Property Investment
Why isn't this illegal?
If developers aren’t qualified to give financial advice, they shouldn’t be selling properties like they are. Here’s what’s going wrong.
Property Investment
3 min read
Private Property issue #151
Property has made me millions in 20+ years. Here are the reasons why I'm still bullish about it.
If you’d made $10 million from property, would you keep buying?
I’ve built a portfolio of 40+ properties. Made $10 million+. And I’m still buying.
That’s why some people were shocked when I released a podcast earlier in the year called: “Why We’re Getting Out of Property.”
It made some people think I was walking away.
But the truth is more complicated.
So let me set the record straight: I'm still bullish on property.
At the same time, I know (as a financial adviser) you should diversify and invest in lots of things.
So here are the 5 reasons I’m still bullish on property … and also what else I’m investing in.
Because I’ve got to take my own advice and diversify.
5 reasons why I’m bullish on property
#1 – We're in a housing crisis
There are not enough homes and not enough people building homes.
Last year Jarrod Kerr (the Chief Economist at Kiwibank) came on the podcast.
He said that despite the building boom … we’ve still got a shortage of the right houses in the right places.
#2 – You can borrow against property to supercharge your returns
With property, I can invest $120k as a deposit and buy a $600k asset (the house).
If the property market goes up by 10%, that house will now be worth $660k.
It made $60k. That’s a 50% return on my deposit.
That’s why I call it the Mortgage Magnifier. A small deposit buys a big asset, so your returns get magnified.
#3 – NZ’s population is going up
Even though lots of Kiwis are moving overseas … our population is still going up. Last year, we gained 48,500 people. The size of Timaru.
In 20 years, almost 6 million people will live in New Zealand. Another 700,000 people.
That’s like cloning everyone in Christchurch, Wellington City and Palmerston North.
Because that’s how many people we need to squeeze in. And they all need to live somewhere.
#4 – Incomes go up over time
Incomes increase by around 4.1% per year.
This means people can borrow more to spend on a house … even with the Reserve Bank’s new debt-to-income ratio rules.
#5 – I’ve seen property work
I’ve seen people build significant wealth through property. Whether that’s friends, clients or myself.
One client I worked with bought a house for $475k in 2016.
It’s now worth $850k — and the rent covers the mortgage and all other costs.
What else am I investing in (outside property)?
It would be dumb if I only invested in property.
The Christchurch earthquakes taught me that I shouldn’t have all my wealth tied to one city or asset class. That was a wake-up call.
So, I've been dabbling outside of property. But some of my other investments are high-risk and may surprise you.
#1 – A new lab meat company
A friend (who is way smarter than me) founded a company that produces meat without killing animals.
They take a single cell from a cow, place it in a Petri dish, and grow a steak.
But this is high risk. It’ll either make no money … or make a killing (forgive the pun).
#2 - Shares
I've got a decent share portfolio. I’ve been growing this on the side for a while.
So, if the property market goes up or down, I have some other assets that might do okay.
#3 – Health and wellness businesses
I almost invested in a Fijian coconut oil company.
But I backed out. It’s too risky for me to invest in overseas private businesses.
Instead, I've committed to investing in a health and wellness company, too.
But, don’t invest in these things just because I am.
I’m in a position where my properties let me take these bigger risks.
Don’t look at this and think: “Andrew’s investing in lab meat. I should do that, too.”
How much do I invest in property?
Roughly two-thirds of my investments each year still go into property.
I'm 40 — still with decades ahead of me.
That gives me a long time horizon, and property remains my best long-term bet.
While lab-meat might change the world … property has already changed my life.
Andrew Nicol
Managing Director, 20+ Years' Experience Investing In Property, Author & Host
Andrew Nicol, Managing Director at Opes Partners, is a seasoned financial adviser and property investment expert with 20+ years of experience. With 40 investment properties, he hosts the Property Academy Podcast, co-authored 'Wealth Plan' with Ed Mcknight, and has helped 1,894 Kiwis achieve financial security through property investment.
