Making millions

Graeme Fowler, who has built up a portfolio of 80 properties and written books including Real Estate Investors Secrets – How 10 Investors Became Millionaires in Property, said the biggest misconception was that property investors were all making tons of money.

‘‘While some are, 99 per cent of them are not. They have fulltime jobs and struggle to make ends meet like any other family. If a tenant doesn’t pay rent or unplanned maintenance needs doing, that money needs to come from somewhere.’’

He said most investors only had one or two properties as rentals and paid tax on any income left after expenses.

Last year, there were just under 1500 residential property sales nationwide to people who owned 50 or more properties, according to CoreLogic. Some of those may have been to the same people multiple times.

‘‘It usually takes many, many years of investing in residential property before any real money is made, and I know more investors that have gone bankrupt than I know that have been successful over a long period of time.’’

Most buy-and-hold investors never held a property long enough to pay off their mortgages, he said.

‘‘For me, with buy and holds, out of the 80 or so, from memory 17 have no mortgage on them and within the next eight years or so, about 40 of them will have no mortgage. The rest will be paid off in full over the following eight to 10 years.’’

He bought his first investment property after saving $25,000 – more than a year’s wages working as a mechanic at the time.

Seven years later, he sold it for a $40,000 loss and ended up with no money once again.

‘‘Now 20 years later, it is a lot easier because of what I learnt. Over the years I also learnt how to buy, renovate and sell properties so have completed hundreds of these over the years, as well as now having 80 long-term rentals.’’

He said he paid GST as well as income tax on properties he renovated and income tax on the rentals. over time get the idea that wealthy people are bad,’’ he said.

‘‘However, if it weren’t for investors buying properties, or business owners employing people, the country would be in a real shambles.

‘‘If you ask people to write down what is the first thing that comes to their mind when you mention the word ‘money’, it will usually consist of a list something like this – struggle, hard to get, rich pricks, bills etc. To these people, their mindset is that money is bad, so people with money must also be bad.’’

Another investor, Tammy Onekawa, based in Napier, said there was a ‘‘victim mentality’’.

‘‘Referring to investors as greedy is nothing more than a convenient truth for some, which allows them to explain away personal responsibility for their own situations – it deflects the onus from themselves, this belief also helps to echo their misfortune, which in turn bolsters their ideas and therefore perpetually fulfilling their stereotype that indeed investors are greedy. Life is what you make of it.’’ are brought in, not only with property investors, but business owners.’’

Onekawa said the idea of taxdodging investors came from people who were able to make large tax-free gains due to rising house prices.

‘‘Getting a huge windfall from selling the property far above its purchase price is deemed to be unfair as there is not a tax consequence in the gain.

‘‘The problem is that it is the way the tax system has been set up, if you are in the business of long-term rentals then that’s your taxable supply, not the gain in house value.’’