Article: Property Investment
Guru’s Going Going Gone
If one were to construct a list of tell-tail signs of a property investment boom, near the top of the list would have to be a proliferation of gurus promising riches to anyone who is prepared to stump up with the entry fee. The boom between 2002-07 saw the rise of these supposed miracle workers who were regularly embellished with front cover exposure and feature articles in investment magazines (who, as it happens, just forgot to mention that the feature was more than likely part of a substantial advertising spend with the magazine). They also did the rounds at local property investment groups, who naively seemed to buy into the hype and bovine excrement.
Now that we are on the “reality check” side of the investment cycle the gurus are making headlines in the general media for all the wrong reasons. Rich Mastery have disappeared from the scene, Don Ha has stopped giving seminars after his real estate company went into receivership owing $7 million, and more recently the “Massive Action” seminar business of Dean Letfus’ has gone belly up, leaving many red faced followers out of pocket.
It’s actually staggering just how much money people spent to access the assumed wisdom of these gurus – often thousands of dollars to attend their weekend seminars and tens of thousands of dollars to become part of their coaching programs. Huge money was involved. I am told by one insider that a seminar company he presented for walked away with a million dollars from one weekend seminar.
There is no denying these performers certainly have an ability to rouse a crowd and make them feel as though they have received value for money. Their investment ability is less certain as the recently failures would suggest – like, did hey not know property prices can fall?
Don’t get me wrong, I am not saying all seminar presenters are mere entertainers and salesmen and that seminars have no place in the ongoing development of ones investment knowledge. I am simply saying that grown-ups should stop believing in gurus – if you believe in gurus then you may as well believe Taniwha live under a motorway somewhere near Meremere.
I have the same circumspect view about so-called motivational speakers. At the end of the day motivation must come from a desire within to improve ones lot in life. Investment success not only requires motivation but a need to gain some of the technical skills (like how to use a calculator and do some sums) and an understanding of market trends (like sensing when a market is at an extreme). Mostly it’s pretty simple common sense stuff, but simplicity and common sense need to be embellished in glitzy wrapping if it is to command a premium price on the guru circuit.
Speaking of gurus and Gods, the Prime Minister has had a bit to say about property investment recently. The good news is that he has no intention of targeting rental property investment in the future.
He is reported as saying he was satisfied that the changes made in the 2010 Budget had taken the steam out of the property market but not so much to make it so unattractive that investment stops altogether. Speaking on TV One’s Breakfast programme he is reported as saying, ““There’ll always be a rental market. There’s no question we changed the dynamics around (the rental market) - it’s not as attractive as it was. The balance there is making sure we don’t do so much that people stop investing and then rental prices go up a lot”.
One surprising remark by the Prime Minister was that he agreed with the comment made by the Productivity Taskforce in their report on housing affordability that perceived tax advantages for housing was not a driving factor in driving up house prices over the last decade. If that is the case then National should have addressed the real cause of the price bubble, instead of removing depreciation rates.
On the issue of migration he said he expected net migration to New Zealand to remain positive, which is a positive for the property market, and at a time when a few positives are needed.
Frank Newman is the author of numerous books on investment matters and the creator of the NZ Investment Game which may be ordered at http://www.investmentgame.co.nz. He is a director of the accounting firm Smart Business Centre. He may be contacted at .(JavaScript must be enabled to view this email address).
