Not so long ago, buying properties and developing sites was a great venture. There was lots of money available to borrow and building supplies were readily available without constraint.

It meant people could get into their homes at a reasonable price, some with potential to add one or two bedrooms or even build an additional unit/duplex. The bigger sites could get their developments done in relatively standard timeframes without running the risk of falling to material cost inflation.

The current climate, though, is a battleground; the prices are higher, lending policies have tightened — making it much harder to borrow what’s left of the banks’ funding pool; not to mention the material shortages gripping the country.

It’s obvious to see that Auckland is heading into a denser housing state with big developments popping up all over the city. However, it can be a dangerous game of chasing after the big projects and sometimes it all falls to pieces. There have been mortgagee sales happening more and more this year. Most recently, a development in Panmure ended up in this very situation. The project itself had resource consent for a four-level apartment building and an additional 12 terraced houses on one site. Unfortunately, as the old saying goes, they bit off more than they could chew.

To top it all off, this wasn’t the only development to go bust in that same week. The first project to fall that week was actually a Sunnynook Central development which planned to have 15 townhouses, and they were almost complete too. Unfortunately, there will be more development projects going under in the next 6 months. Some lenders have noted up to two-thirds of their books are currently defaulting. I pulled out of a aseven-terrace house project late last year knowing the material supply would be an issue.

Aim High

As China still adopts a zero Covid stance and the war between Russia and Ukraine continues, we are unlikely to see easing of supply shortages anytime soon. On a positive note, as New Zealand continues loosening its Covid policy, some local supply, e.g. GIB boards, will gradually catch up to the demand.

‘A failed investment will cost you far more than being educated by a professional’

Even with all of these issues currently in the market, my opinion has not changed; don’t stop aiming high. If you want to get into the property investment game this is the time when a good property coach will be important for your success.

When it comes to property investment there is always a risk factor involved. However, the safest way to play it is to be smart. It’s really interesting to compare how the Kiwi culture tends to lean more towards the “do it yourself” attitude as opposed to seeking help. I did my property investment by myself and although I didn’t lose money, I know that if I had the same knowledge I have now, I could have added millions more in value in the same period. It’s a matter of leaning on others to accelerate your investment journey and avoid their costly mistakes. Not letting your ego get the better of you.

There are quite a few property trading/investment programmes out there, each with different prices for their services. Generally, these programmes range from $8,000 to $40,000, depending on the level of involvement you are seeking. Now, before you let these prices scare you away consider the cost against the lifetime knowledge and experience that you will gain — not to mention the continuous growth of your portfolio over time. But really, what are you buying into?

A property coach will cost you a bit extra compared with a standard course, but in the long run will save you so much more. I always like to say “a failed investment will cost you far more than being educated by a professional.”

A good property coach will know your strengths and weaknesses. They will know how the market works, update you to the changes, and can predict what may happen in the future. They would also have deep knowledge of the financial sector and can advise on the best lenders and products in the market. They will walk you through each property you’d want to check out and thoroughly analyse it so you can understand all the details of your potential purchase.

By Your Side

Of course, they will teach you what to look for in a property and how you can increase its value. They will be by your side at every auction with their experience to tell you when it’s time to bid or pull out if the property is overpriced. They can also share their networks with you. This may include some “off the market” listings provided by their close contacts.

There are times you may find yourself out of your comfort zone, and that is a good thing. You won’t grow if you sit in your comfort zone forever. Essentially, a property coach is your guardian angel who will know your financial situation, your capacity, and will strategise your investment plan to get the best results. Everyone needs a coach if they want to succeed, even if your only goal is just to not see your investments fail.

My personal view is that the cost of getting into property investment by yourself is way too risky. One person can make dire mistakes like buying the wrong property or reaching for something too high and coming up short, just like the developers at Sunnynook and Panmure. Having a team behind you, however, removes that risk. So, if you’re serious about the investment life then get yourself a coach. They will literally hold your hand along your journey and make your life so much easier. You may even become friends.