The Property Academy Podcast

In this episode, we discuss this week's Reserve Bank update. While not much changed from a policy perspective – the Official Cash Rate didn't change and the LVRs remained at their current levels – there were some key points made, which indicate future moves.  The Reserve Bank indicated that a rate cut is likely to occur in February 2020 and that the bank would still like to see increased spending from the government and businesses. For them, increased long term investment is still the most desirable outcome.  The bank is taking a wait and see approach, they want to see the benefits of their previous rate cuts hit the market before taking further action.  The general trend for property investment is positive. If LVR restrictions and interest rates continue to ease – as we expect they likely will, then property investors (especially 1st and 2nd time property investors who aren't already heavily indebted) will benefit. 

In this episode, we discuss why the NZ property market is unique. We identify that because New Zealand is a long skinny country, which was colonised, our major cities are primarily port cities – based around large bodies of water. This is true for Auckland, Tauranga, Dunedin, Wellington, New Plymouth – and even Christchurch. This means that there is an area the city can't expand into. This means that inner-city land becomes more desirable because the new suburbs are further and further away (compared to if the city could expand in a perfect circle.  We also discuss that New Zealand is politically stable, has a relatively prosperous economy and is protected from many global headwinds. This causes the New Zealand property market to be particularly buoyant and robust. While it may seem attractive to invest overseas, we can sometimes forget, as New Zealanders, that there is a great property market that we can invest in at home. 

In this episode, we discuss that property investment requires a sacrifice – an investment. It might sound obvious, but Andrew gives an example of a couple who wanted to invest in property but didn't want to sacrifice their current lifestyle.  His challenge to them was to sacrifice now and invest ... or continue to live their current lifestyle and sacrifice later in retirement. 

In this episode, we discuss how property cycles tend to work, with a special mention on the Auckland Property Market. Property cycles are arguably one of the most important considerations when investing in property. However, they are very hard/impossible to predict.  One of the key takeaways from the show is that the property cycle is not the same as the economic cycle. Where shares tend to fluctuate widely in value based on the economic cycle, this is not the same for property.  New Zealand's property cycles tend to operate in spurts. When the property market heats up, property prices will leap for a few years, and then flatten out for a few years. When the next property cycle comes, property prices will leap again for a time, before flattening out again.  This can be seen by looking at any graph of a region's median house price over a period of 20+ years.

In this episode, we give three real-life case studies about what can happen to property investors when they take the plunge.  2 of the investors within these case studies achieved large gains in the value of their properties within the first 4-6 years of owning their investments. 1 of them is yet to see any substantial gain from their investment. We talk through some of the reasons why this might happen, and how property cycles impact the immediate gains that can be achieved by investors. 

In this episode, we discuss whether Mangere is a good suburb to invest in. Mangere is one of Auckland's lower socio-economic areas, and may not typically have been where most investors would have thought to buy a property. However, there are a lot of good reasons to invest in properties that are located within the suburb.  Over the last 18.5 years, Mangere properties have appreciated at a rate of 8.08%. This is well above the average appreciation rate of most houses in the Auckland property market, and certainly around the country.  On top of this, Mangere greatly benefits from the expansion that is currently underway at the Auckland International Airport (AIA). AIA is currently investing over $1 million per day to improve its infrastructure. This includes improving the shopping experience and building a new hotel. This means more jobs. Because Mangere is the gate-way to AIA, we would expect an increase in the number of people who would want to live in the suburb. This is a positive sign for both investors' ability to tenant their properties, and for their long term capital gain.

In this episode, we discuss the nitty-gritty of what property managers really do for property investors. Over a 10 year period, you are likely to pay your property manager the same amount of cash as you will your real estate agent. However, for that, you will get significantly more value and service.  Celia estimates that over recent years the workload for a property manager has increased by 30%, however, they haven't increased their fees.  Property managers have awkward conversations with tenants, ensure that they pay their rents, follow up when that doesn't happen and ensure the property is maintained and expected. But, the real benefit is in their institutional knowledge and the paybooks/procedures they have in place so that if something goes wrong it can be managed.  This is the final show – in this round of recordings – where we are joined by Celia Burbery from Auckland Property Management.

In this episode, we discuss what a good rental yield is for Auckland property investors. Nationally, we know that Auckland typically will deliver higher capital growth but lower yields.  This depends on the type of property you have in Auckland, its location and then purchase price.  While the national median yield is over 4%, in Auckland, we would typically think someone hitting 4% would be doing well. We are once again joined by Celia Burbery, general manager of Auckland Property Management. Celia has over 35 years of experience in property, and we are really privileged to learn from her experience. 

In this episode, we are joined by Celia Burbery from Auckland Property Management. Property management is so important because if you want to get the long term gains from investment property, then you need to hold the property for the long term.  A big part of being able to do that is managing the property itself. That's where property managers come in. Recently there have been a few law changes and judicial rulings that impact property investors. In the show, Celia details what these are, including the new Health Homes Act and walks us through what property investors need to know.  Note: Auckland Property Management are specialists in the Auckland Property Market and do not operate outside of Auckland.

In this episode, we discuss the additional costs you will face as an Airbnb property investor. These include all the utilities you need to cover e.g. water, power, internet. You'd also expect to pay for consumables like salt and pepper, shampoo, milk (all the creature comforts guests expect). Property management is also more hands-on, which leads to higher costs. Management fees are also higher. Long term rental management fees are 7-10% of gross yield. Airbnbs will range from 20-30% of the net yield.  Property investors will also need to furnish the property to a high standard including items to make the property homely e.g. coffee table books. And depending on where the property is located, you may be subjected to higher rates. In Auckland, rates can be as much as 3x higher than a standard tenancy. This is the final episode in this round of podcasts where we are joined by Jon Lawry from Urban Butler. In the show, Jon mentioned that he has an ebook detailing the 5 things that every Airbnb host needs to know. To access that free ebook fo to the Urban Butler website