Warren Buffet, the world’s wealthiest investor, once said “Be fearful when everyone else is greedy and greedy when everyone else is fearful.”

Up until recent times, everyone’s been quite greedy, buying property as quickly as possible all over New Zealand. If you bought property over the past few years, it doesn’t mean that was a mistake. If you’ve done the maths, you’re fine. But if you’re aiming to be a serious property investor, you want to think about being a bit Warren Buffett. Buy when the other buyers are feeling scared, because that’s when prices are lower. Then, when the market does its usual cycle and buyers are once again feeling greedy, your asset has shot up in value – woohoo!

Right now, investors are fearful. They’re worried about meth contamination, rental WoFs, rising interest rates, tax changes and the higher cost of construction. (Of all those three, the one that genuinely concerns me is the last one.) Plus, there’s the difficulty of finding a 35% deposit. I mean, 35% is better than 40% but it’s still a shedload of cash. There have been rumours that the number will drop to 30% this year, which would grease the wheels a little, but I don’t think another 5% is going to result in a flood of investors leaping feet first back into the buyer pool.

‘Look at the types of properties first-home buyers don’t want’

Buy Outside LVR Restrictions

That makes it greedy o’clock in the property market right now. Be as bold and brave as you can – without putting yourself into a bad financial situation, of course. What can you afford to spend? We’ve got so many firsthome buyers taking advantage of off-the-plan houses right now. They love them. They can use a small deposit of 10% to secure a fantastic property for the future. They can access double the HomeStart grant on new builds – up to $10,000 for an individual or $20,000 for a couple. Add to that their KiwiSaver money and it’s looking pretty achievable right now. If the LVR restrictions are hampering your buying, remember they don’t apply to new builds; you can put down 10% on a brand new house and have the best quality tenants lining up to rent it when it’s finished in a couple of years’ time. Plus, you’re locking in the price before the building costs get any higher.

Another area to be greedy – look at the types of properties first-home buyers don’t want. Consider:

• Home-and-income properties, which are fantastic because they provide two income streams.
• Units, especially blocks of units. First-home buyers often steer away from units and I’ve never heard of one buying a block of them. If you can get a pair or three units even better, because you don’t need to worry about dealing with the Unit Titles Act.
• Commercial/residential combos. First home buyers aren’t interested, but you can get a dual income stream and mix up your portfolio.
• Sections. Could you land bank right now? Very few investors are buying sections at the moment, but this can be a brilliant long-term strategy.
• Badly-laid-out houses. If you can find one, home buyers don’t like them but when you have a great eye, you can often rearrange the internal walls and create a decent rental out of a rabbit warren.
• Houses with non-consented work or low-level meth contamination. These terrify home buyers, but you’re tougher than that. Get the right advice, or get scrubbing with your sugar soap, and your hard work can turn into incredible equity.

These are a few ideas, but you know there are more. There will be a weird
property in your area sitting there waiting for your creative mind to uncover its potential. Start thinking about how you can be greedy – this is the time to make your move.

The Property Factory is a licensed Real Estate Agency that specialises in investment listings across New Zealand and Australia. Owned by Real Estate Investar, a publicly listed business on the Australian Stock Exchange, our mission is to provide property investors around the world with the best advice, guidance, products and services to enable them to create wealth through property investment. Campbell Venning has been investing in property for over 20 years and is the Head of Property at The Property Factory. He can be contacted at campbell@thepropertyfactory.co.nz or on 021 515 085 Contact: Campbell@thepropertyfactory.co.nz