“This is an extract from a book I contributed to "New Zealand Real Estate Investors Secrets, How 10 New Zealanders became millionaires from Residential Property and how you can too!" Enjoy the read. “When I left school and got a job in 1978 my father’s advice was to start a savings history and get some life insurance. He said it would achieve a couple of things. Firstly, it would establish a savings record with a financial institution. Secondly, it would give me the opportunity to borrow money from the insurance company to buy a house and finally it would give me some security in the future if I should die and have a wife and kids. So like all good kids I took my Dad’s advice. The next question was how much insurance should I buy? The insurance agent tried to sell me $50,000 or $100,000 worth of insurance, however, this was too much for me to comprehend and relate to so I could not accept that. At that stage a reasonable three bedroom house in Oamaru was worth $10,000. So I took out $10,000 worth of life insurance and started paying my monthly premiums. The insurance did help us buy a house later on but eight years later the same $10,000 houses were worth $35,000. With hindsight I should have bought a house. In 1983 I was working in the forestry in the Nelson area as a Logging Supervisor. I had just graduated with my New Zealand Certificate in Forestry. My father had always said "when you leave school get a job and then get a qualification", so I had achieved one level of success. However, I could not balance my chequebook or pay off my $500 credit card. One of my lower skilled contemporaries (how is that for snobbery) had been saving with a Building Society for a number of years and he won a ballot that allowed him to borrow for a mortgage to buy a house. At this stage I could not understand how he slept at night with such a large debt! My next step was to go and talk to the pay officer - he was the one who dealt with money and paid people in the forestry, so I assumed he would know the most about money. I told him I had a small deposit and that I was thinking about buying a house. He asked me how much I had. I lied and said about $5,000, and added that I wanted to save another $5,000 to get a decent deposit. He asked me how long it would take for me to save $5,000, and I said about a year. He said that unfortunately house prices will have gone up $10,000 in the time I would have saved only $5,000! Oh well - forget about that idea I thought - too hard. So I did forget about that idea and carried on trying to balance my chequebook and pay off my $500 credit card debt. I met Catheryn (my wife to be) shortly after that and we decided we had had enough of our jobs and so decided to head overseas for a year. As we were both from good Catholic stock it would have been improper for us to travel the world together without making a long term commitment, so prior to leaving we got engaged and set a date to get married and then headed overseas. We both had $3,000 cars and we sold them to buy our air tickets and clear up all our debts before we went, including paying off the balance of my $500 credit card. When we arrived in Heathrow we had enough money to buy our air ticket home and live for two weeks. When we got home ten months later we had enough money to live for just two weeks. We had a great time overseas for ten months, working for five months and traveling for five months around Europe and England. Whilst I was away I got a first hand view of the effects of the draconian tenancy laws in England. When we arrived in London we were met by one of Catheryn’s friends who said she had a place for us to stay and it was close to town. When we got to the flat we found it was a squat. We were squatting in the basement flat of a five story terrace house and the landlord lived on the top floor! We were able to squat because the girls had got the flat legitimately and then found problems with it; loose cupboards, poor ventilation and a number of other trivial things. They got a health inspector to inspect the flat who gave them a report of about ten things that were wrong. The girls gave the landlord notice that they were not going to pay any rent until the property was tidied up and then they changed the locks so he could not get in. It was great for our finances but a wrought all the same. It was close to town being one block from Madam Tusaud’s, the next street over from Harley Street, and a ten minute walk to Bond Street. It was paradise for us being so close to town and not paying any rent. Unfortunately, it didn’t last because the day we got back from the Beerfest in Germany we found all of our belongings out in the street in black plastic rubbish bags and we had to find another flat fast. The unreal thing that we found out later on is that if we had taken the proper steps when we found our gear outside we could have gotten back into the flat and had the landlord prosecuted for throwing us out. The cost of ignorance is high! Now we had to find a proper flat and we were amazed at how hard they were to get. The bonds and rent we paid in advance was nearly £1,000 for a £100 bedsit because the landlord could not afford to take the risk of renting to people with no money. During this time we noticed heaps of terrace houses that were vacant and boarded-up. We enquired why they were not let out as there was such a shortage of homes. We were told that the owners could not afford to let them because the Tenancy Laws were so draconian against landlords that once tenants got in, they could not get them to pay rent or evict them. It was cheaper to leave the property empty! I understand that the laws were later changed to make it fairer for landlords and to encourage more landlords to invest in properties and rent them out. When we returned to New Zealand in 1986 we had the idea that we would get married, save for one or two years and then buy a house. As we travelled down the country from Auckland to Dunedin and spoke to our friends it became clear that in New Zealand at the time the best way to get a house was to be poor and get a Housing Corporation loan and buy a house immediately while we had no money and no jobs - we qualified as poor!. Before we got married I spoke to a good family friend who was an accountant and he gave me a big dose of reality. He said - "You have just come back from overseas, you are getting married, you do not have a job, or any money - you won’t be able to buy a house". This devastated me completely and put any idea of home ownership out of the question. When we discussed this with Catheryn’s father and the prospect that we would need to rent for a couple of years, he said "don’t worry about it, just go and buy a house." He didn’t offer us any financial support but offered confidence in his ‘matter-of-factness’ that it was possible and we just needed to go and make it happen. Once we got married Catheryn went back to work as a Radiographer and my job was to find a house. I spent all day looking at houses and doing odd jobs to keep myself busy. I found an ideal house for us that showed some potential. It was an old villa split into two flats. The owners lived on one side and the other side was rented to an old single guy who had lived there for the last 16 years through four different owners. He paid $80 per week. The house needed major work - you took your life into your hands just walking across the verandah. When I showed Catheryn the house she didn’t even want to stop, it was so rundown with a rusty chain link fence held up with rotten posts and a gate falling off the post, obviously well lived in but not well cared for. The house was on the market for $42,000 and so we started the purchasing process by offering $33,000. We did all the negotiation through our lawyer John Dowling... Matthew and Catheryn have gone on to purchase 15 properties and become landlords. ”--Matthew & Catheryn - Total Gain: $8,054,541
“Dorothy and I were driving around looking for property when I spotted a gentleman doing handywork. I approached him and before I knew it he was telling me he had a property in trouble and wanted out. When we close next week we will walk away with $7.000.00 and potentially the tenant will stay in a lease purchase.”--Robert Z & Sally Dorothy Z - Total Gain: $6,718,840
“I had a call from my ad and spoke with the gentleman about four duplexes he wants to sell. I qualified him and the property over the phone and agreed to a deal in theory. We will meet him at the property tomorrow with offer in hand, and hope to close deal within 10 days.”--Mark W - Total Gain: $4,793,530
“Jeff and I purchased a commercial building nothing down for $295,000 which had a positive cash flow and we sold it 3 years later with a net gain of $100,000”--Real S & Kevin S - Total Gain: $4,689,000
“I attended the wealth retreat to learn more about real estate and how to profit from real estate investing. I met many speakers and finally heard about foreclosures which peaked my interest I applied the techniques of contacting people in that were in default and in need of help. The people all said they had their situations resolved but I continued. One day a woman called me telling me her home was going to sale the following day. I brainstormed with her about all the possibilities she might use to solve the problem from refinancing to borrowing money from family members In the end none of the ideas worked. It turned out that some investor had tried to take the property from her through scheming and lying. She was going to lose her house either to the investor or to a sale. She told me that she wanted to be the one to save her. We agreed on terms and I bought the house from her. I fixed it up and sold it. I made a nice profit and a lifelong friend. This positive experience started me on the road to investing. ”--Ernie V & Kathy V - Total Gain: $3,559,620