There’s no Such Thing As a Property Cycle by Graeme Fowler

Disclaimer: Nothing is this article is meant to constitute financial advice of any kind, and is the opinion of the author only. Seek professional advice before making any financial decision.
 
Booms, busts, bottoms of a property cycle, tops of a property cycle, peaks, troughs, recoveries, property clocks, you’ve no doubt heard them all before.
 
Are they important to know?
 
Do you need to understand what they mean?
 
Will they help you make a decision if you want to buy, or sell a property?
 
Where in the property cycle should I buy?
 
Where in the property cycle should I sell?
 
How do I know what the ‘time’ is on the property clock?
 
Why are people so obsessed with all this jargon; needing to understanding it and always trying so hard to work out where in this hypothetical ‘cycle’ we are?
 
I think a lot of it comes from fear. Fear of the unknown, fear of making a...
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The Best Question I Can Remember Being Asked by an Investor by Graeme Fowler

Disclaimer: Nothing is this article is meant to constitute financial advice of any kind, and is the opinion of the author only. Seek professional advice before making any financial decision.
 
Question...... Because it seems like such a fine balancing act between expanding the portfolio versus paying down debt, I am keen to understand your view on the following: If you were to start all over again, would you allocate any extra funds left over at Year End (say, over five years) towards deposits for the next property purchases, or would you use it to pay down principal? And if used for paying down debt, would there be a certain LVR% that you might target before you start expanding again? I think your cash-flow strategy aligns closely with my values and goals, so I'm interested to see how quickly a sensible portfolio could grow.
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Answer ......
Out of all the questions anyone has ever asked me in the...
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What Does Cashflow Positive Mean? by Graeme Fowler

What Does Cashflow Positive Mean? by Graeme Fowler (2015)

Disclaimer: Nothing is this article is meant to constitute financial advice of any kind, and is the opinion of the author only. Seek professional advice before making any financial decision.
 
I will often ask at seminars or meeting up with other investors – what are some of your rules for investing?
 
Most will say that one of their rules is to ‘only buy cashflow positive properties’.
I will say – ‘well, what does that mean’?
 
They will often look at me as if to think I’ve never heard of the saying ‘cashflow positive’ before. So, they say ‘well it has to make money’!
 
I say – ‘ok so let’s say I buy a house for $200,000 with no mortgage and it rents for $50 a week, is that cashflow positive?’
 
They say ‘no it’s not’.
 
And I say ‘well it actually...
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Property Values by Graeme Fowler

Disclaimer: Nothing is this article is meant to constitute financial advice of any kind, and is the opinion of the author only. Seek professional advice before making any financial decision.
 
There are many different ways people use to determine what they think a property may be worth.
 
Here are some of them below:-
 
Purchase Price
 
RV, CV or GV
 
E-Value
 
Registered Valuation
 
Market Value
 
Looking at each of them, we can understand a little better what each is used for.
 
1) Purchase Price – this is the price you pay for a property when buying, and it may actually be worth more, or less, than what you are paying for it.
Sometimes you may be in a multi-offer situation where you end up paying more than you originally intended to, or because you really like the property. Other times, it may be in need of work, or the owner wants to sell it quickly, so you may buy it for less than what it...
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Getting Started in Property Investment by Graeme Fowler (2015)

Disclaimer: Nothing is this article is meant to constitute financial advice of any kind, and is the opinion of the author only. Seek professional advice before making any financial decision.
 
It’s now over 25 years ago that I got started in property investing, and I knew virtually nothing about property – except that I wanted to get rich from it!
 
I ended up losing about $40,000 on my first property, but luckily I did learn a lot from it.
I made many mistakes along the way and it was really no wonder as I was pretty clueless when it came to all things regarding property investing.
 
Back then, there wasn’t a lot of information around, so it was more of a trial and error thing for me for a few years. There wasn’t anyone I knew who I could ask about property or get their opinion about something, and virtually nothing written by NZers on the subject.
 
I remember a friend of mine inviting me to go see an older guy who...
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Should I pay my own Home off First, before my Rentals? by Graeme Fowler

Disclaimer: Nothing is this article is meant to constitute financial advice of any kind, and is the opinion of the author only. Seek professional advice before making any financial decision.
 
This is a question that comes up at times when talking to other investors about property investing and the debate about P & I vs Interest Only loans.
 
Logically and financially it makes more sense to pay your own home off first and as soon as possible, while having your rental property loans on interest only. The reason being you can claim interest as an expense for tax on a rental property, but not on your own home. So why would you want to pay off any principal on your investment property loans while still having a mortgage on your own home, if you’re not able to claim that interest? It makes sense from a financial perspective and because of this, investors will often begin this way with their investing. I used to talk about this with other investors 15 years...
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What’s The Real Estate Market Doing!!!!???? by Graeme Fowler

Disclaimer: Nothing is this article is meant to constitute financial advice of any kind, and is the opinion of the author only. Seek professional advice before making any financial decision.
 
If you’ve ever played the board game Cashflow 101 or 202, you will know that in order to win the game, the first thing you need to do is get out of the ‘rat race’.
 
The ‘rat race’ in the game is a circle where you keep going around and around and around until you are able to get out onto the ‘fast track’. This is where the game suddenly gets fast, exciting and a lot more money is made, but first you need to escape the ‘rat race’.
 
How do you get out of the ‘rat race’? You do so by getting to the point where your monthly cashflow without your job (passive income) is greater than your monthly expenses. There are a several ways inside the game to be able to do this, buying investment property is one of...
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The Pitfalls and Stress of Goal Setting/ Planning by Graeme Fowler

How many times have you been told you need to set goals and plan for your future?
 
One of the most common methods of goal-setting is the SMART goals – Specific, Measurable, Achievable, Realistic and Time based, i.e. the goals are to be achieved in a certain time-frame. Brian Tracy was another one that had all these specific ways and methods he would teach that would help people achieve their goals.
 
For me, I used to be very focused on goals, working hard to achieve them, and then setting new goals. One overseas seminar I did over 10 years ago was 3 days just on goal-setting and cost over $10,000 to attend. During the next year or two I did achieve the goals I had set at the time, however I started thinking – why wasn’t I happy when I achieved a goal, or if I was – why was it so short-lived? The answer I thought was to either set a new bigger goal or do it in a faster time. I remember being at the course and one of the goals was to own...
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Mindset by Graeme Fowler

Mindset
 
What do you think would be the biggest blocks to someone’s success in real estate investing?
 
 
Some may say their lack of experience, or funding issues, possibly not having enough agents to find them good properties, and others may say it’s the market itself - not doing what they want it to. All sorts of reasons as to what’s stopping them from getting what they want.
 
These all sound like they could be valid reasons they believe are holding them back, but personally I think it all comes down to just one thing – their own mindset.
 
I believe someone’s mindset and beliefs about certain things will either help them succeed, or prevent them from succeeding. When you have your mind set in a way that helps you rather than hinders you, everything seems to flow easily and effortlessly.
 
To give you an example of how this works, think of all the radio stations in Hawkes Bay that are now playing in the...
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What Could You Do with $60,000 cash? by Graeme Fowler

Disclaimer: Nothing is this article is meant to constitute financial advice of any kind, and is the opinion of the author only. Seek professional advice before making any financial decision.
 
This question was asked to 5 of us for the NZ Property Investors’ magazine for an article.
Below is my answer to it, however it was only supposed to be 400 words, so here it is in full:-
With $60,000 in cash, there’s quite a lot you could do without too much risk.
 
However it does depend a lot though on your strategy, your plan, your own financial intelligence, and how risky you are as an investor.
 
Lots of people use risky strategies that will most likely cost them everything in the long run. They try to pick which area to invest in, in other words - what locations they think will go up in value. They invest with assumptions, hopes and wishful thinking, not with logic and common sense.
 
It doesn’t even come into my thinking as to...
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