Despite what most people will tell you, there is a right time and a wrong time to buy real estate – and timing could mean the difference between getting a good return and losing your home. Experienced and successful investor Paul Do shares the secrets of his success in a way that will allow all readers to benefit from the upcoming property boom times.
Reviewed on behalf of Good Returns Bookstore by Graeme Fowler
This book is written from an Australian focus, but can also be applied in many ways to the New Zealand property investment market. Paul Do is the author and has been investing in property as well as the share-market for almost 20 years. He starts off by discussing the advantages and disadvantages of property which includes leverage, security and adding value.
He talks a lot about apartments vs houses as well as capital cities vs the regional areas, and has a lot of information on past growth areas for anyone that is interested in knowing that. Again it is based on the Australian property market, although it would seem that our market overall in New Zealand would have followed fairly closely.
The author has a substantial background in pricing and financial analysis which becomes even more apparent when it comes to using the SYSTEM T formula he has designed. For those readers that are interested in formulas and technical analysis, this will be excellent reading.
His formula goes like this: –
Proceeds = s (chance of success) x m (how much it is geared) x e (initial equity) x [1 + y (average net yield) x (1 – t (tax rate)]x T (years) – Total Interest Cost.
If you can work that out, you’re a lot smarter than I ever will be. He does explain this in more detail, but I must admit that is was a wee bit beyond me.
Paul then goes on to explain more about research, the 80/20 principle which he says to spend 80% of the time researching and only 20% of the time looking at properties. He uses a lot of analysis to work out when a good time to buy is using a ‘buying zone’ graph and then goes on to discuss real estate agents, auctions, doing inspections, types of valuations, negotiations, conveyancing and a few other tips for the beginning investor. Lastly he has chapters on property management, development and selling, selling he advises against if at all possible.
In summary, this book will have some value to new investors, as well as the experienced ones, and the bulk of the information in the book can be applied to the NZ market as well.
3 ½ stars
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