-Firstly, tidy up the place, as a nice and tidy place attracts more potential tenants, hence increasing your return. Work especially on the exterior, garden, and entrance.

-A fresh coat of paint would possibly give you additional $50-$100 per week at a cost of approx. few thousand dollars which will cover the investment back in one year.

-Adding another bedroom, say, a 60m2 one bedroom, you would get a rental return increase by approx. another $100/week. It usually requires the floor plan to be updated, so do check with your local councils.

-Adding a sleepout or converting the existing garage to a sleepout: a double garage conversion to a two bedroom accommodation would be approx. 30k, which would boost the rent by about $350/week. Make sure you obtain the building consent first.

-Rent by rooms, if you have a centrally located 3 bedroom and a sleepout property, your comment rent may be $650/week, but rented out room by room, say $300/week, ×5, you then have approx. $1,500/week.

-Adding another dwelling onsite—this can be a relocatable house, which may be picked up for free as there are developers wish to get rid of old dwellings—the cost is approx. 100k, but gives you another income stream, doubling your returns. Again, obtain the necessary consents from the councils before your start.

~Lucia

~Lucia

Well, but don’t they give us reward points or cash backs? This is often $100, or $75, for $1 back, or cash reward of $250 when applying for a credit card. Do you take the bait? With retail stores having to fork out an additional 2.5% of the money to the bank, the cost has been passed back to the consumers. The only winners here are the bank and the credit card companies.

I don’t like credit cards, but I have to have one. There are a lot of payments I have to make online that only accept credit cards. With the direct payment systems like “Alipay” growing in popularity, credit cards—which once used to be a symbol of status—are becoming an old fashion and we are going to see them become history, just like Kodak.

~Lucia

-Be yourself, have your own personality. There is no need to follow the trend, because you don’t want to be a follower; you want to be the leader.

-Dream big, give yourself a purpose! Find something you are passionate about, and have a purpose. Making money shouldn’t be your only goal as you won’t go far. Remember, if you look after others, you will be looked after. But caution yourself to not let your kindness be abused.

-Although you need to calculate your risk, make sure you make a decision and take action! Without action, you can’t go anywhere.

-Respect others and be patient.

-Stop day dreaming, stop dreaming about winning lotto or meeting someone to get you out of your mess. Work on what you have, educate yourself!

-If you are not sure what to do, know there’s no guarantee that you will figure it out at university. Our education system is very dated; it has probably killed more young creativity than it has helped the young ones to achieve. It forces the intelligent young ones to fit into standards that don’t suit everyone, leaving a lot of graduates unemployed, hopeless, and depressed when they graduate, and don’t forget the crippling student loans they have. A career is fluid, a path. Find a job to support yourself financially before you figure out what you want to do.

-If you are looking for a job, go for big companies as you have a better chance to be hired. Unlike those small companies working on tight budgets, they can afford to train you and can give you access to a wider range of opportunities.

-If you do end up working in a corporate company, DO NOT spend more than 5 years there, otherwise you’ll end up like everyone else, saying the same thing, wearing the same uniform, losing yourself!

-Save. Have discipline in your spending.

-Invest! It is what you do with your income, not the income you make, that really makes a difference.

-What people think about you is their business, not yours. Surround yourselves with like-minded people and have a role model that you can look up to.

-Be happy.

~Lucia

That was me in 1999, after I posted at least 20 CVs trying to secure a job. These were checkout operators in “Foodtown” (now “Countdown”) to receptionists, I didn’t receive one single interview, and couldn’t understand why.

Now I know I was overqualified: I was someone with a banking and finance degree, having come from a sales executive job in a five-star hotel in China. I was very deflated and didn’t know why nobody wanted to employ me. Thinking of other places to apply, I realised I’d always wanted to work in a bank, but I was afraid to apply as I “believed” that my English was very poor. I was talking to Nola, my then boyfriend –now husband’s– nana, and she urged me to go for it. There was nothing for me to lose so I went ahead and applied. Not long after that, I received a call from the bank. It was a phone interview (which went fairly well as my English wasn’t actually as bad as I thought), followed by a maths test in town (The test was easy, but getting to the city from a state house in Panmure as a new immigrant was not), then I was told I got the job. This was amazing news (I later served 15 years with them).

One of my dreams had come true! Since then, my dreams have kept coming true, one by one!

What did I do? The concept is simple, but learning and putting it into practice is hard: Believe, and commit to it!

~Lucia

1. Over 2 million New Zealanders have KiwiSaver and a Capital Gain Tax would affect at least 40 percent of the population, not just the 4 percent claimed by Jacinda Ardern.
2. There are over 500,000 businesses in New Zealand, 360,000 of those are small businesses. They will be affected too.
3. If the home office is claimed under your business expenses (something that most self-employed people do), your own home would also become subject to tax.
4. Currently, the proposal excludes family homes, but we cannot guarantee that 10 to 20 years down the track, the Government won’t re-evaluate this.
5. Property investors are already paying large taxes with a five-year bright-line test in place.

While tax fairness is important, evaluating behavioural responses is also critical in the decision-making process. Kiwis are already weak when it comes to investments, and a Capital Gain Tax would only create more fear and further discourage those looking at investing. This is a factor the government must take into consideration.

The presenter was enthusiastic about his new model and said he had spent five years developing it. He had also spent a lot of time and energy battling the Financial Markets Authority (FMA) to get it approved in New Zealand so that it could be offered to ‘mum and dad’ investors (essentially those without much knowledge on property investment and how it all works and hence the most vulnerable).

I had to bite my tongue throughout the presentation as the model wasn’t anything new. In fact, a company in Auckland had been running a similar model for years.

The new model the presenter was referring to was equity crowdfunding for property investment. His company allows potential investors to invest as little as $100 to gain shares in a property. Investors are also required to pay a 4% application fee on top of their investment. Shares in a property are allocated based on the amount invested.

The company purchased its first property early this year for $1.2M and has been trying to get investors on board ever since then.

The company also promotes home ownership; however, home ownership is not about having a piece of paper that shows you have a 1% share in a property. It’s about people actually owning the house and living there. What the company is doing is not going to solve home ownership issues.

I’d also like to address the return on investment with this company’s model. The current project is forecasted at 4.6% gross; however, once you take off land rate, insurance and general maintenance (which is approx 0.6% in this case) you are left with 4%. Additionally, you also have to subtract the company fee of 4%. So do investors receive a 0% return?

The other part of this model that I’d like to discuss is liquidity. When it comes to liquidity, real property investors do not sell property to liquidate. They top up their mortgage from their lender to withdraw their initial investment (it usually takes one to two weeks). Investors are accumulators not traders. With this equity crowdfunding model, the investor has to sell their shares in order to liquidate which means they have to find another investor who is willing to purchase their shares.

Therefore, I don’t see the new model as property investment, where you use other people’s money (mortgage) to invest, and to recycle the deposit for the next purchase.

The company also says they are planning to spend $150,000 to renovate the property they have bought and are going to increase the current value of $1.2M (purchase price) to $1.4M. This is someone who knows nothing about property investment. For every dollar you invest in renovation, you should expect four dollars back. For our renovation team, it would cost $50,000 at most for a floor area of 230 square metres.

The comparison they use is the cash deposit rate. They may have a market edge compared to savers, but there is of course one question that seems unanswered: if people can receive a 3% return from their deposit and have liquidity from their bank, why would they invest in this model?

There are also property shares that investors can invest in with dividends and capital growth via companies like Kiwi Property. Companies like Kiwi Property have been around for a long period of time and offer shares in diverse sectors including commercial property.

Commercial syndicates work well because the returns are usually running at double digits. Bank funding is harder with commercial properties compared to residential, which is relatively easy.

The issues with this company’s model are:

• For their business to be sustainable, they would need to continue their fee, not just have a one off 4% fee at the beginning. However, in doing so, it will be a struggle to get people to invest.
• The company will be dealing with retail investors, which will take a lot of time and energy compared to commercial syndicates where you are dealing with wholesale investors that are more sophisticated.

In saying all that, this model could work well in countries with negative interest rates.

In regards to home ownership, New Zealanders simply don’t realise their financial potential. Home ownership is not that hard, people just need more education around how to get into it. I am currently working on something to make this happen.

Although I was impressed with the founder’s passion, I don’t believe the model will work well. It’s sad to see people spend all their time and energy on something they believe in but does not necessarily get them where they want to be. If he came to me five years ago, I would have outlined the issues with the model and perhaps he would have done something differently.

I actually believe if they can’t find investors and end up keeping the property for themselves, that would be the best outcome.

RBNZ uses the OCR to control inflation. So if inflation is running hot they increase the rate and if it runs cold, they reduce the rate. As we currently stand, inflation is running low, this usually means the economy is not spending and the lowering of the rate is a way to stimulate the market.

The low OCR is of course great news for investors borrowing money, especially for those who have mortgages—if interest rates are due to be renewed, they will be able to switch to much lower rates. However, what all this will ultimately lead to is a widening of the gap between the rich and the poor. A lot of the time, what happens when an OCR is this low is that it is the wealthier people, those with the largest holdings and investments, that benefit the most. The low interest rates result in the wealthiest people and organisations investing more in assets such as shares and properties which in turn increases demand which then leads to the prices for these assets to increase as well. People without assets and with low incomes are the ones that end up suffering. At first glance, we might say, “but it helps debts and makes debt management more affordable” but we have to remember that those who are in poorer income groups usually rely heavily on credit cards and other consumer-good loans and rates for those types of debts have barely budged. While RBNZ uses the OCR to help when the economy is struggling, one of the side-effects is the way in which it impacts the distribution of wealth.

What we require is more education around investment in the lower socio-economic groups. One of the key issues I have found is the difference in the mentality between the rich and the poor: the difference lies in how money-rich people use their money compared to the money-poor. The money-rich focus on saving to invest or investing while the money-poor focus on spending or saving to spend on items with no long-term value. For example, let’s say you receive an annual bonus of $20,000, what would you do with it? Money-rich people would save it as a deposit for an investment, or they would invest it if they were already on their investment journey, while money-poor people would plan on buying something like a new car, a new toy, a new dress, etc., or would save it in order to buy those consumer goods. Each of us has the power to choose which group we want to be a part of. Each of us has the power to balance the economy so that it isn’t just the rich that are always benefiting from it.