Most Kiwi's invest in property like this.

I was at a meeting with MBIE today, and they were asking questions about how many landlords quit the industry before really getting to grips with their responsibilities as landlords.

My impression is 'most of them'.

Lots of Kiwi's do-it-themselves when it comes to managing their own property.  They own their own homes, and they've been tenants, so how hard can it be?  It is only a matter of time before they find out.  It was very enlightening to us that many don't realise how emotional this is for property investors.  When you are buying property for the purpose of your future security, your retirement nest egg, something that stops you from thinking cat food is one of the main pensioner food groups, you get really rattled when things go wrong, and that disaster jeopardizes that security you are working towards.

The vast majority of Kiwi property investors own one investment property in addition to their own home.  A few own two or three investment properties.  Only a small number of property investors own more than that.

So this blog is for the 'one or two' investors.  The newbies, or the cautious.

I get it.  I know what you feel when everything seems to go wrong.  The tenant left owing rent, damaging the property, and taking your stuff.  They left rubbish and long lawns, and a cat with a litter of kittens behind them to compensate you though, so that's something, right?  And you are too scared to go to Tribunal to set matters right, because in the heat of things you lost your cool and said or did something you really regret, and you worry it will count against you.

So you start setting things to right, and you tidy it up again, and borrow more money from the bank to fix things, and spend your weekends and evenings sorting it out.  You plot what you'll do if you bump into the tenant at the local swimming hole, when no one is around to see... no one would know, would they?  But you stop yourself, this isn't TV-land, that isn't OK.  You continue your work to tidy up the property, feeling jaded about humanity.  And while you do so, your mind is dwelling on 'what will I do if the next tenant is as bad as the last one?' and you don't know if you or your relationship with your nearest and dearest can take it again.  So you think 'That's it, I've had enough, I'm selling'.

You put it on the market, the agent says 'you'll need to tidy it up more to get a good price' so you spend weeks of your personal time doing just that, but it doesn't make a difference to the offers you get.  You haven't been advertising it for rent, because the thought of that leaves you cold, and anyway, you'll be selling it soon, right?  The weeks of marketing it drag on, with you visiting frequently to mow the lawn, dust, work on just one more thing that might make all the difference to a buyer.  You desperately want a good offer, because all you can think about is your mortgage payments going out, and no income from this property coming in to help cover it.

If you are steadfast, you stick it out for months.  Then, in a fit of desperation, you take the next offer, which while on the low side, will at least let you break even financially, if not emotionally, and it certainly doesn't cover the hours you've spent working on the property.  But you take it because at least you are finally free of the burden of holding this wretched rental property.

If your spouse isn't constantly asking you, you are asking yourself 'what was I thinking?  Why did I think owning a rental property was a good idea in the first place?  I can't do this.  I'm certainly never going to do that again.  Couldn't afford to anyway even if I wanted to, as prices seem to have jumped the instant my place settled'.

You decide that property investment isn't for you.  You'll invest in the sharemarket, once you know how to do that, once you get a hot tip, and once your kids are out of school, out of university, married, the grandchildren are secure, oh, and what's just happened?  You hit retirement age without any assets, without any investments, and with plenty of regrets.  Your grocery list consists of 'tea, bread, baked beans, cat food, milk', and you don't even have a cat.

Pretty grim eh?  That is the reality for the vast majority of people who buy investment property.  They get one without knowing what they don't know, they don't pay for good advice from experts, they change their strategy when something goes wrong, and they lose out, often with a large amount of emotional fallout with their loved ones.  So much for 'lucky, greedy, wealthy landlords'.  They don't exist really.

So what separates the average property investors with a successful one?

Yes, there may be some luck involved, but mostly luck you get is what you make by being prepared.  Would we say a kid who scores top of their class is lucky, or paid attention and did their homework?  Of course we'd praise their work.  It's the same with successful investors.  They educate themselves, they get experts to help, they have a sensible strategy, and they have resilience.

Education should be pretty easy, there are plenty of resources out there freely or cheaply available, as well as plenty of people willing to put a high price on education.  Don't run the risk of thinking you are smarter than Jack and you have a way that no ones thought of before that will make you a killing.  More likely than not it has been thought of, is illegal, and might even kill someone.  Your outsiders perspective is most likely ignorance.  Get the insiders perspective, and follow their wise words closely.  Once you've become the master, then you can forge new paths. Not before.