Tony Brazier
The Press - Tuesday 28th April 2009
Residential Property Investment : Researching the topic
Now that you've decided to be a property investor the question remains - "Where do I start?" Buying an investment property is not like buying a house to live in. There are many aspects to consider beyond its size, comfort and proximity to schools etc. An investment is purchased as much with the tenant's needs in mind as much as the owner's. To say "I wouldn't buy anything I wouldn't live in myself", is at times, using the wrong purchasing criteria for the wrong use. For example, tenants often like to be reasonably close to work, be it a university, industrial area, military base or CBD. Transportation costs may be a bigger consideration for them than you, as an occupier, who will tolerate the commute to work if it means living quietly in the suburbs. We will discuss this more when discussing inspecting various property options later.
With much to learn, where does a budding investor go for knowledge. Thankfully knowledge is everywhere. In fact everyone has an opinion on property investment but very few are qualified to speak. We have seen many enthusiastic investors put off by asking advice of people who either don't have any investment property or have an aversion to this type of investment. Following are some suggestions for places to find books, websites, seminars and mentors in your pursuit of knowledge.
A very good magazine that will lead to other avenues of advice is the "New Zealand Property Investor" monthly. Apart from the excellent articles, it carries lists of books that are recommended. Some books are too complicated for early perusal but one that we recommend is "The Complete Guide to Residential Property Investment in New Zealand" by Andrew King and Lisa Dudson. (It is even recommended reading in the Open Polytechnic education of real estate salespeople and property managers). From here the reader can find other topics to expand on and find the relevant books in the pages of the magazine above.
Having received the basics don't try and read the whole library section. Go then to property related websites to see what is topical in the market today. www.propertytalk.com is a popular site for investor's questions or to just watch the discussions going on. Much can be learned from storytelling. For more specific information on being a landlord/investor www.dbh.govt.nz is a relevant and voluminous site to use. Their market rent information is specific and is the source of many other commentator's charts. By browsing this site an investor will get a clear and factual expression of the market and the tools to operate within it. A site that has some interest value is www.suburbwatch.co.nz. This site takes rental and sales data and attempts to analyse yields in each suburb and even goes so far as issuing sell, buy or hold statements. (Take your own advice on any opinions). Also the Real Estate Institute site www.reinz.co.nz will give readers the median prices achieved in each suburb and a historical graph of monthly changes.
For more one on one or group education our advice is to not only attend the many property investment seminars that come to town, (or are provided by real estate companies like ours), but to join the local property investors association, Canterbury Property Investors Association (CPIA) has many and varied forums, seminars and speakers but is also an excellent venue to find a future mentor.
Consider having everyone you intend to deal with, be it the real estate agent, bank manager, valuer, accountant or your solicitor, firstly as an investor themselves. You need advice from advisors who have been where you are going, not ones who have chosen not to go there. Preferrably find yourself a mentor.
These people will have done what you want to do and be where you want to get to. You will find them at seminars, among your chosen professionals, CPIA meetings and websites. For those who wish to pay, these are even available by contract.
For those who do not have time to peruse the media and real estate websites for purchases, a relatively new industry has arisen in the last few years of Propertyfinders. For a fee, these individuals representing either themselves or parent companies will scan the choices, often nationwide, and make recommendations to you to purchase. You must, however, know a suitable purchase when you see one, and have your criteria very firmly in place.
Financial analysis of property is a whole topic on its own and is best left to your advisors to do professionally. Residential investment is not difficult. "Buy, improve, revalue, refinance and buy again". Too much analysis, we've seen, can give one "analysis paralysis". That is, the little knowledge can lead to fear and the budding investor to do nothing. Leave the analysis to your real estate agent, valuer or banker, and if necessary get it checked by your accountant. Funnily enough the best investors trust their intuition (gut) more than they do their calculator.
If you need to ask advice of everyone and anyone, maybe property investment is not for you. You will only worry about what you've done. However, after having done your research, asked those that know, and knowing the decision feels right, have the confidence to just, do it.
After you have researched the topic, it is time to study the stock available, but that's next time.
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