Property Investment
4 min read
Author: Andrew Nicol
Managing Director, 20+ Years' Experience Investing In Property, Author & Host
Reviewed by: Ed McKnight
Our Resident Economist, with a GradDipEcon and over five years at Opes Partners, is a trusted contributor to NZ Property Investor, Informed Investor, Stuff, Business Desk, and OneRoof.
Property investment isn’t one-size-fits-all. Not many investors use the same strategy their whole lives.
When you’re younger, you typically have more time, but less money.
As you age, that flips – you have more money, but less time. Maybe you’re married, have kids, or your job is more demanding.
Over time I’ve tried almost every property strategy in the book. And I’ve changed my strategy a few times too.
All of that has led me to where I am today – owning over 40 investment properties.
But, before I share my story, it’s important to say that here at Opes we help investors buy New Build properties.
And (spoiler alert) I have changed my strategy to focus more on New Builds.
So there’s the potential for me to be biased. To tell you to switch strategies and buy New Builds too.
I’m not going to do that. Because while switching strategies worked for me … it won’t be the right fit for everyone.
I first started investing when I was 19. Today I’m 40. Here are the three distinct approaches I’ve taken with property investment.
When I first started investing, I had no money but plenty of time.
I was 19 years old, enthusiastic, and had a girlfriend willing to renovate properties with me.
So, we picked up paintbrushes and got to work.
I’d finish my job at BNZ at 5.30pm, grab a Chinese take-out, and by 6.30 we’d be sitting on the floor of our latest project. And after finishing our takeaways we’d paint late into the night.
At that stage of life, flipping worked well. It helped me build equity when I didn’t have much capital to start with.
Later, I became a mortgage broker and kept investing.
Then, the Christchurch earthquakes hit. This created new opportunities. I started buying and repairing earthquake-damaged houses.
I was busy growing my business, so I partnered with a friend who was active in property.
We formed a joint venture, and that strategy worked well for me then. I could still invest, but without managing every single detail myself.
Both of these two early stages used active investing strategies. I was buying properties and doing them up. But that stage wouldn’t last.
But life changed again ... I got busier.
I got a partner, had a child, and my business took off.
Suddenly, I had far less time. I didn’t want to be on-site late into the night, eating takeaways on the carpet. I didn’t want to paint walls till midnight. I wanted to be at home with my family.
So, I transitioned to a build-and-hold strategy. I don’t have to put in as much time, and that makes sense for where I am in life.
Now, truth be told, I’ve bought New Builds (the build-and-hold strategy) throughout the last 10-15 years. And as I got busier and busier, they’ve made up a larger share of my portfolio.
I see my experience in other investors’ stories too. There are four reasons people often change their approach.
You often have more time and energy when you’re younger, but less money.
As you get more responsibility, you might need a strategy that doesn’t need you to be so hands-on.
Early on, many investors use flipping to build equity. But after you’ve owned your own home for a while, you tend to have a bit more wealth in your property.
Your house might have gone up in value. You might have paid off some of the mortgage. That gives you equity you can use to invest.
The opportunities shift with the market. At some points, flipping is lucrative. Other times it makes sense to use a strategy where you hold for longer.
The taxman loves to change the rules, and this influences how you invest.
For example, investors could once flip properties and not pay tax. Thanks to the bright-line test, that’s no longer the case.
I recently spoke at a seminar in Christchurch. After, a pair of 21-year olds came up for a chat. They were about to graduate from university and wanted to invest.
They asked if they should buy a New Build through my company. I said “no”. They were too young for that. I told them to look at flipping. That’s probably a better fit for their life stage.
But, it can go the other way too. Some investors start with build-and-hold, then shift into renovations later on in life. One of the investors I worked with started out in New Builds. As he grew his wealth and knowledge, he moved into property development.
If I were 20 again with a bit of money to invest I’d buy a house, move in, renovate, sell, and repeat.
And I’d keep doing that until I had enough equity to look at other strategies.
But as a 40-year-old with equity in a house and better things to do with my time … that’s not for me anymore.
Your strategy will (and should) change as your life, money, and the market evolves.
The most successful investors aren’t locked into one way of doing things. They adapt and do what makes the most sense at each stage of life.
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.
