My book - in all leading bookstores this week

My book writing journey

I am delighted that my book Invest and Prosper With Property has been released into bookstores. I started writing the manuscript for this book in January 2010 with the purpose of answering my friends and family members questions on how to invest in property successfully.  I wanted to do a good job, so I decided to give a broad coverage of all property investment topics. After several hundred hours of work had been invested I decided I would like to have it published so I didn’t just sell a few hundred copies or have to give them away. I made the decision to seek out the services of a professional publisher. My friend Amy Hamilton-Chadwick was a professional editor and she edited the manuscript and gave me excellent feedback to make it more readable.  Then it was time to brief out my manuscript to publishers and having been told by so many people about how hard it is to get a big name publisher behind you I was expecting it to go the way of most of my offers on properties – rejected.  This was a most pleasant surprise to me and full credit to Jan Riley of Random House who introduced me to the publishing team.

I was most impressed with the professionalism of Random House from the outset, with their large Auckland presence, an enviable list of best-selling books, and their reputation as one of the very best non-fiction publishers (as well as fiction publishers) in New Zealand, and worldwide.  So I choose them and Random House have been excellent in distributing my work through bookstores nationwide.

Topics covered in my book

There are number of topics covered in my book as it is designed to function as manual for those wanting to invest in property or for those who already invest in property and wish to keep their knowledge up.

Chapter Line-up

1. Why should I invest?
2. Why should I invest in property?
3. What do I need to know to get started?
4. Could I really become seriously rich?
5. Should I buy commercial or residential property?
6. What do I need to know to be a great investor?
7. What kind of goals should I set for my success?
8. What investment strategy is best for me?
9. How to get a great deal
10. How to find great properties
11. How do I check out a property?
12. How do I structure my property ownership?
13. What do I do about paying tax or getting tax rebates?
14. How can I find the money to invest in property?
15. What is a revolving credit or offset account?
16. Fixed vs Floating interest rates
17. How can I save money on my mortgage?
18. What type of loan is right for me?
19. How to structure your loan
20. What do I need to know about accounting and taxation?
21. Depreciation: making it as simple as possible
22. Renovate, redecorate and revalue
23. What do I need to know about valuations?
24. Keeping your investment safe
25. Managing your property
26. How to minimise the risks
27. Don’t derail your own success
28. How to prepare an offer
29. Due diligence
30. Education
31. Useful websites
32. Glossary
33. Index

Sunday Star Times Book Review

Leading financial journalist Greg Ninness of the Sunday Star Times reviewed Invest and Prosper With Property in today’s business section:

OF ALL the useful advice contained in David Whitburn’s book Invest and Prosper With Property, one particular paragraph stands out.  It is a section of the second chapter which asks if property investing will be hard work. ‘The short answer is yes’ the book says…

Whitburn now works as a property mentor and is the president of the Auckland Property Investors Association.  The book draws on his experience, and of others he has seen succeed or fail, to provide a guide that should help investors avoid many common pitfalls and structure their activities in a way that will help them succeed.”

Where do I buy Invest and Prosper With Property?

Now this is available in all good bookstores nationwide with official release date being Friday 7 October 2011, but some bookstores have it already.  This is also sold by a few international online bookstores including a couple of physical bookstores in Australia too. Very shortly the book will be for sale on www.investandprosper.co.nz.

I think it will be an excellent investment for anyone wanting to improve their knowledge on property investment at $37.99, so firmly recommend that you buy it.  I also hope that you enjoy reading it as much as I enjoyed writing Invest and Prosper With Property.

David Whitburn – 2 October 2011

It is a voluntary scheme which had a big launch today. I don’t think this scheme will get massive traction as most houses will get a fail rating of 4 or below.  This is because most houses are not new and built to the latest performance standards with ideal sun orientation, double glazing, and the highest ratings of underfloor, wall or ceiling insulation.  So only the very newest homes with a big budget to spend to get the highest 9 or 10 ratings are likely to use this voluntary scheme.

I am worried that this may make a move towards compulsion of this Scheme a reality.  The Green party would like this to happen.  I don’t see the point of creating this industry.  What is the harm in asking for an invoice to prove the level of insulation installed and the date of this.  On some hosues you just know they will be cold in winter.  For example they are clad with concrete block or tilt slab concrete walls, they face south or west, or have no underfloor or ceiling insulation.  You can easily inspect underfloor insulation on most older houses as you can peak under the house. Remember to take a torch along to each property inspection you do as part of your due-diligence. There is nothing stopping you taking a ladder and peering into the manhole space at the ceiling insulation – otherwise you can get someone to do this for you.  I have a couple of builders on tap that I pay a box of beer to do such inspections for me.

I will watch whether the home energy rating scheme takes off – I doubt it will for at least 5 years.

KEVIN GREEN: The BBC Secret Millionaire Star with nearly NZ$80 million portfolio

Here is Kevin Green on the BBC Secret Millionaire programme:

Kevin was star of the hit BBC series The Secret Millionaire. He is the largest Social Housing landlord in the UK and he runs one of the most successful lease options businesses in the world.  His lease options strategy to success is definitely worth the ticket investment. His other specialty is asset stripping and he will explain how he made his first $250,000 using this strategy, and much more more so you can profit from this method too.

Kevin Green’s Property Profit Strategies event is all about giving you an easy to follow action plan to improve your cashflow.  This event is sold out apart from the Auckland Property Investors’ Association special ticket allotment.  However there is a wait list for tickets as we had a number of booking from Christchurch prior to the devastating February 22nd earthquake, and if anyone can’t make it NZ Wealth Mentor is issuing full refunds if you are unwilling or unable to attend, which could free up a ticket for you.  In addition there is a small chance APIA members will not take up their allotment, so please don’t call me about this, just simply go to the booking page and click the put me on the waitlist button immediately. 

So whilst the sold out signs are up, there may be a few tickets given to those on the wait list, so please don’t give up as we are doing our best to accommodate everyone. Leave you name, email address and phone number and we will contact you if a ticket becomes available.

Kevin Green at APIA

Finally Kevin Green is talking to the Auckland Property Investors’ Association on Tuesday 12th April.  What can you learn in just 55 minutes?  Quite a lot.  This will give you a taste of what Kevin Green and NZ Wealth Mentor are about. We have sponsored this meeting and have 50 tickets that we negotiated with APIA as a special allotment for the Kevin Green event.  So come to APIA to hear from the investor with the largest residential property investment portfolio that we have ever had present to our members since APIA’s inception in 1995.

David Leon - Property Masterclass Master of Ceremonies on 27 November 2010

I covered a lot of topics as the keynote presenter, and those attending particularly enjoyed my take on the market, drawing attention to where we are at in this current stage of the property cycle and my predictions for the future in terms of the various Auckland sub-markets.  I gave a thorough analysis of all of the key market drivers, showing and interpreting graphs from the economics and research of the major trading banks, Reserve Bank of New Zealand, Statistics New Zealand, Quotable Value and the Real Estate Institute.

In another segment on stage I talked about how we as investors are running a property business and the fact that we have to wear a number of hats.  One of the leading property educators in the United Kingdom Gill Fielding talked about the importance of being skilled in a number of different disciplines wear you have a number of buckets to control or hats to wear.  I love this analogy so I talked about the various hats we have to wear as property investors in terms of the CEO hat – managing everything in our business; CFO hat checking our bank statements, keeping accounts, monitoring the financial performance of our portfolio, paying taxes, Renovations/Maintenance hat – looking at how we maintain our very valuable assets and renovating to increase our cashflow and equity; Legal hat – when doing due diligence on properties, looking at legislation changes and ownership structures; and Property Management hat on – where you have to manage your tenants or your property manager, to ensure you minimise vacancies, charge market rent and collect your rent and take the appropriate action when tenants are not behaving,  I also covered ownership structures, including the key changes in light of LAQCs losing their potency in that they lose the ability to offset losses against personally earned income.  The new tax structure the Look Through Company (“LTC”) was introduced too, with Chartered Accountant and my colleague from Deloitte Tax many years ago Amanda Macdonald (Tasman Tax and Accounting Services based in Albany) also presented on this topic being the tax and accounting expert she is.

Finally I gave covered my opinions on US tax deeds and liens that have been promoted in New Zealand heavily over the past couple of years, and I covered the good, the bad and the ugly things about lease options, giving an example of the massive win-win situation created in my last lease option deal that resulted in my tenant buyers settling the property and giving me a giant hug as they achieved their dream of being home owners in New Zealand, as well as the sheer joy of meeting their goal.  I also enjoyed presenting on the strategies I am using in today’s market and covered my revamped and intense mentoring programme where I take my mentoring clients out to do deals with me.  I have some new clients from this event and am looking forward to training them shortly.

Other speakers

Senior Resource Management lawyer Andrew Braggins talked about the spatial plan for Auckland the Supercity, which highlit the growth areas in the Auckland region, major infrastructure and planning thoughts from the head planner and CEO at Auckland Council, who are in Andrew’s network.  This presentation was enjoyed by attendees who were impressed with Andrew’s knowledge and communication skills, as he enlightened them about the hot spots in Auckland.

Andrew also briefly covered how to dispute council fees, levies and contributions both under the Building Act (including seeking a determination from the Department of Building & Housing) and also the Resource Management Act (including a judical review application he recently did on a property he rents out).

Jan Galloway then gave a masterclass in property management, including listing out the issues in relation to the Residential Tenancies Amendment Act with the fines for unlawful acts by Landlords and Tenants all covered – luckily these were included in the comprehensive bound manual we gave our event attendees.

Renovations expert Mark Trafford told attendees about a number of ways not to do renovations in a photo driven presentation.

Gary Hey, a director and shareholder of large mortgage broking firm, Mortgage People, then address the property cycle from a finance perspective.  He talked about how lenders’ criteria are changing and it is much easier to get finance for property now (compared to say 6 months, 1 and 2 years ago).

Improve your financial knowledge, get updated on the current market and learn what strategies I am using for wealth creation for the remainder of this year and in 2011.

My topics covered

Come hear me present live at NZ Property Masterclass event, where I will be talking about:

• Loss Attributing Qualifying Companies (“LAQCs”) being abolished and introducing the new tax structure, the Look Through Company (“LTC”)
• a Market Update with my opinions on where the market is heading for 2011 backed up by graphs and facts
• the untold truth about US Tax Deeds and Liens to follow up from my popular blog in March
• the good, the bad and the ugly with Lease Options, and a number of lease option promoters
• how you can create wealth in 2011, using the strategies I am successfully using on NZ properties in the current market.

Also included in the low $29 ticket price is access to 5 other fantastic speakers.

Your other speakers

Speaker #2:  ANDREW BRAGGINS  LL.B, BSc - Buddle Findlay

1. Local government, environment & resource management, litigation and dispute resolution expert
2. Andrew advises a range of clients, including developers, network utility operators, local authorities and financiers
3. Andrew has an in-depth insight into how local authorities work, having spent 3 years as a local government in-house council, and acting for many councils
4. Member of the Resource Management Law Association & Water NZ
5. Barrister & Solicitor of the High Court of New Zealand

Learn all you need to know about how to deal with councils, the structure of the new Supercity and the Supercity’s impact on you as a property investor.

Speaker #3: JAN GALLOWAY  BA Cert. Crim (Criminology) - Corinthian Management

1. Principal Corinthian Property Management
2. Over 25 years as a property manager
3. Multi-millionaire property investor
4. Managed a leading central auckland property management division
5. Auckland Property Investors Association Board Secretary
6. Multiple award winner (property management related)

Jan knows all you ever needed to know about tenancies and the issues that arise from them.

Speaker #4: MARK TRAFFORD - Owner of Renovate to Profit

1. Principal of Renovate to Profit and Maintain to Profit
2. Renovating properties for over 20 years!
3. Accomplished Property Investor
4. Regular Contributor to Property Investor Magazine
5. Sought after speaker

Mark is an excellent property investors knows everything there is to know about renovating properties having done many dozens of properties.  He is an excellent project manager with unparalleled networks of quality tradespeople.  Join us and learn more about creating wealth through smart renovations!

Speaker #5: GARY HEY BCom - Mortgage People

1. Owner and Director of Mortgage People, a leading Auckland based mortgage broking firm
2. Bachelor of Commerce, member of the NZ Mortgage Brokers’ Association
3. Commercial, Industrial and Residential developments advisor as well as residential investment properties financing expert
4. Sought after speaker having a background in education

The banks and other major lenders criteria are changing and it is easier to get finance for property now.  Gary loves finding funding for your deals.  Bring on your best questions forward and he and his team will be there to assist you.

Overview of key topics covered during the day

1. The current market cycle – using current & historic data to identify our current position & determine where, when & how to purchase your next property deal
2. LAQCs & LTCs & what it means to your investment portfolio
3. Practical strategies to increase your rent easily in the current market
4. Hot strategies for 2011 – the strategies NZ Wealth Mentor’s principals and mentoring are using to make money from NZ property today, and how you can meet your financial goals in 2011
5. Understanding the new paradigm for obtaining finance – How to get banks to lend you $$
6. Where are the best strategies to use in 2011?
7. The untold truth about US Tax Liens & Lease Options – what you must know before you ever think of investing on them.

We will discuss all the current hot topics so that you can leave the event well informed and ready to invest successfully.

2 Ticket Options

There are standard tickets priced at just $29 which don’t include lunch or any extra.  The Gold Tickets however are priced at $98 and these include a delicious buffet lunch in a private room with David Whitburn and many of your presenters.  You also get a portfolio review and wealth plan by NZ Wealth Mentor’s head of property mentoring and Auckland Property Investors’ Association President, David Whitburn, to help you set and reach your financial dreams.

So are you going for GOLD???

In NZ Wealth Mentor we want to make sure you get all your financial goals. If you book online before November 20th we will also include our “Financial Mastery Success Plan” in the ticket price. Financial Mastery Success Plan is designed to look at your financial situation today to build a brighter future. It retails at $175 and you will get it for free as a part of this time constrained offer (3 days to go). Make sure you don’t miss out and book your gold seat (select from the menu) for NZ Property Masterclass today.

In light of the Leaky Homes Compensation Plan announced by the Government, and my comments in leading global newspaper, the Telegraph, I wanted to get some clarity on more of the issues surrounding leaky homes.  As a result we have the following guest blog from Ian Holyoake, answering two questions:

1. How to do the right due-diligence to prevent buying a leaky building?
2. How to fix a leaky building?

How to do the right due diligence to prevent buying a leaky building?

Let the seller provide you with what could be termed ‘proof of product’ – remember the Russell Crowe & Meg Ryan movie Proof of Life – if a seller is serious they should table openly the state of the building – why should you pay to have there building tested. What you should ask for and in this order is:

• What treatment does the framing have? Poorly treated timber is what is rots from leak events. Therefore a robust building is one with high durability protection. Regrettably treatment levels have been reducing since the late 1970’s so its hard to find well treated timber outside our old State Homes. So settle for H3 (tanalised) or highly treated boron. I have underlined ‘highly’ as this is referenced to levels like the current standard H1.2 which equate to boron concentrations of 0.4% BAE which are useful to slow down rot for around 5 years only – so if the building is more than 5 years old more information is needed. I require at least 4 samples for testing from each elevation and each floor level including studs, base plates and lintels as timber is often mix and match – timber supplies are not consistent with deliveries. Get the owner to supply these test results and if they don’t have them organize for them to be done at the owner’s expense – why should you pay for testing there home?
• Is the wood decayed? Unfortunately every building leaks so those constructed with perishable wood will already have some decay in them. The secret is finding where the damage is and then determining whether the decay warrants major cost to reconstruct. It’s not illegal to have decayed framing – but if it could collapse and cause harm then council has a duty to issue a safe and sanitary to protect the occupants. The rule is its stupid to get yourself into this situation so ask for sampling results. Samples of framing can be examined (without destruction) taken from Mdu PROBE installations under every ‘at risk location’. The at risk locations are the same places water would accumulate if the building leaked – and buildings leak where complicated details are eg decks, flashings, roof and wall connections, penetrations through claddings, internal gutters, hidden gutters, high ground lines, cracks etc so obviously the more complex the more sampling is required. An average building requires around 80 samples, so more some less. The samples should be fresh ie taken within the last year otherwise more damage could have arisen. Never never let so called experts cut or drill the cladding. If they insist get the insurer to cover the building with a leak indemnity content before they start so if it leaks in the future you are covered. After all its holes in the cladding that cause leaks. Councils often require full reclads after these holes are made. Another useful test is strength testing to establish if the framing wood is suitable for the home. One major wood supplier has been found guilty of supplying under strength timber to homes. This can result in early decay (extra sugar for fungi as wood is sapwood) and extensive cracking of claddings and sealants leading to unexpected leaks.
• Monitoring of moisture over time: Never be fooled by point in time moisture checks. No single moisture reading event is reliable – and certainly not if you are to spend your money. What we discover is summer investigations find less than 10% of winter leaks – its obvious – why would it leak in summer when its not raining. Unless the target is too good to be true (which it probably is) it’s a sucker’s deal to buy on thermal or scan results or point in time assessments. Always ask for the past 2-3 years of monitoring results – including summer and winter. It’s normally the variances that are of interest. Think of this as if you were buying a car – would you pay money if it had no dash board full of gauges. If the owner has chosen not to install monitoring it is for a very good reason – they have their head in the sand – you don’t. The simplest way to monitor is to read the permanent Mdu PROBES twice yearly. Owners who look after their buildings value will be installing monitoring – so they are available.
• Maintenance plan: This is basic sense. What you want is evidence they have conducted maintenance. This starts with a maintenance plan. If they don’t have one then the chances are they haven’t a clue on what there responsibilities are to look after the home – ie is it treated, does it have decay and what are the moisture contents. A useful maintenance plan has monitoring as its cornerstone with response actions in place should leaks occur – coupled with visual condition assessments of building products – this can be done by pre-purchase inspections – but again should be at the owners cost – why should you do their maintenance? If you are considering purchasing an apartment or unit you should request full disclosure from the bodies corporate of the maintenance plan and monitoring results. Also ask if any of the buildings have had leaks or if investigations have been carried out. Be very wary if nothing is available – it shows denial and head in the sand approach.
• Who pays to get this information? If your negotiations get bogged down and you still want to proceed I find a useful thing to do is agree with the seller before any costs are undertaken that if the tests above all come up positive you will pay but if not they will pay. That puts the onus on them to think it through. They will already be thinking – you may get a pre-purchase inspector who isn’t that good and uses point in time assessment technologies so will likely miss discovering what they fear is happening hidden behind the walls. Not every expert is trained in this and don’t have the expertise in weathertightness training – and many who claim they do want to cut holes or remove the cladding first – or apply limitations on there reports yet still charge tens of thousands.
• What is on the council file? The home may already have been repaired – or it may be listed as a damaged home or a claim under WHRS been initiated. Always seek the council property file.
• Ask the seller to disclose the history of the home. This is the representations that you are entitled to rely on. If the owner says things like ‘never leaked whilst we owned it’ then write that down as that information is useful if you do discover the building is actually a leaker after you purchase it.
• Buying at auctions is fraught with problems – you may have no recourse against the seller or the agent – and it is unlikely the seller wants disclosure of anything about their property. This is where you should think ‘buyer beware’ before you buy.

How to Fix a Leaky Building?

Fixing a leaker has become an expensive matter – mainly because the remediation industry is trying to limit there risk into the future. It’s uncertain how well leakers can be dealt with – follow the tests above – what to look for after the repairs. For example if the repair method doesn’t provide for ‘highly’ treated timber it will continue decaying. Without monitoring how can we be sure it’s been fixed – and who says so – would we trust that person or would we want some physical proof like ongoing moisture contents. All buildings leak so it’s no surprise that repaired buildings will again leak. This is one reason that repaired buildings carry the stigma even after money has been spent attempting to fix it. So the things that are important in repairing leakers are:

• Discover: Getting adequate information before you make decisions and start spending. I see too many owners agree to large capital spends after getting a WHRS report or assessments based on single point in time assessments. If your money is that easy to come by then go ahead – but investigation techniques have moved on from these old style approaches. If your building has been cut apart by one of these people we will assist you recovering costs fixing the damage they have caused. A good value assessment will include the 3 steps above – checking the treatment level, taking numerous samples (non-destructively) to examine for decay and monitoring the moisture over time. We call this the ‘discovery’ phase. Spending time on this saves money and avoids over spending. A useful thought is its better to take 100 small 1% steps than try for the single 100% improvement.
• Making a plan: By slowing the decision making down and getting the discovery phase done a professional plan with options to satisfy owners objectives can be developed to address the requirements of the Building Act (which is that occupants shall be protected from harm and the home shall be healthy) and your plans for the property. You do not have to fix leaks or remove decayed framing unless the occupant’s health and safety are under threat. What is best is to build a ‘long term maintenance plan’- we call this the ‘building lifecycle plan’ so today’s decisions can be reviewed ongoing. Where damage is minor ‘tags’ are placed on timber for future removal, or cladding improvements may be required for drying (which may involve recladding a wall – but not all walls by default) and to lessen future spend changes in design may be useful – like removing complex details that are expensive to keep in good condition.
• Involving the Council: It is always useful to involve council, so you would show them this plan. After all they have become the insurer of the defunct builder in what is called the last man standing rule. Another important aspect is it is in your interests to have that plan on council files as it becomes your disclosure document if you decide to sell in the future. Council often over step the mark and want extra things like – maybe a full reclad. If you are in time (within 10 years of build and have lodged a claim and are eligible) it’s advisable to take 2 options along. One for what is termed targeted repairs and the other a reclad. If council intimate they would not accept targeted repairs then get that in writing with councils reasons – this is useful later in the claim process. If you are being forced into spending along one option path and council has chosen to blatantly ignore reasonable consideration and process adjudicators may well award greater compensation especially for stress.
• Manager: Get an outside manager not the contractor to manage the plan. Once the plan is consented always seek an independent onsite manager to avoid the trappings of the ‘variations clauses’ that inevitably result in escalating costs. You also need an independent weathertightness expert to manage council inspections.

So what does a good plan look like? There are two types of plans emerging. Plan 1 is if you have a claim you rebuild the whole house out of the respondent’s pocket. With the new Government package we are unsure of how long this will last – and respondents are starting to wake up to this. Plan 2 is the minimum spend possible to avoid over capitalization. Most plans fall in the middle ground. Its really up to you – it’s your money. For investors the sensible plan is building the maintenance plan to its extreme so all repairs are fully tax deductible. Where not then it’s a matter of funds available. At a minimum all the building needs is for the occupants to be safe and healthy. Don’t forget that fact. Everything other than that is discretionary spending. For example a new kitchen may be more important than some minor decay in the garage that is not threatening life or limb. This is where the RotStop injection system is useful as it stops rot from getting worse. This allows you time to create an affordable and appropriate plan that you and your partner can live with.

Ian Holyoake

Managing Director – Step Up Group

I would advise all clients and readers of my blog that have leaky buildings to consider their options and to talk to experts like the Step Up Group.  They are available on www.stepupgroup.co.nz and 0800 STEP UP.

Saturday 29 May 2010

8:30am start to 6pm finish (registrations from 8am)

Parnell Jubilee Hall, 545 Parnell Road, Parnell, Auckland

The 2010 Annual Budget has just been presented and it implements the largest tax reforms New Zealand has seen in 25 years.  To arm you with the knowledge and tools to succeed in light of the Budget and in today’s market, the not-for-profit Auckland Property Investors’ Association (APIA) have a 1 day seminar BUDGET BUSTER 2010 – Strategies for Today’s Market with tickets at just $49.

The speakers include multiple best-selling Author and NZ Property Investors’ Federation Vice President Andrew King, who provides a State of the Property Investment Nation address, then sets the theme for both newer investors and more experienced investors with substantial portfolios.  APIA’s Treasurer & Chartered Accountant Ann Loudon has the all important topic of tax changes to go through, particularly in light of the depreciation changes and the taxation treatment of LAQCs to have to become aligned to Limited Liability Partnerships.  APIA’s Honorary Solicitor & Property Lawyer Tony Steindle then talks about structures, including the legal aspects of the Limited Liability Partnership, and APIA Vice President, Property Mentor & Trust Lawyer David Whitburn talks about what to buy in today’s market, how to buy it and how to analyse just what is a good deal or not.  APIA President & former NZ Mortgage Broker of the Year Sue Tierney then talks about finance in light of the turbulent global financial crisis we are in, particularly with the highly indebted European Union countries and the relevance of this to New Zealand.  ANZ Mobile Mortgage Manager Vanessa Murch then covers off financing in New Zealand, including why fixed interest rates are so high in comparison to floating loan rates and just how we get our loans approved.  In case this wasn’t enough content, we provide further value to you in relation to tenancy management with APIA Board Manager and Principal of leading boutique Property Management Firm Corinthian Limited Jan Galloway, presenting on how you should manage your property to get the best tenants and lowest vacancy rates.  This is combined with a presentation by Tenancy Practice Lawyer Scotney Williams, giving his expert advice on the Residential Tenancies Act including recent times and also proposals to reform parts of it.

So don’t delay, BOOK YOUR TICKET for Saturday 29th May at the Parnell Jubilee Hall by emailing admin@apia.org.nz now.

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!

We are closing in on a mega trade deal at the moment. You will know my belief that in todays market to thrive that you need to create the deal. So we are seeking to solve another person’s problems.

DIY Superstar wannabes

The problem the vendors have is that they wanted to improve their home, but didn’t want to follow the rules, or know the rules. You need a building consent under the Building Act 2004 whenever you do structural work to a house.

They have put in some extra windows, stairs, ranchslider and a kids playhouse high up off the ground with no handrails. Sadly for them their jealous neighbour dobbed them into the council and the council investigated and found the work required a permit and they have therefore done illegal building work. They then got a letter from the council giving them 6 weeks to remedy this (ie restore it to what it was permitted to be). They did not oblige and even told the inspectors that they have improved it so much any council would be foolish to prosecute, or they will call Fair Go. Well they did this and Fair Go was not interested funnily enough. Unfortunately for them they have been issued a notice to fix giving them 4 week to remedy this or else – be forced to (by a court order). Don’t comply, then the house may be shutdown.

So since they spent their money on an illegal thing (unpermitted reno) they have run out of money to restore it. So these DIY wannabes have failed and because they did not know the rules they are sacrificing many tens of thousands of equity to us (the highest offerers on their property). It needs to be sold before it becomes a big problem, we will simply spend the $7-8k to get it fixed, then build a minor dwelling there too.

So the house goes to auction. We like auctions for non-standard properties as the fact it is different scares most people. There is far less competition and seldom a decent bid. Also on Saturday you will recall in Auckland that we had some tremendous downpours in the afternoon, and the cold southerly didn’t help bring the punters along to the open home.

So we were the only bidders and true to form were below the vendors. So our agents are in the final stages of crunching a mega deal at the moment.

Most prospective buyers don’t like things with a twist. It is “too hard”, “too cold”, “too wet”, or “too scary” or insert any other excuse why not to buy a property to make you $100K in 9 months.

The morals of the story are:

1) Don’t brag too much to your neighbours
2) Knowledge is power – if doing structural or any building work, speak to a qualified builder or architect
3) Go to auctions when it is a miserable day or the property is not a standard one

There are some great deals out there if you persist and know what you are looking for.

Post-Script:
Auckland based property developer/investor/trader/mentor Sean Wood got fined $30,000 in June 2008 for unconsented building works. Sean Wood’s company City Link Properties was granted a building consent based on plans to extend an existing house. The company submitted a plan to build an upstairs bedroom with ensuite and a four car garage. Instead five rooms were built upstairs and part of the garage was turned into a living area – leaving room for only two cars. Manukau City Council Compliance and Enforcement Manager Kevin Jackson says he is pleased with the sentencing as the building work was over and above what was originally submitted:

People can’t put in one set of plans to the council then do something completely different and hope to get away with it. I am disappointed that this was an experienced property developer who knew the rules but chose to break them.”

Source: Manukau City Council website and New Zealand Herald

Sean Wood’s court fine will not doubt get more attention from frequently negative and ostensibly insecure people like Peter Aranyi that have a desire to criticise other education providers repeatedly, in an flawed attempt to set themselves apart.  Therefore it appears a bit strange that Sean didn’t strive to comply as he had a lot of time and chances for this not to go to court.

Through being at the cutting edge of the property market day in day out, I have found that in today’s market to succeed, you need to be doing something a little bit different to most. You need to add value to the property you purchase – ie. create the deal. In developing where I make my profit can be in a number of steps:

1) profit at purchase (but below value)
2) profit on renovation (do-up)
3) profit on development (obtaining consents, planning)
4) profit on construction (building the plan)

The profit is realised at the sale (if you are trading) or on getting a new registered valuation (if you are keeping it). Sometimes I am happy to buy at retail as I can make enough money from the other aspects. It is always about the overall project, and your buying rules. Getting 3 of the 4 prongs has worked well for me.

Property yields are dropping all around the country a the moment. Talking with the Auckland Property Investors Association President, Andrew King last month, the average Auckland gross yield has dropped below 5%. As a result to keep actively investing you need to create the deal.

We are working with many investors at the moment who are increasingly seeing development as the way forward. Whether you are trading properties or doing a development to create equity and/or cashflow – look at the wonderful opportunities you have with land.

Basically to see my favoured strategy I recommend going to www.fuzo.co.nz, and take a look at the House Trap documentary (TV3) that I filmed last year on minor dwellings with Kevin Biggar (Trans-Atlantic Rowing race winner and he walked to the South Pole of Antartica by foot too).