to go out with us. Then my Club soccer game. It will be fun.
It has been an Interesting past few days. I have had a good time to reflect and learn more about myself and my priorities.
What if?
I have seen a few people with so much negativity in them, whether from poor health, loneliness, being eaten by jealously or whatever, just lose the plot. I was wondering whether if ill health or misfortune were to strike me down (eg a sudden heart attack) how would I like to be remembered?
Makes you think doesn’t it. Life is short. You only live once. So why do so many people live life in fear of themselves and other people, hide from reality, and inflict so much pain on themselves without even knowing it. Your health is very important – without good health you are either dead, dead tired, in pain or likely to head that way soon. I am not just talking about physical health but mental health too.
My wife’s sister died from poor mental health at her own hands, I have known others with mental illness that have felt so miserable they have attempted the same, and seen friends and family die from physical illnesses and had a friend die instantly in a car crash from a lack of focus and crossing the line of the road, killing his girlfriend and the the oncoming car’s driver.
My stories
I have learned that life is too short to play games. I admit I have played some – but on reflection it is just too damn tiring. It is time to figure out what your true values are, and to live those beliefs. Where are your priorities? What is the point of having money if all you do is work 90 hours a week then get a crippling cancer and die early? My Grandmother who is currently 89 years old has lived for 16 years longer than my grandfather did and is still going strong. One of her biggest joys is me not going into medicine like her husband and son (an uncle). Why? Surely being a Doctor is fantastic and right up there with being a lawyer or elite Businessman.
The answer is that he worked such long hours whether studying to be a doctor, practicing to be a specialist (Obstetrics and Gynaecology), being on call 24/7 until he was 52, as babies just don’t come out from 9 – 5 like they should! Then when he was a superintendent of a hospital the paperwork was so much that he worked 80 hours a week in the office instead “with the gloves”. He then worked as a consultant for the Minstry of Health to the day he died in his 70s on health standards for immigrants (as even the most deranged left wingers would agree that it is just plan stupid to allow someone to immigrate to NZ when us taxpayers have to pay $50,000 per year to keep them alive – get this some immigrants we allow in cost us many hundreds of thousands a year more than that, but I don’t want to stray off topic). So maybe he had work as his number one priority. I know granny did not appreciate this – and she misses him dearly. She is glad that I am not in a strict 8:30 – 5pm job (or worse) and not going down the same path as my grandfather.
I never met my other grandfather. He was a builder turned propertydeveloper. He died of cancer before I was born. His wife and my grandmother lived into her 90s, nearly 30 years after he died. It is not such good news statistically for us guys so we need to be even more vigiliant about our health. Do you really want to leave your loved ones by themselves for many of the best years of your life when not only do you not have to work, but can relax, travel and do what you like if you are in good financial, physical and mental health.
Get in good financial, physical and mental health
Find the balance guys. Surely the important things are to be in the best mental, physical and financial health you can be. When you have these three things all healthy you are a devastating force, and can truly be “in the zone”.
Don’t get me wrong having money is fantastic and I am very passionate about building my wealth and wealth of other people. But it is not my main priority in life. It gives me a home, passive income streams, good equity reserves to leverage into to create cashflow from. BUT without good mental and physical health it would not mean as much to me.
My message is also think about where you are heading. Do you like where you are going? If you don’t surely now is the time for change. How can I get in better physical and mental health. I think you should all know by now to speak with Richmastery or me if you want to get in better financial shape.
Postnote:
If anyone reading this knows someone that may be feeling depressed there is help out there. One of the greatest ever All Blacks, Auckland rugby try scorers and my former butcher John Kirwan is fronting a very successful campaign aimed at helping curb New Zealand’s atrociously high suicide rate and encourage those with mental illness to acknowledge that it is ok to feel the way they do and there is help. I have lost a loved one to suicide and it really hurts. I with I could resurrect her, known what I could have done about it. For some it may not be too late. I highly recommend taking a look at http://www.outoftheblue.org.nz/index.php. Whilst you may be like me and lucky enough not to have any mental health issues – maybe someone you know is not so fortunate. What can you do as a friend to assist them?