With entry level prices high, affordability low in many locations and lending regulations stringent, it’s harder than ever for aspiring young (or new) investors to get on the property investment ladder. But it’s not impossible. We speak to three young investors who’ve come at the problem from three different angles and find it’s still possible to succeed as a new investor, if you’re strategic and determined.

Billy Mclachlan-Flipping Like A Pro

When Billy McLachlan left Opahi College in Temuka in year 12, all he cared about was skateboarding – much to his mother’s dismay.

And despite the fact that he showed considerable talent (he’s sponsored by Amazon NZ), his mum encouraged him to enrol in a one year Certificate in Business and Tourism course in Timaru, so that he had a way of earning while he skated and travelled. Just as well, because McLachlan took to it like a duck to water, so much so that his tutor encouraged him to pursue business, and suggested he read Rich Dad, Poor Dad by Robert Kiyosaki. The book opened McLachlan’s mind to the passiveincome- earning possibilities of investing in property.

“I thought, ‘I’m going to invest in property because if I invest in property and I can get cashflow from rentals, then I can literally skate the world’. I thought ‘well, that makes sense, I won’t have to work’ – nobody wants to work.”

After completing his course, he landed a job at Disney World in Florida and at age 18 left New Zealand to spend two years working there. But he didn’t forget about property. While he was there he perused real estate agencies and property values and decided he wanted to “go back to New Zealand and create a foundation in real estate”.

For McLachlan this meant moving to Christchurch to pass his real estate agent’s licence. He thought that moving in the direction of property was his best bet and figured he’d have access to the best deals and contacts. While in Christchurch, he Googled “Christchurch’s most successful property investor” and an article came up about Steve Brook and how he became a millionaire at just 19.

He asked Brook to meet him for a coffee and quizzed him on the best way to fast-track his way to becoming a millionaire. Brook dissuaded him from working as an agent, and spoke to a business partner who, a week later, made him an offer to work for him fulltime as a personal assistant, which would enable McLachlan to learn the “trade”. It was certainly a trial by fire: “I started on the Friday and [the business partner] said ‘I’ve just finished renovating this house in Brighton, Billy put a tenant in this rental before the end of the weekend – I don’t care what you have to do’.” Not one to shy away from a challenge, McLachlan did just that. He then spent a year project managing renovations, setting up valuations, getting quotes, calling the council and paying invoices, even cleaning his boss’s car – he was, he laughs “his little bitch” – but it was an excellent apprenticeship.

Soon, a bathroom supplier who McLachlan did some transactions with noticed him and offered him a job for $70,000 a year, working as a sales rep. Not bad coin for a 21-year-old, thought McLachlan, but “I got the job and I hated it – my heart wasn’t in it.”

While he worked for the bathroom supplier, he looked for other opportunities and saw a cleaning business for sale, which he and his girlfriend bought together.

“That opened us up to the world of self-employment,” he says, and he hasn’t looked back.

That business now provides McLachlan an almost passive cashflow, covering his living expenses and giving him the time he needs to do property deals.

“I started off wholesaling deals, getting properties under contract and selling them on to build investment savings and I’ve done a few joint ventures with equity shares. So, I find a property, I sign it up, I take it to an investor, he settles it, he funds the repairs, I do all of the work start to finish – I have an equity share in the property with no money in.”

‘I thought, ‘I’m going to invest in property because if I invest in property and I can get cashflow from rentals, then I can literally skate the world’ BILLY MCLACHLAN

“My business in real estate is lead generation.”

He’s done that a few times now and he’s on track for his first major goal: to buy a “six-door” – that’s young investor speak for a block of six units/income streams. McLachlan puts the cost of a six-door in Christchurch at $1.3 million and he’s on track to buy one before the end of 2018.

But the 24 year-old has even bigger plans. He knows from his time researching real estate in Florida that he can purchase an apartment complex of 19 units over there for the same price, and that will be his next goal.

He’s only half-joking when he says that when he’s a “multi, multi-millionaire” his long-term goal is to build apartment blocks of a similar scale in New Zealand. It’s a lofty goal for such a young investor, but with his tenacity, it wouldn’t be at all surprising: watch this space.

Angela Humble - Engage A Finder

Growing up living in rentals in West Auckland with her mother, Angela Humble was able to appreciate first hand the impact a kind landlord can have on a renter’s situation. In one of the rentals they lived in the landlord would give her mother a week’s free rent at Christmas, to ease the cost of the holiday period. This gesture always stuck with Humble, along with a desire to one day own her own home and rent homes to others.

After high school Humble went straight into sales and has been at Trade Me Motors for the past eight years (she was recently promoted to North Island sales manager). In 2012 this allowed her to fulfill her dream of owning her own home. She purchased a three-bedroom home in West Auckland with her partner Jesse for $440,000, spent $80,000 renovating it, had her son in 2015 and then sold the house for $1,000,300 in mid-2016. “It really set us up.” Meanwhile they had bought the neighbouring property beforehand which was a much larger four-bedroom house with a pool on a half acre section for $960,000.

Over a year later in November 2017 she was travelling to Wellington for work and picked up a copy of NZ Property Investor magazine and it reignited her desire to invest.

She thought “This is kind of what I wanted to do.”

“I was a bit mad at myself for putting it off all this time. I had a sit down and had a think about why I had put it off.”

There were a few key things she discovered: firstly, that she didn’t know any investors and lacked any guidance, and secondly, that she couldn’t keep up with market changes due to her busy work and home life.

She made a goal to buy a rental property within the next three months, before her 32nd birthday in February. To start off with she joined property investor chat groups online, she then read Graeme Fowler’s 20 Rental Properties in One Year, she moved onto Lisa Dudson’s The New Zealand Property Guide and finished with Robert Kiyosaki’s Rich Dad, Poor Dad. She then contacted Maree Tassell from iFindProperty with a loose strategy for what she wanted to do; Tassell questioned her around her thinking which helped her understand her goals and clarify her plan.

Humble then engaged iFindProperty property finder Janet Dixon who “read my personality really well. She let me lead and just checked me along the way which was lovely and helped me out because I’m time poor.”

Humble settled on a four-bedroom house in Mount Maunganui on a 1000m2 section. She drove down to see the property, and beat out other bidders at the auction to purchase it for $478,500. Weekly rent is $515 but she’s renovating it and will hopefully achieve a rent of $570 post-reno. She’s currently putting a three-bedroom relocatable house and garage on the back of the section, which she has estimated to come in at a cost of $163,000 including consents. She will get a minimum $520 per week for the new rental, which she says will bring her in line with an 8-9% yield.

She expects the property to have a total value of around $820,000 when it’s completed in six months’ time.

She is also now in the process of building a second two-bedroom dwelling on her West Auckland property. The build cost will be around $240,000 and she will rent it out for $520 per week when it is completed in around five months’ time.

Humble and her partner are now able to do another Mount Maunganui relocatable project, but she says she’s currently “mentally at capacity” and wants to take the time to learn through doing the process herself, so she’ll have a pause before going again.

She is however planning on giving her tenants the same treatment that her mum was given when she was renting – by giving rental rebates at Christmas – it’ll be Humble’s way of giving back and it may just inspire the next generation of young investors.

Kelsee Bax - Stay At Home And Save Hard

Kelsee Bax is a young investor with a different mindset to many young people (and before you ask, yes, she’s a distant relative of Kylie Bax). Rather than head off flatting straight after school, she decided to study at Waikato University and stay living at her parents’ house in Hamilton while she saved to buy a rental property. The way she saw property was different to most her age.

“I looked at it as savings,” she says. “I know there are going to be dips in the market, but in 13 years’ time when I’ve paid it off it’ll be worth much more than what I bought it for.”

The 25-year-old has always been an excellent saver. When she was at school she always worked and always saved some of her earnings. She has worked in catering, at Hamilton City Council and did babysitting and by the time she left university in late-2014 she had saved a $60,000 house deposit.

So when she secured a job straight out of university as an occupational therapist at Waikato District Health Board she put her plan into action.

She bought a three-bedroom house in Hamilton for $311,000 (Hamilton has seen around 35% growth since) and the owners of the property wanted to stay on as tenants. The rent was set at around $370 a week and this covered the mortgage payments, insurance and rates, as well as a $50 fortnightly maintenance fund. Bax also uses her earnings to top up the mortgage payment in order to pay off the loan quicker.

Bax credits her parents with exposing her to the benefits of property investment (they have a portfolio) and they were always at hand when she needed advice around managing rentals.

The original tenants have since moved on but Bax has never had any problem with renters. She puts this down to the wide pool of tenants her property attracts; she has set the rent below market value so that she can have her pick of tenants. The last time she advertised she had over 100 calls and was able to pick really good tenants. “I don’t really want to have terrible tenants or people moving out often.”

To that end she says it’s really important to vet tenants thoroughly and for that reason she didn’t hire a property manager “so I could make my own decisions.”

She’s done some maintenance and renovation too – she’s had the roof replaced at a cost of $11,000, she had the driveway paved, installed a dishwasher and modified the bathroom. The house was fully insulated and had a DVS system when she bought it, so she won’t have any problem complying with tenancy requirements, she says.

Late last year, she bought again, this time in Taranaki – a joint purchase with her partner who lives there. The second investment allows her partner to live there with a flatmate who pays rent, and Bax spends half of her time down there too.

For now, she doesn’t have any immediate plans to purchase again – both the market and lending are a lot tighter than when she first purchased, but she plans to build a house in the future as well as continue growing her rental property portfolio as cashflow and equity allows.

Bax still lives at home with her parents when she’s not spending time in Taranaki with her partner, and she’s in good company – she says some of her friends who had been flatting since they left high school are now returning home, so that they can start saving a deposit for their first home.