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Great Property Investment Tips

Whittaker Hamilton has provided below some very important property investment tips. If you are entering the property investing world these tips are highly recommended.




Whittaker Hamilton has provided below some very important property investment tips. If you are entering the property investing world these tips are highly recommended.


  • As there is a range of experience levels in this forum be careful not to take advice from just one person. It will only be their opinion. Try seeking out information from the seasoned investor too, they have been through property cycles and know how to survive them.
  • Use the forums search function a lot of topics have already been discussed here. But if you cannot find anything just ask somebody will help you out.


  • The property market works in cycles. It is fun and exciting for a couple of years when we have a boom (like we have just been through). But during any impending slump it is no longer the in thing to be doing and can at times be hard work.
  • Property should not be treated as a get rich scheme (despite some seminars beliefs). If structured properly with the correct support it can be a reasonably safe wealth creation tool.
  • Use as many resources as you can. Read past discussions here and go to the library to get some books out. There is a huge range of books available at the library and it means you can read them before you buy them for your bookshelf. Try: Planning for property success By Andrew King and grow rich with the property cycle By Kieran Trass. There are many other recommended books available and even reviews on this site.
  • Form your own opinion based on what you believe is your own safety level. People can tell you to mortgage to say 80% but if you won’t sleep well at night due to worry don’t do it. Only go as deep as you feel comfortable.
  • Try to be careful on how deep and fast you get into the property market. Use the advice from seasoned investors who have been through it all before. Most people can make money during a property boom just from buying any property. But it is buying the right property to hold long term that is harder. You will hear many stories from investors who purchased large amounts of property only to lose most of the gains during the slump. Buy the right property from day 1 and don’t be one of the statistics that need to sell up when the market tightens.
  • Write down all the things that are stopping you from investing or that would affect you sleeping at night if you were investing. These are now you’re “What if’s”. What if interest rates go up? What if tenant builds a P lab? What if house burns down? What if house gets trashed? What if property goes down in value? What if rents drop? Etc. Now you can work on a plan to cover these. Eg. Insurance.
  • Beware: Too many people can suffer “Paralysis by analysis”. By the time they invest the boom is all but over. This is Fear of investing.


  • If you are serious to be a long-term investor get a structure in place to protect yourself and your assets.
  • If you are going to use any statistics for house growth ensure you use 10 year growth figures. 1-year figures are deceptive and do not indicate possible future growth. During a boom even the poorer suburbs can experience growth that looks good. 10 year figures will most likely include a complete cycle boom through to slump. Shorter terms will miss part of the cycle and not be accurate.
  • I heard an interesting stat that out of all the banks long term interest rate predictions they have had poor odds at getting it right. This would be similar to economist’s long term property value predictions I guess. Past history is no guarantee of future growth and long term factors are very hard to predict as something usually happens to alter the forecasts. (Wars, terrorism, floods, earthquakes, Asian crisis). However saying that we can usually see into the short term and be semi reliable. Using historical growth and buying in the right location at the right price can put us ahead of those blindly purchasing to follow a boom.
  • A good way to protect yourself is to use the “What if’s” (See Philosophy above). Decide if you are going to protect yourself from anything that concerns you with regards investing. Most things that concern people and prevent them from investing can be covered by a well thought out plan. Do this from day one.


  • Avoid using the 1 bank trap. This is simply where an investor gets comfortable with there current bank giving the bank complete control over there entire portfolio. Banks will like to cross collaterise if given the chance. Using several banks spreads your loans around and reduces the risk of your portfolio being called up if the economy turns bad.
  • Banks use Loan to value ratio (LVR/ Equity) and debt service ratio (DSR/ Cashflow) to determine your ability to acquire a loan. It is safer to drop back and keep your serviceability low at end of a boom. This will enable you to have a buffer if things get tough and let you ride out any pending downturn in the market (Slump). Historically rents and house prices usually drop back from their peak.
  • Ramp up your serviceability leading into next boom. This is when you need to use your servicing to catch the wave and build some serious equity.
  • Just as it is sometimes safer to diversify your property locations. You should do similar with your borrowings. Interest rate diversification. Spread any fixed rate terms over a range of dates so all your loans are not expiring at same time. Interest rates move around regularly and you do not want to be caught out needing to have your entire portfolio expire at a time when rates may be high.
  • There is a large amount of opinion on Principle and interest (P&I) loans versus interest only (IO). The general consensus is if you have non-tax deductible debt e.g. personal house mortgage. Then use Interest only and pay down the non-tax deductible debt with the money you will be saving in lower loan payments. Otherwise if you have no bad debt the choice is up to you P&I or IO. IO can allow you to accumulate more property but P&I can be good during a slump too as the debt is being paid off slowly.


  • Treat real estate agents with respect. They are there to help and can provide valuable information needed before you make an offer. You may need them at another stage in life, What if you need to sell a property quickly?
  • Analyse your purchase and rent figures. Know your exact cashflow position when buying. That way when/ if rents or property values drop you know if you will have sufficient cashflow to survive.
  • Use morals when purchasing property. You will feel better. Why invest if you cannot be happy doing so. Some people use non-moral techniques to acquire property cheaply, watch out as Karma usually bites those people.

Example strategy

A strategy of investing could be as a simple as this:

  • Always be aware of current serviceability levels.
  • Property values can raise and fall so knowing your levels you can be prepared.
  • At the end of a property boom it is probably better to have a lower servicing level. That way if prices drop you are more protected.
  • Try to buy wisely during any down turn in the market so as not to affect your servicing level. . Buy creatively and try to achieve high yields eg. Buy a 2 Br and convert to a 3 Br.
  • Buy in good areas which will see growth early as the next property cycle rolls around. That way you can be in a position to use your gains early and go hard into a boom. Being 1 step ahead of other investors who may have purchased last cycle in less desirable areas.
  • As the property market picks up and we lead into the next boom raise servicing levels high. Buy up big as each property shows equity growth.
  • As the boom is nearing an end consider dropping servicing level once again.
  • Repeat process.

Note: This was an example strategy. Every investor is different and needs to work out a plan that suits them and there risk profile. Think outside the square, use renovations, developments, buy and sell, buy and hold, commercial.

My 2 cents

A lot of people have gone out and have maxed out serviceability levels to buy numerous properties through the hype of a boom. This on its own may not be bad but could be slightly flawed during a slump. If values do not increase much in years to come they will quickly run out of serviceability and find they have to wait quite a while.

As a side note some of these people have been purchasing in less than desirable areas. Which are slow to move in value until later in a property cycle (ripple effect) so they won’t be able to benefit until well into any property boom.

One thing to consider when purchasing in less desirable areas is the ripple effect during a boom.

Take the last boom we have just been through as an example. Some of these less desirable suburbs got there big jump in prices later on in the boom after others had already been through it.

This could cause implications for a portfolio of property. If the next boom continues to follow the ripple effect pattern you may not get the big price rise until the boom is well under way/ nearing its end.

This is not to say you will not get slow growth just that the large portion of any equity which may be created during a boom will not be usable until boom is well in truly arrived.

We want to be right there at the start of a boom ready to pounce before the rest of the herd push the prices up. Then when they do, they propel our property prices with them.


What Makes A GREAT Investment Property?

Why do some property investors seem to be able to continually add to their property portfolio, whereas most buy a few properties and then can’t go any further? One of the main things that separates the really successful investors from the average investors is the properties they choose to buy.




Why do some property investors seem to be able to continually add to their property portfolio, whereas most buy a few properties and then can’t go any further? One of the main things that separates the really successful investors from the average investors is the properties they choose to buy.

Let’s have a look, then, at what makes a great residential investment property.

Firstly, what are the main objectives of property investors? The most common objective is something like this:

“To create a passive income stream to enable me to stop working if I wanted to… to enable me to retire comfortably so I can spend my time doing what I want.”

An ancillary to this primary objective would be to accomplish this without demanding massive risk or huge effort / stress in managing the properties.

Assuming that these are the objectives, then the following are qualities to look for in a superior investment property:

1. High income

  • If your property covers all costs of ownership (the main ones being mortgage interest, rates, insurance and maintenance), it is not going to place great financial strain on your existing cashflow.
  • If you want to grow a substantial portfolio, you can not have properties that place a strain on your cashflow, because that limits how many you can own.
  • Over time, when rents increase, a property that covers its costs today, will produce a positive cashflow in the future, hence helping to grow your passive income stream.

2. High Tenant Demand Location:

  • If the rent looks high compared to the price of the property, but it is located in an area that is unappealing to tenants, you will have periods of vacancy, which equates to periods of sleepless nights, which equates to “I’ve had enough of this property investment game – I’m out!!”…
  • These frustrations are not what you need if you want to be successful!! If the property is in an area that is always appealing to tenants, you will easily be able to replace tenants when they leave… this amounts to sleeping at night, which we like!!

3. Fee Simple Title:

  • A fee simple title is the best legal tenure you can get. With this type of property, you are in control of your asset. For example, you can improve it, extend it or alter it, as you please, without consulting with neighbours, Body Corporates (as with apartments) or common leaseholders (as with cross-lease titles), subject to conforming with the local council rules, of course.
  • This is important because people (including us Kiwis) LOVE control. The more control and flexibility you have, the more control you have over your future and your choices, the more appealing the property is to LOTS of people.
  • Therefore it will be easier to sell, and more likely to sell at a premium price, when it comes time to sell (including if you need to sell in a hurry, heaven forbid!). And there almost ALWAYS comes a time when you will want to sell.

4. Traditional Construction:

  • People do not like things they do not understand. Investors especially like the tried and tested… they don’t want to experiment.
  • Therefore, to make sure your property will appeal to the broadest range of potential tenants and purchasers in the future, make sure it is built in the traditional way… weatherboards, iron or tiled rooves, bricks… this is what us kiwis feel confortable with.
  • If it has a 1990s-style monolithic style cladding system, many people will simply not consider it… don’t give yourself this disadvantage when it comes time to sell!!

5. Difficult to Replace / In Short Supply:

  • If you are going to own an asset for a long time, you might as well own one that is most likely to increase in value faster than most… and this comes down to good old supply and demand.
  • In a decent sized city, with an increasing population, demand for housing is increasing over the medium to long term. But it is much easier to increase the supply of some kinds of housing, than others, in order to meet this increasing demand.
  • For example, in central or city fringe locations, the supply of apartments and townhouses is likely to increase dramatically in order to satisfy the demand for additional housing in these locations. This eases pressure on price increases (supply increasing to meet demand).
  • On the other hand, the supply of free-standing houses in these locations, is really not increasing by much – IF AT ALL!! When you have demand increasing, and supply largely static, this tends to produce strong increases in prices.
  • Therefore I recommend buying free-standing houses, rather than apartments or townhouses.


If you can buy a free-standing property, with a fee simple title, in a high demand location, built using time-tested construction methods, with a strong cashflow (say 7.5-8.0% gross yield or even more if possible), then you are in PROPERTY INVESTMENT HEAVEN!!

Now don’t get me wrong – I never said it was EASY to find these types of properties… and you may have to compromise one or more of these criteria, but if it was easy, EVERYONE WOULD BE RICH!!! And last time I checked, not everyone is rich…

So now for my shameless plug for a GREAT investment property that I happen to be selling!!!

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Important Facts about Minor dwellings

Building a minor dwelling on an already existing title significantly boosts the return of a property through both rental earnings and capital appreciation however an awareness of council regulations is essential.



Its first prize win at last year’s Master Builder ‘House of the Year’ Awards with a home in the $250 000-and-under category has firmly established Investor Homes as an exceptional New Zealand building company.

While gaining success as the only wholesale building company in New Zealand, Investor Homes has also drawn recognition from its minor dwellings.
Minor dwellings are secondary units which can be built on already existing titles.

Once called ‘granny flats’ and built for extended family or aging parents, minor dwellings today are a modern and cost-effective alternative to pricey subdivisions while providing an excellent investment opportunity.

Whereas subdivisions can easily cost $70 000 per lot, minor dwellings provide a way around this.

Stuart Shutt, director of Investor Homes, has seen the ‘two-house return for the price of one-and-a-half’ on numerous projects, such as a recently completed minor dwelling on the rear site of a rental home in Henderson, West Auckland.

“After purchasing a four-bedroom house for $242K, my client spent $15K renovating it and rented it out for $400 a week.

At the same time he invested in building a three-bedroom minor dwelling on the property for $150K (turn-key including all council costs) which he rented for $340 a week.

In total $407K was spent on the property. The value of the property went up to $500K in six months with a build time of only ten to twelve weeks.” So a $93k capital gain and a positive income!

Building a minor dwelling on an already existing title significantly boosts the return of a property through both rental earnings and capital appreciation however an awareness of council regulations is essential.

Building a minor dwelling in a suburb of Manukau or North Shore City, for example, is possible as long as it only takes up 60m², or 65m² in West Auckland.
Investor Homes encourages people to act on potential investment based on numbers and sound advice that covers each aspect of minor dwelling projects, from location to products and plans.

Offering a huge range of minor dwelling plans and prices, some of which can be viewed on their website, Investor Homes also offers informed investment advice concerning minor dwelling projects.

“We recently worked with a woman living on a property with a sloping backyard that was hard to mow and difficult for the kids to play on,” says Stuart.
“We created a minor dwelling strategy that saw something which was costing her money turned into a goldmine.
“Minor dwellings a very safe form of development – you can sell it for a profit, or if for some reason you can’t sell, you’re left with a positive income.”

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Transition under the Unit Titles Act 2010

Once the UTA 2010 commences, there are transitional arrangements that apply for 15 months. This is a short summary of the options, useful for a body corporate secretary/manager.



Once the UTA 2010 commences, there are transitional arrangements that apply for 15 months. This is a short summary of the options, useful for a body corporate secretary/manager.

  1. Body corporate rules – a body corporate can either keep its existing Schedule 2/Schedule 3 rules or elect for the rules to be replaced with the operational rules under the UTA 2010 (awaited in Regulations) and section 138 (which contains the new repair and maintenance responsibilities). In making this choice a body corporate will need to consider:

    * the role of the secretary – under the UTA2010 now one of the service contractors to the body corporate
    * committee make-up, appointment and procedures – is the body corporate ready for the change?
    * AGM procedures – again, is the body corporate ready for the change?
    * existing body corporate rules – are the existing rules all covered in the UTA 2010 and new Regulations, do the existing rules remain appropriate of not, are there any ultra vires issues that need resolving in the rules? A review of the rules will be needed and consideration given to what, if any, additional rules should be put in place.
    * repair and maintenance – is the body corporate ready for the additional responsibilities under section 138 and has it been budgeted for?

  2. Long term maintenance plan – a long term maintenance plan will be required at the end of the transitional period. The only decision therefore is when to start. A body corporate might consider delegating this to the committee to get it ready in time.
  3. Long term maintenance fund – a body corporate has a choice whether to set up this fund or not. The UTA 2010 will require it at the end of the transition unless a body corporate has opted out by special resolution.

There are many other provisions that need to be considered when the UTA2010 is first passed. In following posts I’ll cover this, including what would be a useful agenda for a first AGM.

In terms of these transitional arrangements, watch the timing. A first AGM will need to be convened within 6 months of the UTA2010 being passed. The transitional arrangements above apply for 15 months from the first day of the month following the UTA2010 commencing. In general body corporate meetings are needed once every calender year and not later than 15 months after the previous one. If the decisions above are not covered in the first AGM then the following AGM might be too late and the default position will apply, or an extraordinary general meeting could be convened to get the necessary resolutions passed.

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