Mauri Ora!
Disclaimer: I have 0 financial qualifications and you should always seek your own financial advice from a qualified professional!
Season 2 of the Podcast is almost out. It's all about bringing Maori experts closer to those at home so that we can all learn from them (including me). 2 of my 'Experts' were actually property investors. Property is something which hits home for me because My Papa Bob was a property investor. He had properties all over New Zealand in locations like Auckland, Tokoroa, Napier. Our whanau got the fruits of this as we had somewhere to live either in the north, center, or a little south of the north Island. My Papa would have loved Maori Millionaire and he'd have been giving me tips all the time.
The 2 experts who I interviewed were Tiri Rangihuna (full time real estate investor from Ahuriri), and Jamie Dally ( Multi-Millionaire through property). I was so honored and privileged to be able to speak to them both and to share their matauranga with you all.
The Podcast and Video of our Korero will be released in due course. Make sure to subscribe so that you don't miss out!
First, What is an investment in Real Estate and How do you make money through this?
I first learnt about investing in Real Estate at a Robert Kyosaki course in Napier. I was 14 and had read Rich Dad Poor Dad and so Robert was my role model/ idol at the time. I saw that a FREE course was being advertised in town and so I got my mum to come with me and we went down to the event. Here's what I learnt:
Property can allow you to become ULTRA wealthy because of this one powerful tool:
Leverage:
Leverage is when you borrow money, and make money from the borrowed money. So, instead of only making money from your own money, you borrow money, invest it, and make more money overall.
Entering the Stock Market is cool but this is just my goal for the meantime until I build up enough capital and income to enter the property market. Here's why:
If I can BORROW $1,000,000 from the bank at an interest rate of 3%, but make capital gains of 8%, then this would leave me with a +5% ROI (Return on Investment). 5% of $1,000,000 is $50,000. So, instead of just making money from my OWN money (which is what I do in the stock market), I can now start making money with the banks money as well!
In basic terms, this is the concept of investing in property:
You borrow money to buy a house. Someone else rents the house. Their rent pays your mortgage. You make money because now you own a house which has equity.
Equity is the difference in the cost owing to the bank on your property, and the actual value of your property. For example: If you owe $150,000 to the bank for 123 ABC Road, and 123 ABC Road is worth $300,000 then you have $150,000 equity in your property.
This is how (in simple terms) you make money through property.
Here are the 5 things I learnt from talking to 2 property investors:
Your Circle is SO Important
Some of the similar ideas which they shared were about building your circle. Jamie described this as 'your team' which will support you when you need it. He described the team having a good accountant, broker, lawyer, and a support network around you. I promote this idea as well because we are the product of those we surround ourselves by. It's something which many teenagers suffer from where they're negatively influenced by their peers. I remember a time where I'd party and drink solely because my friends was. It wasn't something I wanted to do, I just did it because others were. I can transfer this to now where I'm very selective about who I spend time with. If I'm not leaving my meeting with someone feeling energized, motivated, and inspired then I'm reconsidering the value of the relationship.
2. If you won lotto, what would you do? If you say 'leave my job' then you aren't doing something which you love.
Matua Tiri shared that if he won Lotto, he'd remain doing the same things he's doing now. The reason for this is because he loves what he does. This is my goal in life! I never want to feel trapped somewhere just because it pays the bills. There's so much privilege in even just saying this; but, it's something I wish more Maori could. The problem with working a job that you don't find joy in isn't what can be seen at face value. For me, it's because I've seen so many adults who have become burnt out, sick, fallen in to addiction purely because of a job which they hate and being trapped.
3. Cashflow is KING
Cashflow is the positive revenue which comes from the rental income you get minus the expenses you have to own the property, things like the mortgage, rates, insurance, emergencies. If you are in a negative cashflow position then this means that you are paying money from your own pocket to run the house and therefore you are not making any profit. Many property investors recommend running the numbers on a property before putting an offer in to see if you will be able to have a positive cash flow.
4. Making your money work for you is way more sustainable
Jamie shared this idea that if he didn't learn how to make his money work for him, then he'd have to work until the day he dies. Investing your money means that you won't need to do this.
5. Knowing your WHY is just as important as your WHAT
Jamie wants to build generational wealth for his tamariki, their tamariki and so on. He wants to leave a legacy to prevent them from struggling with poverty. Matua Tiri wants to do the same but he also wanted to allow for himself to do his power lifting overseas without coming back home to New Zealand to debt and a job he didn't want. I'm reading this book at the moment called 'Start with Why' By Simon Sinek which discusses how your Why is pivotal to anything you do. Sinek shares how the very successful 'Apple' uses this exact whakaaro by having a company mission to 'challenge the status quo'. This means that their products aren't just phones, laptops, airpods - they're products which are good at what they do, and beat what else is on the market by challenging the status quo.
What attracts me to investing in Real Estate:
Investing in Real Estate is 'safe' from my point of view because there will always be a market for it. People will ALWAYS need somewhere to live.
What worries me:
As with all forms of investing, there are risks involved.