Standalone homes, townhouses, and apartments - which is the most profitable?
CEO of Real Estate at Valocity joins Tim Beveridge to discuss property types and values.
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Speaker 1 (00:05):
You're listening to the Weekend Collective podcast from news Talk,
said b C. You encode crash water where out a
quarter revenue and you in a thredom moment?
Speaker 2 (00:26):
Well, I set June trance. We push us to Yeah,
I said you as high class ahead for your side.
Hell you in the water abbitue and you ain a fred.
Speaker 3 (00:42):
You ain't luck a matter.
Speaker 2 (00:45):
And welcome back to the show. This is the Weekend Collected.
By the way, if you missed our panel and can
go and check it out on iHeartRadio or news Talk
said be just look for the Weekend Collective when we
get our podcast loaded pretty quickly after each hour, so
you have to wait too long. But right now this
is the one roof radio show. And we also want
your participation on eight hundred and eighty ten eighty text
(01:05):
on nine two, and we're going to have a chat
about well, we always have a bit of a chat
about where the market's hat and what it's doing. But
if you are on the CUSP, and I would suggest
that it is one of those times where people if
you're interested in investing in real estate, then you might
be starting to think, well, you know, the market's in
a reasonably friendly position right now, there's a chance of
(01:26):
interest rates. Well, who knows what they're going to do.
I won't make any predictions there, but you might be
looking at getting into it, whether it be buying another
property or getting in for the first time. And of
course there are standalone homes as you just need to
drive around your neck of the woods and many parts
of New Zealand there are lots of brand new townhouses,
apartments and units. The real estate pages are full of
(01:47):
there's some nice looking apartments. I'll tell you what, if
you were just looking for somewhere to live, I'd be
very tempted to look in an apartment. But if you
are investing, are you considering investing in an apartment or
a standalone home? And what fact is influencing you? What's
your choice? What's going to be your go to? And
while we know that standalone homes, when I say we know,
should I say that that's a very bold statement. But
(02:10):
there is a suggestion then let's try that that standalone
homes tend to be more profitable on the capital gain side.
But then again there's also does the cost versus the
return of a rental apartment make more sense? Anyway to
discuss all of those questions. We welcome back to the show.
She is CEO of real Estate at Velocity v A
(02:31):
l Oh of course Velocity, and her name is Helen O. Sullivan.
And it's a very good afternoon, Helen. How are you doing?
Speaker 3 (02:37):
Good? Tim I am extremely well, Thank you. How are you?
Speaker 2 (02:40):
I'm fair to middling. I think I had a flu
jab yesterday and I had my COVID jab in the
other arm, and I'm I'm feeling pretty good, but maybe
just just a bit fair to middling. Yeah, you know,
and you what's been keeping you out of mischief lately?
Speaker 3 (02:58):
So much? It really must find an opportunity to get
into some mischief just way too long.
Speaker 1 (03:05):
I know.
Speaker 3 (03:06):
We've been rolling out some pretty cool new functionality and
our Velocity Nexus tool for our real estate agent customers,
which has been pretty exciting.
Speaker 2 (03:16):
To tell us for people who I mean people who
listen to the show regularly and will know your name
and what you do, but for those who haven't tell
us about what you do at Velocity.
Speaker 3 (03:25):
So I'm the CEO of real Estate for Velocity. Are
our DNA is in the evaluation and banking industry and
the piece of the business that I Run is our
nexus product which is primarily focused on as a tool
that we're a research tool that we've built for real
estate agents. So it enables to real estate agents to
(03:45):
bring together all the data that they need to accurately
praise properties for their clients and give their clients the
best possible advice when they're buying and selling real estate.
Speaker 2 (03:57):
How much and how quickly has the technology around this
evolved hugely because AI? I mean I'm a resisting saying
well do you have AI because it seems like the
compulsory question.
Speaker 3 (04:10):
But yeah, but absolutely what AI enables us to its
AI is a large part of our data ingestion and
processing tool, and we also use it as part of
our coding. So we've got a bunch of developers who
actually build all these amazing bits of software. Yeah, I
wave my arms and go, yeah, I want one of those,
and very very clever people we were away with crazy
(04:35):
just I love Yeah, I love watching it happen. I
can't do any of it, but I keep threatening to
write alone a line of code.
Speaker 2 (04:44):
If you don't don't get on with us, I'm going
to write some code. And they're like, oh God, don't
let it don't let her now.
Speaker 3 (04:49):
To step away from the piece.
Speaker 2 (04:51):
I'll do it so well. I want to get your
take on on what sort of properties give the best return.
But let's have a chat about where the market is,
because it feels that for a while. And I get
this just because of hosting a property show that there
have been. I've had two or three a handful of
conversations over the last year, maybe more. Will you get
(05:14):
the sense or is this is this this the bottom
of the market? Not so much is this the bottom
of the market, but is this thing's going to move on?
And we had I've had some guests who made some
pretty bold cause as to how much the market was
going to be up by the end of last year,
and we know that didn't come true. I don't know
what the expression is, but this the dawn of a
new era. How's how are things looking from an observational
(05:37):
point of view?
Speaker 3 (05:39):
Possibly you'd say the market's probably feeling a little bit
like you at the moment. I have a little bit
free at a middling.
Speaker 2 (05:45):
It's had it's flu jab, it's how it's COVID jab.
Speaker 3 (05:47):
And it's like we're thinking about things log It has
also been a little bit mixed up by the Easter
antac combo. Quite frankly, I think we somehow managed to
slip an extra Christmas New Year into the middle, and
it's just been a disaster, different productivity.
Speaker 2 (06:03):
Well, because for a three day and vestment and leave,
you've got ten days off.
Speaker 3 (06:07):
And there's also two thirds of everybody took it.
Speaker 2 (06:09):
That was almost better than Christmas, wasn't it.
Speaker 3 (06:11):
Well, Yeah, except yeah, I think so. Actually, yeah, the
way it landed.
Speaker 2 (06:17):
So does are there particular cusps or time of the
year where you would expect to see a change in
behavior in the real estate market historically?
Speaker 3 (06:25):
Yeah, Look, April is actually generally reasonably quiet because the
thirty one March in year in for a lot of people,
investors and buyers and sellers, tends ton't mean that March
isn't you know, it's still summer. It's late summer. March
is usually a really big month, and then everybody kind
of sits down and has a bit of a It
takes a bit of a breather in April. Plus you
(06:47):
often get Easter and school holidays and YadA, yadda. It
gets a bit quieter during the winter months and then
starts to pick up again in the sort of spring
seedge sort of you know, September intuitively.
Speaker 2 (06:59):
Really isn't it. But like general human activity, yeah, we
all tend.
Speaker 3 (07:03):
To hibernate a little bit over winter. It doesn't mean
that nothing happens. It just means that sort of less happens.
Speaker 2 (07:09):
So what has How would you describe the sort of
last six months with did we see much of a
what was the spring and the summer?
Speaker 3 (07:17):
Like, the spring and summer was far better than it
was than the two previous years had been. But we
tend to have quite short memories in the real estate.
In this dream, we sort of forget that the last
two years were quite quite bad in terms of the volumes.
You know, it was really the activity was very low
(07:38):
when we went into that that shock and the markets
interest rates shot up and people pulled back and took
a deep breathing with cracky and see it very still.
So the market was very subdued in terms of volumes.
And we focus in the real estate industry not just
on price, but on volume and the pace at which
things sell.
Speaker 2 (07:58):
And what was that looking like?
Speaker 3 (07:59):
Both of the volumes had have been improving this year
over last year considerably prices have stayed pretty have not
have not shot up so and prices, you know, I
have continued to be what would the technical term might
be flat mm hmm.
Speaker 2 (08:20):
So we're not going to get you to crystal ball
gays or anything, because it's a mugs game. And of course,
I guess if you have a lot of volume, but
it depends how well the supply is being met by
the demand. But it seems that supply there's a lot
of where are we at with them number?
Speaker 1 (08:37):
There are a lot.
Speaker 3 (08:39):
There is a good supply of listings at the moment,
so if you're looking, there is plenty of choice, and
you're not going to be under pressure time wise because
things are not moving as super fast speeds, but there
is renewed like this last six months has certainly people
have been back in the market, not going nuts, no,
but but actually in the market and paying attention.
Speaker 2 (09:01):
Because I remind myself that you know, people, while people
are not interested in the market, there will be a
time when everyone suddenly well I imagine there will be
another time when everyone suddenly like, oh gosh, I really
need to get into real estate. But really that's that's
after that stable bore, stable door is open and the
horse has started to bolt. Because if you are interested
in investing in property, I guess is it time. It's
(09:24):
times like these that you should really be marshaling your troops,
isn't it?
Speaker 3 (09:27):
Well, now it was a good time if you know.
The thing is always to only buy when you are
ready to buy. Trying to pick the turns in the
market is you'll guys get it wrong. So my advice
is always to do your numbers. Be absolutely so a
lot on what you're doing and why you're doing it.
Are you buying for capital growth? If you're buying for
(09:47):
capital growth, be prepared to be very patient and have
a number of years in a ten to twenty year
cycle where you're not going to see a.
Speaker 2 (09:54):
Lot of capitalist Most people just want to be like, well,
I just want to pick it just at the start
of the cycle. Sure you want to do that, And
some people will have. I mean, in the days gone by,
there will have been people who bought in who just
happened to see meteoric growth and lucky old them.
Speaker 3 (10:10):
Yeah, And there'll be people who bought in at the
point in time when it looked fantastic and then three
days later it all went to custard and then five
years later you're going cracky. I should have bought then.
My first ever interview on in real estate that was January,
just after the christ Ut quakes, I was being interviewed
(10:30):
by Mary Wilson on Radio New Zealand, and she said
her opening line was not looking good for the property market?
Speaker 1 (10:36):
Is it?
Speaker 3 (10:37):
If I'd had a proper crystal ball, I'd have said, no,
it's awful. Get in and buy everything you can, because
you know, five years later those numbers, we dream of
those numbers still.
Speaker 2 (10:48):
Do you think we'll ever get those sort of numbers again?
But we could.
Speaker 3 (10:51):
I doubt it.
Speaker 2 (10:52):
And that is that simply because the as if people
used to talk about the market's going to grow up
and go up this percent all the time. It doubles
every eight years. But it's just not mathematically feasible because
if you double a number every few years, it just
eventually gets to ridiculous numbers.
Speaker 3 (11:09):
So when do you go that's called inflation.
Speaker 2 (11:14):
Yeah, yeah, but I mean the idea of that of
doubling all the time eventually that that just gets too
fast and exponent because that's exponential growth, which you can't
keep up with doesn't it to a point.
Speaker 3 (11:24):
I mean, what tends to underpin the value of resale
value of properties is the cost of building new ones.
And we have seen a number of times in New
Zealand where the cost of building stuff just got to
be too complicated, so people didn't build. You know, you
look back in the GFC, we didn't build anything for
five years, and for five years it was fine, and
(11:47):
then on a dime, confidence returns, the market turns, people
suddenly jump in and start buying, and it takes another
three years to get supply back online.
Speaker 2 (11:59):
How's our building going at the moment? Then it's because
the talkers that we're building, we're going to getting into it,
isn't that? And we've got a Ministry of Housing who's
right into building. But what's actually happening now?
Speaker 3 (12:09):
Yeah, Look, I don't see a lot of activity in
the building section of the market. And when I talk
to people in that space, particularly in the high density space,
they have very furrowed brows.
Speaker 2 (12:21):
So I guess historically what there is there a big
difference between the types of capital gains we see and
the types of property.
Speaker 3 (12:29):
There is absolutely Ultimately the biggest capital gain is in
the land equation of the property. Okay, so if you're
sitting twenty years ago and looking into your crystal ball,
you could see a lot again in it. If you're
sitting if you're buying today and weighing up buying a
(12:52):
standalone home with a big land section, you've got to
be your question is going to be you'll get a
higher capital gain potentially over ten to twenty years, but
will you'll probably get a lower yield in the meantime,
you'll get a lower rental flow, and you'll have higher
expenses in terms of maintenance of you know, weather boards
and standalone homes and gardens and that kind of stuff.
Speaker 2 (13:13):
So intuitive if well intuitively, and I think most people understand,
the value is always in the land, isn't it. So
if the value is always in the land, and you're
buying an apartment where you're buying a much smaller share
of that land, therefore logically you're going to see less
of a capital game. But you might find that you
get a better rent for a nice property that's easy
to live in and maintain.
Speaker 3 (13:32):
And you'll probably have a lower entry price point as well,
so you'll have lower capital invested in the property and
you'll have you'll have a solid return. Well you have
a you'll have a higher yield on on what you purchased.
You do in an apartment like there's there's pros and cons.
I personally love being invested in an apartment because I
don't want to have to organize all the stuff that
(13:55):
the body corporate takes takes care of. Other people feel
at that.
Speaker 2 (13:59):
We invested as a as an owner occupier, as an investor, well,
both as.
Speaker 3 (14:04):
An owner occupy high it's a fabulous having.
Speaker 2 (14:07):
Yeah, I think you're quite fond of your apartment.
Speaker 3 (14:08):
I'm very fond of my apartment.
Speaker 2 (14:10):
To that apartment which you still manage, I've managed and
not managed to blurt out which it is. But it
is a very nice apartment though.
Speaker 3 (14:16):
It is a very nice apartment building.
Speaker 2 (14:17):
Yes, is it still? Is it all sold out now?
Speaker 1 (14:20):
Not yet?
Speaker 3 (14:20):
There's a few, a couple of a few left in it,
smaller ones, but but there are a few less.
Speaker 2 (14:26):
So who's what percentage of investment? Do we know what
sort of properties are being purchased to buy investors? Invest? God,
I can't say the word investors.
Speaker 3 (14:36):
I don't have that larder at top of mind.
Speaker 2 (14:38):
No, But intuitively would it say that, I wouldn't. I mean,
what's the main purpose people buy a property for, Because
technically you're not supposed to buy for capital gain? If
that is your intention, it's actually if that can be established,
the tax department can say, well, if that was your
intention when buying the property, then you should pay property
tax on the capital gain, even though they don't. Doesn't
(15:00):
usually work that way. Everyone pretends that they're buying it
for the rent. But how many people how many people
do buy a property. Look, if you've won Powerball, you
might buy a bunch of apartments simply because you want
the yield.
Speaker 3 (15:13):
Yes, Look, it's one of the curiosities of our tax
system is that we are convinced that the capital gain
is just automatically, accidentally or accidentally tax free. It's just
that is part of the mindset, and it's why if
you ever actually make comments are on that space, you
can expect people from either side of the bat to
(15:36):
weigh in quite heftily, quite quickly. And I know people
who had happen to them in quite public arenas what
this one?
Speaker 2 (15:44):
No, I know, something might have come on, Well, realistic,
we'll buy it for the capital gains. Suddenly you know, Hello,
who's there? It's a tax department. Look, we want your
cause on this. If you are and if you're an
investor thinking of investing, what sort of property you're looking
at buying? Are you looking at buying a standalone that
has its own slice of land all to itself? Because intuitively,
(16:06):
to me that would be ideal, But of course the
rents aren't too flash So maybe you're thinking, no, no,
I'll buy two or three apartments or one apartment, and
I'll just gradually wait for it to be paid off
over time by virtue of me not having to contribute
to the rent. Maybe, in fact, now I say that
that doesn't sound like such a bad idea. What do
you reckon? What would you What is a good investment
these days? And property? Standalone, townhouses, apartments, units? Not sure
(16:29):
what they read of the difference is there but units?
So I guess yes I do, because I liven't one.
Eight hundred and eighty ten eighty is the number. It's
twenty three passed for. My guest is Helen O'Sullivan. She's
CEO of real estate at Velocity. Of course he got
any questions for Alen as well? Give us a call
back in a month.
Speaker 1 (16:45):
On there like you.
Speaker 2 (17:01):
Before, Yes, that's it started to.
Speaker 3 (17:25):
Yes.
Speaker 2 (17:25):
Welcome back to the one roof radio show. I'm Tim Beverages.
Is the weekend Collecting. My guest is Helen O'Sullivans, CEO
of real estate at Velocity. We're talking about we've been
discussing when it comes to buying an investment property. Are
you better off buying a standalone house with its own
land or an apartment or a townhouse or whatever? And
what would what are you looking at when it comes
to your investment decisions. But of course there is another
(17:46):
side to it, Helen, and that is well, it's it's
the famous expression, isn't it location, location, location, location? Is
it still true?
Speaker 3 (17:54):
It's always true? So if you buy the worst house,
but it's in the best place.
Speaker 2 (18:04):
Worst how best streets still rocks? Does it still rocks?
My producers doing a little dance out in the studio then,
because I think she thinks she's in the worst house,
best street, although I don't know. I think she's flashy
than she lets on anyway, So we want your cause
on the There are a few texts to kick things
off with. Hello, I'm currently building a new house and
the bank has asked me to get evaluation from a
(18:27):
registered valuer. Why I think we can broaden this question out,
but we'll stick to the wording. Why can't I use
the lu likes of Velocity for that purpose? And I
was wondering because if AI is getting so smart and
professionals are using AI, why can't you just go and say, look,
(18:48):
here's what this reputable real estate tool says my property's worth.
Speaker 3 (18:53):
Next, So it comes down to how much data is available,
and with our automated valuation models that are our core business,
the core Velocity platform, which serves an most of the
residential banking platforms, that's based on basically a giant mathematical
crunching of the attributes of the property that the subject
(19:14):
property and the attributes of everything that's been bought and
told around that property, and is mathematically similar. The thing is,
when you run out of data, that gets a bit.
Speaker 2 (19:24):
Changed, but it doesn't the paint's peeling off its limitations
to it.
Speaker 3 (19:30):
But that's why there's there's always an element of of
headroom that the banks apply to that number to ensure
that it all still works. So when you're building a
new property, that doesn't have number, you're basically you haven't
(19:50):
got the subject property attributes from a reputable source or
an independent source. So a valuer has to you have
to get a human involved where there's anything that's in
edge case is sort of the short.
Speaker 2 (20:01):
Answer, Actually, I think that'd be interesting. I like to
th that out as a supplementary question is to speak
to you who are listening, I e. One hundred and
eighty ten eighty, how do you go about ascertaining how
much you're going to pay for a place, Because of
course that is one of the biggest questions in real
estate all the time, isn't it. And you get the
real estate agent in here, I go, well, what a
(20:21):
place is worth is what a person's prepared to pay
for it and sell it for, and that's what it's worth.
But in terms of ascertaining for yourself whether you've made
a goodbye, I mean, that's one of life's biggest questions.
It on one of life's, if not the biggest purchase
you'll ever make in your life.
Speaker 3 (20:36):
One But you know, it comes down to that tussle.
The buyer wants it for the least possible price, and
the vendor wants to sell it for the highest possible price,
and the real estate agent's job is to get the
two of you to agree and reach a figure where
you can you can conclude a transaction.
Speaker 2 (20:55):
But separate to that, I guess there is your decision
is also made on what you are prepared to pay.
And people, it's where they all get together, don't they
the buy and the cellar. But each person will have
their own idea.
Speaker 3 (21:13):
But you also when you're looking, when you're looking at property,
and you start to get a sense of what things
are worth, just because you go to a lot of
open homes, you see a lot of properties, you see
what they buy and sell for, and you get a
sense of you know, therefore the value of this it's
about there. You do the maths on it. What's the
per square meter value of this one? What were the
(21:35):
attributes of that was this? But you're basically doing in
in in personal you know, in a soft, squishy brain
matter time, what the what the algorithm is doing in
our av ms, And that's kind of it's you will
form an opinion of the general center to the market,
and then your ability to borrow, to pay for it
(21:57):
or to fund it comes into play and so too
does how much do you fall in love with it?
That's why it's really important if you're in that buying
position not to fall in love with it until you
actually own it.
Speaker 2 (22:08):
Well especially well. And it's even more it's easier to
not fall in love with it as an investor. I'm
not sure, because I'm sure their investors have made a mistake.
In fact, I've spoken to successful investors I said some
of their early mistakes was to fall in love with
the property, thinking imagine how they wanted to live, what
they wanted to live in, as opposed to what will
this look like to a renter.
Speaker 3 (22:30):
I think it's always important as to be prepared to
live in it yourself, because I think as if you think,
you know, if I, at the stage of the life
of the target market for this property, would cheerfully have
lived here. It will have broad appeal and you'll continue
to get a good You'll be able to keep it occupied,
you'll be able to keep it rented. If you look
(22:51):
at it and go, I wouldn't live to you, then
that's possibly a bad sign. Well, you know, so maybe
don't fall in love with it, but don't don't don't.
Speaker 2 (23:00):
It has to be pleasant, pleasant to live in, I guess,
But of course some people have for their own house,
they have delusions of grandeur as to what they would
want to live in, versus well, that's perfectly adequate. That's
a clean bathroom, it's a nice functional kitchen. As opposed.
It's not the latest marble from Rome.
Speaker 3 (23:18):
Absolutely absolutely, but it's striking the balance. I yess, it's
the key thing.
Speaker 2 (23:22):
Well, so how accurate? All I think is that as
time goes on, the AI tools, which are not just
analyzing data but it's they're going to get cleverer and
cleverer when it comes to be able to get a
decent idea about what a property's worth.
Speaker 3 (23:40):
AI is now enabling us. We are experimenting with using
the AI to examine images. So look at the photographs
that we've got of a property and get a sense
of your comment earlier about you can't tell if it's
the paint's peeling off. When AI can get to the
point that it can tell if the paint is peeling off,
or can tell that it has recently been refurbished, then
(24:02):
it really starts to take another step up in turns
of it.
Speaker 2 (24:04):
Also, do you think it's more likely that we'll get
to a stage where Okay, this is what the data
tells us about the square meterage of this house, the
section it's on, you know, all the number of other properties,
and then the user can come along and go, okay,
it's made of the substance and it looks like you know,
it needs to get it's going to need repainting in
(24:26):
five years or something. Where you could punch that in
and then AI would go, oh, thanks for giving us
that extra information. By the way, I'm making out of
this up as a go along, Helen, you pulled some
funny faces.
Speaker 3 (24:39):
The challenge is around the validation of that, because I
could go in and tell the machine that it's got
the latest marble from Rome and it's been refurbished and
the sun is always shining on the side of.
Speaker 2 (24:50):
The city, and then you know the oh, I meant
for the user not to put it into any public system.
Sure to ascertain your own sense of the value? Would
that be speechless?
Speaker 3 (25:06):
You can take the number and just apply maths. Really,
don't you don't? Really, I think this is one hundred.
I think I think it's better than that.
Speaker 2 (25:15):
Okay, by the way, we'd love your cause if you'd
like to join us. What sort of property are you
drawn to when it comes to making an investment. Is
it a standalone home, is at a townhouse? As apartments
and units? When what have you been dealing with? Because
there'll be there will be property investors in every part
of the market who are in it for specific reasons,
and I imagine in the case of for instances and apartments,
(25:38):
you might not be expecting the same growth, but you
are also probably getting more of a contribution to your capital.
I guess from the rent is that generally how it
works with apartments.
Speaker 3 (25:48):
Generally, generally you're in it for the ongoing, steady, secure
cash flow. So you get to the point where when
I get to my retirement, in addition to what's coming
in from keep Saber, you've also got rental stream coming
in to augment that pension that won't be there when
we get old.
Speaker 2 (26:07):
Now, hang on, let me just check a text I've
got here. I've just got it because I think this
is a follow up to an earlier text.
Speaker 3 (26:15):
This is a supplementary question.
Speaker 2 (26:16):
A submetric question to that earlier text says I did
and the bank nominated velocity, so.
Speaker 3 (26:24):
Well, that sounds Velocity is also evaluation ordering platform. Right,
So if you so that so that you can't try
belong to your value and go, hey, Tim wink wink
um buying the property for X, and magically the valuation
comes back at that number. Now the value is are
very rigid about not doing that stuff generally, but in
(26:45):
any case, the Velocity platform actually disintermediate, so the order
is placed through the platform, but it still goes to
an individual value. And so we have a desktop valuation
number and then a valuing valuation ordering mechanism.
Speaker 2 (27:03):
Okay, here's I'm not sure to be able to provide
the answers to these questions. Quite a few texts coming
in with questions for you the helen, When is a
good time to sell? You can hear it. It's already
very broad question. When is the good time to sell
my home to then build a new home? Is there
any generic answer which is safe here? No specific financial
(27:26):
advice by the way, Yeah.
Speaker 3 (27:27):
Look, I think the time not to do it is
when the market is seriously when the market for builders
is seriously overheated, So you know the time to do that.
The best time to the best time is when you're ready. Ultimately,
and when you have very firmly designed here. So think
(27:50):
you how the build process through, right from the beginning
to the end before you get started. Don't try and
half design the house and then go for gold, because
that is when your costs start to inspiral out of control.
Speaker 2 (28:05):
Yeah, because I mean if you're selling before your build
and cost change and your stuff. So I mean ideally
you'd want to be able to hang on to your
own Well, it depends what the market's going to do.
Speaker 3 (28:15):
Interesting, Hey, look, it's a really tricky time is you're
basically choosing what time do I untie the dinghy and
push off, and I won't necessarily have started the engine
on the other side. But my suggestion would be to
get as certain as you can about the costs of
the build, and when you're there and you're ready, then
(28:38):
take your property to market and see how much of
your build budget you actually get out of the side
of the first property.
Speaker 2 (28:44):
Okay, I hit my microphone. Then we'll take a break
in just a moment. In fact, we'll take the break
right now. We'd love your calls, I know eight hundred
and eighty ten and eighty about what sort of property
you would be interested in if you're an investor or
what type of property you did invest in, because with
the market being a little bit sloppy at the moment,
people having a bit of time to think about whether
they go for the standalone home or the apartment or
the unit. Give us a call one hundred and eighty
(29:05):
ten and eighty. My guest is Helen and Sullivan from
real Estate. She's the CEO of real estate at Velocity.
We'll be back in just a moment. It's twenty two
to five.
Speaker 1 (29:18):
Now we got to be.
Speaker 2 (29:31):
And welcome back to the Weekend Collective. This is the
one roof radio show. My guest is she is chief
Chief executive Officer CEO, should say, it's kind of just
called the chief, which sounds a little bit sort of.
I don't know, quirky, doesn't it of real estate at Velocity,
and her name is Helen No Sullivan. We're talking about
what sort of property are the ones to invest in
and why you would make a choice for an apartment
(29:53):
or a standalone home, et cetera. The other question that
I did pop up as part of the conversation was
just about how you go around valuing a property or
working out what is worth what in a particular neighborhood.
Speaker 3 (30:08):
I guess that's research research.
Speaker 2 (30:11):
Yes, indeed, we've got a bunch of texts actually, but
you can interrupt if you think that your text might
be at the bottom of the cube. Giving us a
call on eight hundred and eighty ten eighty, somebody said him,
it's more of an observation. I think, agreeing with you, Helen.
I bought a place in twenty ten for eight hundred
thousand and got told we were mad. It flew up
to a million and six months. There's no way of knowing.
(30:34):
I say, live your life and buy it when it
suits you, not the market.
Speaker 3 (30:39):
Hey, look Tony Alexander rideco that advice as well, and
I'm buy when it works for you, and look at
the fundamentals and don't don't like I've never bought on
the passes of an anticipating huge amounts of capital growth
because you just don't not you know whether or not
that's going to happen, and the capital growth won't help
(31:00):
you pay the mortgage. So incomings, you know, incoming income
versed outgoings is the most important factor to make sure
you can still afford the mortgage next week, next month,
next year.
Speaker 2 (31:15):
What about investing in commercial property, asks this person, is
it worthwhile? I'm not sure if that's your ballpark or not.
Speaker 3 (31:20):
Oh look, I look at commercial property from time to
time as well. The thing you've got to weigh up
is with commercial property is risk in terms of your tendency.
Speaker 2 (31:28):
The thing I do yields are higher generally, aren't they generally?
Speaker 3 (31:33):
Yes. The thing though, is that your income stream is
generally one. You know, if one, you've got one their
longer term three to six year deals. Commercial property can
stay vacant for a lot longer than as a RESI.
I've got a residential rental as long as a good quality.
If the market gets a bit soggy, you may have
(31:53):
to drop the rent, but you can always rent a
good property. You can have commercial properties cit empty for
a year or two years, and that it gets really expensive.
Speaker 2 (32:03):
Gosh, you know what. It's too late now, of course,
but you know, would have been good to talk to
about that. Mean, sir Bob Jones is the king of
real estate property and I'm trying to think of the
word for it. Inflammatory and interesting rhetoric.
Speaker 3 (32:18):
He was never boring.
Speaker 2 (32:20):
Yeah, okay, more texts company share apartments, Well, first, we
need to explain what a company share apartment is, and
I've sort of forgotten.
Speaker 3 (32:29):
Yeah, So a company share apartment will be when there
is a limited liability company which exists, which all of
the It's a mechanism that sort of predates the unit
titling apartments and the resident societies that often are used
the more red socks are used much more frequently now
in the modern environment. And everybody in the building owns
(32:50):
a share in the shareholding company and that owns and
manages the common property.
Speaker 2 (32:55):
That's right, and you have it exclusive use of your
particular apartment or property.
Speaker 3 (33:00):
Isn't there right normally that normally you have a freehold
title to your own property, or at the top of it,
there might be an encumbrance on the title that requires
the owner of that property to also own a share
in the company and then pay their bills.
Speaker 2 (33:16):
That sounds it can get quite unappealing, it can.
Speaker 3 (33:20):
It is a mechanism, it's sort of it's an old
fashioned tool that kind of predated the nineteen seventy two
Unit Titles Act, which is a you know, the body
corporate is actually a better mechanism for managing that kind
of thing because it gives the other owners tools for
collecting debt if one of the owners doesn't pay the
(33:40):
challenge with things that are cross lace and unit title
and resident society. If one person decides, for example, they're
just not going to pay the bills, it is a
lot harder to enforce the debts. So I personally prefer
the unit title. But you know, the company's share tends
to be associated with real character properties from a certain era,
(34:02):
and you know, look by all means do But the
saying is you've got to do the DD on the
company that is associated with it as well as the property.
Speaker 2 (34:11):
Does it put people, Does it affect the value of
a property, the type of ownership model it's been used sometimes.
Speaker 3 (34:16):
Or it's less of the value and more that it
limits the target market, the potential market for the sale.
So it may you just factor in it may take
a bit longer to achieve a sale because you'll be
looking for a more sophisticated buyer and or you're going
to have to put a bit more effort upfront into
explaining the structure and the transaction and providing potential purchases
(34:38):
with the due diligence materials they need.
Speaker 2 (34:40):
Okay, here's another one slightly out of our ballpark, but
I think we'll have a quick easy take on this.
Is it wise to sell privately? It's been suggested to
save on AGENC fees as we're not rich, but I'm
a bit ware of doing the wrong thing. But good
section on best Street. I'll offer my uninformed, unexperienced you
should use an agent, as the advice that I've got
(35:01):
from just about everyone who's ever come on this show.
Speaker 3 (35:03):
Yeah, look, I do agree that, and you know, certainly
my customer is a real estate agent, so yeah, possibly
I would. But the end of the day, real estate
agents have done this before, and you know, repeatedly. They
know the market, they know the process of negotiation, they
know the legalities. And the thing is, you do you
tend to be a lot more emotionally involved in your
(35:26):
own property. The real estate agent brings a They don't.
They're not embarrassed to ask for the extra money. They'll
tell you, you know, they just it just makes the
process a whole lot less stressful.
Speaker 2 (35:37):
It's also a bit like, I mean, unless you really
are a wizard marketing yourself and you think you can
get the word out there, but it's a bit like
selling to a smaller market and a smaller audience. And
given the competition of the market, there's a lot for
sale at the moment, isn't the I mean, I've done
what the numbers are, but it's certainly a hell of
a lot more in terms of the supply was a
few years ago.
Speaker 3 (35:57):
There is a lot more choice of available on the
market at the moment. So yeah, you do need look personally,
I'm selling a property at the moment and when I
wouldn't even contemplate selling it without using an agent.
Speaker 2 (36:07):
Yeah, it sounds like I've got of hard work too.
Speaker 3 (36:10):
That is the other thing.
Speaker 1 (36:11):
You know.
Speaker 3 (36:12):
Buyers do like to phone you whenever, the hell, whenever,
the hey, the buyers want to call you, and that's
what you pay the real estate agent for us to
take that call. Four o'clock on a Saturday afternoon, seven
o'clock on a Sunday evening.
Speaker 2 (36:24):
One more before we head off, not head off, We're
going to take a break and come back with the
one with probably the week. But this is a random one.
Hire Tim and Helen. What about a freehold car park
and a central downtown location. I don't know what the
question is.
Speaker 3 (36:36):
Well, the question is is that a good investment? And
they can be a very like they're low maintenance for
obvious reasons and can be very good yield. Okay, because
you know car parks. Car parks in downtown Auckland are
pretty much always.
Speaker 2 (36:53):
In demand as long as you can get well, I
guess they aren't They mentioned if you're the only one
who doesn't rent their car pack that would be that
would probably be a bit bit boring.
Speaker 3 (37:03):
Hey, look, you'd have to look at this track fure
of it. And you know, there is a building in
downtown Auckland which is actually start There are quite a
few of them as structured as unit titles, so the
principal unit is the car park itself. So there's a
body corporate that does insurance and managing the building and
that kind of stuff, and there's an income stream out
(37:24):
of it. But hey, definitely those those can be quite interesting,
little quirky options and again.
Speaker 2 (37:31):
Well certainly less expensive than buy a million dollar property
somewhere as your first entrance into the property market. Yeah right,
we'll be back in a moment. The one roof property
of the week is next. It is ten to five
New Stork set Bak.
Speaker 1 (37:42):
The one roof property of the week on the Weekend Collective.
Speaker 2 (37:47):
Yes, welcome back. My guest is Helen O. Sullivan c.
I've real estate at Velocity. In these the one roof
property of the week. Look, they were always usually gorgeous.
We've only had a couple of ugly properties, but they
were just such so quirky were the ones that were
ugly because they had such amazing land value. But these
were the property of the week for today. Is one
of the Six Sisters, one of the iconic Six Sisters
(38:10):
in Napier. It's on Marine Prade. It's two O one
Marine Parade, Napier, South Napier City and it's a group
of Treasured Heritage listed villas. It's a two story home
offers a rare opportunity to own a piece of Napier's
rich history. Built in the late eighteen nineties, their pre
Art Deco gems, as they're described, boasting architectural significance, unmatched character.
(38:35):
Of course, their views of the foreshore and the Pacific
Ocean just in there on their own would be enough
to make you think that would have a lovely place
to live. But interesting thing are there two interesting things
about this Helen. One is that they are zoned. There's
no there's no one roof property on this, there's an
RV estimate. But because there's zoned commercial as well, so
(38:58):
you can live in them, but you can also their
zone for we don't know what you can get away
with because they're historic as well.
Speaker 3 (39:04):
But well we can see in the pictures of the
place next door is at coffee house, so it is
a commercial zone as well.
Speaker 2 (39:11):
Yeah, and also they're for sale by tender, yes, which
is where you basically put your best offer and they
don't even necessarily need to accept. I don't know. The
tender sounds like it's it's a game for experienced people
to play.
Speaker 3 (39:27):
Much. The thing about tenders is it enables you to
make an offer that's conditional, which you can't. So basically,
from a vendors point of view, you sort of get
the competition approach that you do with an auction, but
without with the potential purchases being able to, for example,
put in a conditional bird or an offer that's conditional
(39:49):
on selling another property or doing some d D or
and then you can weigh up the different the different
potential offers in a way which when you run an auction,
you can't necessarily do.
Speaker 2 (40:02):
So you put your best offer in, but you say, look,
we're we need to sell our house.
Speaker 3 (40:06):
You often may well be conditional and so it gives
the vendor. It's it's a multif it's a it's a
tool for managing a multi office situation and you're taking
and it is particularly useful I think where you've got
a unique property. Yeah, and a market that is is
that is moving at slow pace. So I think that
(40:28):
is actually a good mething. I think it's a good
method of sale for such a unique.
Speaker 2 (40:32):
Very pretty area. Isn't it too gorgeous house National Views? Yeah,
so there you go. You can go check that out.
It's two o one Marine Parade. You look it up
on the one Roof website One Roof dot curd at
enz go and check it out. It's r V for
whatever that's worth. And we've had plenty of discussions around
what r V. It's one point four to five million. Anyway.
Great to see you Allen, Thanks so much for plastic.
Speaker 3 (40:54):
Thanks so much for having me back, Tim. It's always fun.
Speaker 2 (40:57):
We'll look forward to it again. By the way, we
will have a commercial property expert in the next few weeks.
We're working on that at the moment, so we'll have
some more announce about that in the coming weeks. We'll
be back with the parents Squad. Google Sutherlands joining us
is what we're gonna have a chat about. Well moody teenagers.
Is it something you need to be worried about or
is it just a mistage that they're going through. We'll
be talking about that shortly.
Speaker 1 (41:17):
For more from the Weekend Collective, listen live to News
Talks it'd be weekends from three pm, or follow the
podcast on iHeartRadio.
You're listening to the Weekend Collective podcast from news Talk,
said b C. You encode crash water where out a
quarter revenue and you in a thredom moment?
Speaker 2 (00:26):
Well, I set June trance. We push us to Yeah,
I said you as high class ahead for your side.
Hell you in the water abbitue and you ain a fred.
Speaker 3 (00:42):
You ain't luck a matter.
Speaker 2 (00:45):
And welcome back to the show. This is the Weekend Collected.
By the way, if you missed our panel and can
go and check it out on iHeartRadio or news Talk
said be just look for the Weekend Collective when we
get our podcast loaded pretty quickly after each hour, so
you have to wait too long. But right now this
is the one roof radio show. And we also want
your participation on eight hundred and eighty ten eighty text
(01:05):
on nine two, and we're going to have a chat
about well, we always have a bit of a chat
about where the market's hat and what it's doing. But
if you are on the CUSP, and I would suggest
that it is one of those times where people if
you're interested in investing in real estate, then you might
be starting to think, well, you know, the market's in
a reasonably friendly position right now, there's a chance of
(01:26):
interest rates. Well, who knows what they're going to do.
I won't make any predictions there, but you might be
looking at getting into it, whether it be buying another
property or getting in for the first time. And of
course there are standalone homes as you just need to
drive around your neck of the woods and many parts
of New Zealand there are lots of brand new townhouses,
apartments and units. The real estate pages are full of
(01:47):
there's some nice looking apartments. I'll tell you what, if
you were just looking for somewhere to live, I'd be
very tempted to look in an apartment. But if you
are investing, are you considering investing in an apartment or
a standalone home? And what fact is influencing you? What's
your choice? What's going to be your go to? And
while we know that standalone homes, when I say we know,
should I say that that's a very bold statement. But
(02:10):
there is a suggestion then let's try that that standalone
homes tend to be more profitable on the capital gain side.
But then again there's also does the cost versus the
return of a rental apartment make more sense? Anyway to
discuss all of those questions. We welcome back to the show.
She is CEO of real Estate at Velocity v A
(02:31):
l Oh of course Velocity, and her name is Helen O. Sullivan.
And it's a very good afternoon, Helen. How are you doing?
Speaker 3 (02:37):
Good? Tim I am extremely well, Thank you. How are you?
Speaker 2 (02:40):
I'm fair to middling. I think I had a flu
jab yesterday and I had my COVID jab in the
other arm, and I'm I'm feeling pretty good, but maybe
just just a bit fair to middling. Yeah, you know,
and you what's been keeping you out of mischief lately?
Speaker 3 (02:58):
So much? It really must find an opportunity to get
into some mischief just way too long.
Speaker 1 (03:05):
I know.
Speaker 3 (03:06):
We've been rolling out some pretty cool new functionality and
our Velocity Nexus tool for our real estate agent customers,
which has been pretty exciting.
Speaker 2 (03:16):
To tell us for people who I mean people who
listen to the show regularly and will know your name
and what you do, but for those who haven't tell
us about what you do at Velocity.
Speaker 3 (03:25):
So I'm the CEO of real Estate for Velocity. Are
our DNA is in the evaluation and banking industry and
the piece of the business that I Run is our
nexus product which is primarily focused on as a tool
that we're a research tool that we've built for real
estate agents. So it enables to real estate agents to
(03:45):
bring together all the data that they need to accurately
praise properties for their clients and give their clients the
best possible advice when they're buying and selling real estate.
Speaker 2 (03:57):
How much and how quickly has the technology around this
evolved hugely because AI? I mean I'm a resisting saying
well do you have AI because it seems like the
compulsory question.
Speaker 3 (04:10):
But yeah, but absolutely what AI enables us to its
AI is a large part of our data ingestion and
processing tool, and we also use it as part of
our coding. So we've got a bunch of developers who
actually build all these amazing bits of software. Yeah, I
wave my arms and go, yeah, I want one of those,
and very very clever people we were away with crazy
(04:35):
just I love Yeah, I love watching it happen. I
can't do any of it, but I keep threatening to
write alone a line of code.
Speaker 2 (04:44):
If you don't don't get on with us, I'm going
to write some code. And they're like, oh God, don't
let it don't let her now.
Speaker 3 (04:49):
To step away from the piece.
Speaker 2 (04:51):
I'll do it so well. I want to get your
take on on what sort of properties give the best return.
But let's have a chat about where the market is,
because it feels that for a while. And I get
this just because of hosting a property show that there
have been. I've had two or three a handful of
conversations over the last year, maybe more. Will you get
(05:14):
the sense or is this is this this the bottom
of the market? Not so much is this the bottom
of the market, but is this thing's going to move on?
And we had I've had some guests who made some
pretty bold cause as to how much the market was
going to be up by the end of last year,
and we know that didn't come true. I don't know
what the expression is, but this the dawn of a
new era. How's how are things looking from an observational
(05:37):
point of view?
Speaker 3 (05:39):
Possibly you'd say the market's probably feeling a little bit
like you at the moment. I have a little bit
free at a middling.
Speaker 2 (05:45):
It's had it's flu jab, it's how it's COVID jab.
Speaker 3 (05:47):
And it's like we're thinking about things log It has
also been a little bit mixed up by the Easter
antac combo. Quite frankly, I think we somehow managed to
slip an extra Christmas New Year into the middle, and
it's just been a disaster, different productivity.
Speaker 2 (06:03):
Well, because for a three day and vestment and leave,
you've got ten days off.
Speaker 3 (06:07):
And there's also two thirds of everybody took it.
Speaker 2 (06:09):
That was almost better than Christmas, wasn't it.
Speaker 3 (06:11):
Well, Yeah, except yeah, I think so. Actually, yeah, the
way it landed.
Speaker 2 (06:17):
So does are there particular cusps or time of the
year where you would expect to see a change in
behavior in the real estate market historically?
Speaker 3 (06:25):
Yeah, Look, April is actually generally reasonably quiet because the
thirty one March in year in for a lot of people,
investors and buyers and sellers, tends ton't mean that March
isn't you know, it's still summer. It's late summer. March
is usually a really big month, and then everybody kind
of sits down and has a bit of a It
takes a bit of a breather in April. Plus you
(06:47):
often get Easter and school holidays and YadA, yadda. It
gets a bit quieter during the winter months and then
starts to pick up again in the sort of spring
seedge sort of you know, September intuitively.
Speaker 2 (06:59):
Really isn't it. But like general human activity, yeah, we
all tend.
Speaker 3 (07:03):
To hibernate a little bit over winter. It doesn't mean
that nothing happens. It just means that sort of less happens.
Speaker 2 (07:09):
So what has How would you describe the sort of
last six months with did we see much of a
what was the spring and the summer?
Speaker 3 (07:17):
Like, the spring and summer was far better than it
was than the two previous years had been. But we
tend to have quite short memories in the real estate.
In this dream, we sort of forget that the last
two years were quite quite bad in terms of the volumes.
You know, it was really the activity was very low
(07:38):
when we went into that that shock and the markets
interest rates shot up and people pulled back and took
a deep breathing with cracky and see it very still.
So the market was very subdued in terms of volumes.
And we focus in the real estate industry not just
on price, but on volume and the pace at which
things sell.
Speaker 2 (07:58):
And what was that looking like?
Speaker 3 (07:59):
Both of the volumes had have been improving this year
over last year considerably prices have stayed pretty have not
have not shot up so and prices, you know, I
have continued to be what would the technical term might
be flat mm hmm.
Speaker 2 (08:20):
So we're not going to get you to crystal ball
gays or anything, because it's a mugs game. And of course,
I guess if you have a lot of volume, but
it depends how well the supply is being met by
the demand. But it seems that supply there's a lot
of where are we at with them number?
Speaker 1 (08:37):
There are a lot.
Speaker 3 (08:39):
There is a good supply of listings at the moment,
so if you're looking, there is plenty of choice, and
you're not going to be under pressure time wise because
things are not moving as super fast speeds, but there
is renewed like this last six months has certainly people
have been back in the market, not going nuts, no,
but but actually in the market and paying attention.
Speaker 2 (09:01):
Because I remind myself that you know, people, while people
are not interested in the market, there will be a
time when everyone suddenly well I imagine there will be
another time when everyone suddenly like, oh gosh, I really
need to get into real estate. But really that's that's
after that stable bore, stable door is open and the
horse has started to bolt. Because if you are interested
in investing in property, I guess is it time. It's
(09:24):
times like these that you should really be marshaling your troops,
isn't it?
Speaker 3 (09:27):
Well, now it was a good time if you know.
The thing is always to only buy when you are
ready to buy. Trying to pick the turns in the
market is you'll guys get it wrong. So my advice
is always to do your numbers. Be absolutely so a
lot on what you're doing and why you're doing it.
Are you buying for capital growth? If you're buying for
(09:47):
capital growth, be prepared to be very patient and have
a number of years in a ten to twenty year
cycle where you're not going to see a.
Speaker 2 (09:54):
Lot of capitalist Most people just want to be like, well,
I just want to pick it just at the start
of the cycle. Sure you want to do that, And
some people will have. I mean, in the days gone by,
there will have been people who bought in who just
happened to see meteoric growth and lucky old them.
Speaker 3 (10:10):
Yeah, And there'll be people who bought in at the
point in time when it looked fantastic and then three
days later it all went to custard and then five
years later you're going cracky. I should have bought then.
My first ever interview on in real estate that was January,
just after the christ Ut quakes, I was being interviewed
(10:30):
by Mary Wilson on Radio New Zealand, and she said
her opening line was not looking good for the property market?
Speaker 1 (10:36):
Is it?
Speaker 3 (10:37):
If I'd had a proper crystal ball, I'd have said, no,
it's awful. Get in and buy everything you can, because
you know, five years later those numbers, we dream of
those numbers still.
Speaker 2 (10:48):
Do you think we'll ever get those sort of numbers again?
But we could.
Speaker 3 (10:51):
I doubt it.
Speaker 2 (10:52):
And that is that simply because the as if people
used to talk about the market's going to grow up
and go up this percent all the time. It doubles
every eight years. But it's just not mathematically feasible because
if you double a number every few years, it just
eventually gets to ridiculous numbers.
Speaker 3 (11:09):
So when do you go that's called inflation.
Speaker 2 (11:14):
Yeah, yeah, but I mean the idea of that of
doubling all the time eventually that that just gets too
fast and exponent because that's exponential growth, which you can't
keep up with doesn't it to a point.
Speaker 3 (11:24):
I mean, what tends to underpin the value of resale
value of properties is the cost of building new ones.
And we have seen a number of times in New
Zealand where the cost of building stuff just got to
be too complicated, so people didn't build. You know, you
look back in the GFC, we didn't build anything for
five years, and for five years it was fine, and
(11:47):
then on a dime, confidence returns, the market turns, people
suddenly jump in and start buying, and it takes another
three years to get supply back online.
Speaker 2 (11:59):
How's our building going at the moment? Then it's because
the talkers that we're building, we're going to getting into it,
isn't that? And we've got a Ministry of Housing who's
right into building. But what's actually happening now?
Speaker 3 (12:09):
Yeah, Look, I don't see a lot of activity in
the building section of the market. And when I talk
to people in that space, particularly in the high density space,
they have very furrowed brows.
Speaker 2 (12:21):
So I guess historically what there is there a big
difference between the types of capital gains we see and
the types of property.
Speaker 3 (12:29):
There is absolutely Ultimately the biggest capital gain is in
the land equation of the property. Okay, so if you're
sitting twenty years ago and looking into your crystal ball,
you could see a lot again in it. If you're
sitting if you're buying today and weighing up buying a
(12:52):
standalone home with a big land section, you've got to
be your question is going to be you'll get a
higher capital gain potentially over ten to twenty years, but
will you'll probably get a lower yield in the meantime,
you'll get a lower rental flow, and you'll have higher
expenses in terms of maintenance of you know, weather boards
and standalone homes and gardens and that kind of stuff.
Speaker 2 (13:13):
So intuitive if well intuitively, and I think most people understand,
the value is always in the land, isn't it. So
if the value is always in the land, and you're
buying an apartment where you're buying a much smaller share
of that land, therefore logically you're going to see less
of a capital game. But you might find that you
get a better rent for a nice property that's easy
to live in and maintain.
Speaker 3 (13:32):
And you'll probably have a lower entry price point as well,
so you'll have lower capital invested in the property and
you'll have you'll have a solid return. Well you have
a you'll have a higher yield on on what you purchased.
You do in an apartment like there's there's pros and cons.
I personally love being invested in an apartment because I
don't want to have to organize all the stuff that
(13:55):
the body corporate takes takes care of. Other people feel
at that.
Speaker 2 (13:59):
We invested as a as an owner occupier, as an investor, well,
both as.
Speaker 3 (14:04):
An owner occupy high it's a fabulous having.
Speaker 2 (14:07):
Yeah, I think you're quite fond of your apartment.
Speaker 3 (14:08):
I'm very fond of my apartment.
Speaker 2 (14:10):
To that apartment which you still manage, I've managed and
not managed to blurt out which it is. But it
is a very nice apartment though.
Speaker 3 (14:16):
It is a very nice apartment building.
Speaker 2 (14:17):
Yes, is it still? Is it all sold out now?
Speaker 1 (14:20):
Not yet?
Speaker 3 (14:20):
There's a few, a couple of a few left in it,
smaller ones, but but there are a few less.
Speaker 2 (14:26):
So who's what percentage of investment? Do we know what
sort of properties are being purchased to buy investors? Invest? God,
I can't say the word investors.
Speaker 3 (14:36):
I don't have that larder at top of mind.
Speaker 2 (14:38):
No, But intuitively would it say that, I wouldn't. I mean,
what's the main purpose people buy a property for, Because
technically you're not supposed to buy for capital gain? If
that is your intention, it's actually if that can be established,
the tax department can say, well, if that was your
intention when buying the property, then you should pay property
tax on the capital gain, even though they don't. Doesn't
(15:00):
usually work that way. Everyone pretends that they're buying it
for the rent. But how many people how many people
do buy a property. Look, if you've won Powerball, you
might buy a bunch of apartments simply because you want
the yield.
Speaker 3 (15:13):
Yes, Look, it's one of the curiosities of our tax
system is that we are convinced that the capital gain
is just automatically, accidentally or accidentally tax free. It's just
that is part of the mindset, and it's why if
you ever actually make comments are on that space, you
can expect people from either side of the bat to
(15:36):
weigh in quite heftily, quite quickly. And I know people
who had happen to them in quite public arenas what
this one?
Speaker 2 (15:44):
No, I know, something might have come on, Well, realistic,
we'll buy it for the capital gains. Suddenly you know, Hello,
who's there? It's a tax department. Look, we want your
cause on this. If you are and if you're an
investor thinking of investing, what sort of property you're looking
at buying? Are you looking at buying a standalone that
has its own slice of land all to itself? Because intuitively,
(16:06):
to me that would be ideal, But of course the
rents aren't too flash So maybe you're thinking, no, no,
I'll buy two or three apartments or one apartment, and
I'll just gradually wait for it to be paid off
over time by virtue of me not having to contribute
to the rent. Maybe, in fact, now I say that
that doesn't sound like such a bad idea. What do
you reckon? What would you What is a good investment
these days? And property? Standalone, townhouses, apartments, units? Not sure
(16:29):
what they read of the difference is there but units?
So I guess yes I do, because I liven't one.
Eight hundred and eighty ten eighty is the number. It's
twenty three passed for. My guest is Helen O'Sullivan. She's
CEO of real estate at Velocity. Of course he got
any questions for Alen as well? Give us a call
back in a month.
Speaker 1 (16:45):
On there like you.
Speaker 2 (17:01):
Before, Yes, that's it started to.
Speaker 3 (17:25):
Yes.
Speaker 2 (17:25):
Welcome back to the one roof radio show. I'm Tim Beverages.
Is the weekend Collecting. My guest is Helen O'Sullivans, CEO
of real estate at Velocity. We're talking about we've been
discussing when it comes to buying an investment property. Are
you better off buying a standalone house with its own
land or an apartment or a townhouse or whatever? And
what would what are you looking at when it comes
to your investment decisions. But of course there is another
(17:46):
side to it, Helen, and that is well, it's it's
the famous expression, isn't it location, location, location, location? Is
it still true?
Speaker 3 (17:54):
It's always true? So if you buy the worst house,
but it's in the best place.
Speaker 2 (18:04):
Worst how best streets still rocks? Does it still rocks?
My producers doing a little dance out in the studio then,
because I think she thinks she's in the worst house,
best street, although I don't know. I think she's flashy
than she lets on anyway, So we want your cause
on the There are a few texts to kick things
off with. Hello, I'm currently building a new house and
the bank has asked me to get evaluation from a
(18:27):
registered valuer. Why I think we can broaden this question out,
but we'll stick to the wording. Why can't I use
the lu likes of Velocity for that purpose? And I
was wondering because if AI is getting so smart and
professionals are using AI, why can't you just go and say, look,
(18:48):
here's what this reputable real estate tool says my property's worth.
Speaker 3 (18:53):
Next, So it comes down to how much data is available,
and with our automated valuation models that are our core business,
the core Velocity platform, which serves an most of the
residential banking platforms, that's based on basically a giant mathematical
crunching of the attributes of the property that the subject
(19:14):
property and the attributes of everything that's been bought and
told around that property, and is mathematically similar. The thing is,
when you run out of data, that gets a bit.
Speaker 2 (19:24):
Changed, but it doesn't the paint's peeling off its limitations
to it.
Speaker 3 (19:30):
But that's why there's there's always an element of of
headroom that the banks apply to that number to ensure
that it all still works. So when you're building a
new property, that doesn't have number, you're basically you haven't
(19:50):
got the subject property attributes from a reputable source or
an independent source. So a valuer has to you have
to get a human involved where there's anything that's in
edge case is sort of the short.
Speaker 2 (20:01):
Answer, Actually, I think that'd be interesting. I like to
th that out as a supplementary question is to speak
to you who are listening, I e. One hundred and
eighty ten eighty, how do you go about ascertaining how
much you're going to pay for a place, Because of
course that is one of the biggest questions in real
estate all the time, isn't it. And you get the
real estate agent in here, I go, well, what a
(20:21):
place is worth is what a person's prepared to pay
for it and sell it for, and that's what it's worth.
But in terms of ascertaining for yourself whether you've made
a goodbye, I mean, that's one of life's biggest questions.
It on one of life's, if not the biggest purchase
you'll ever make in your life.
Speaker 3 (20:36):
One But you know, it comes down to that tussle.
The buyer wants it for the least possible price, and
the vendor wants to sell it for the highest possible price,
and the real estate agent's job is to get the
two of you to agree and reach a figure where
you can you can conclude a transaction.
Speaker 2 (20:55):
But separate to that, I guess there is your decision
is also made on what you are prepared to pay.
And people, it's where they all get together, don't they
the buy and the cellar. But each person will have
their own idea.
Speaker 3 (21:13):
But you also when you're looking, when you're looking at property,
and you start to get a sense of what things
are worth, just because you go to a lot of
open homes, you see a lot of properties, you see
what they buy and sell for, and you get a
sense of you know, therefore the value of this it's
about there. You do the maths on it. What's the
per square meter value of this one? What were the
(21:35):
attributes of that was this? But you're basically doing in
in in personal you know, in a soft, squishy brain
matter time, what the what the algorithm is doing in
our av ms, And that's kind of it's you will
form an opinion of the general center to the market,
and then your ability to borrow, to pay for it
(21:57):
or to fund it comes into play and so too
does how much do you fall in love with it?
That's why it's really important if you're in that buying
position not to fall in love with it until you
actually own it.
Speaker 2 (22:08):
Well especially well. And it's even more it's easier to
not fall in love with it as an investor. I'm
not sure, because I'm sure their investors have made a mistake.
In fact, I've spoken to successful investors I said some
of their early mistakes was to fall in love with
the property, thinking imagine how they wanted to live, what
they wanted to live in, as opposed to what will
this look like to a renter.
Speaker 3 (22:30):
I think it's always important as to be prepared to
live in it yourself, because I think as if you think,
you know, if I, at the stage of the life
of the target market for this property, would cheerfully have
lived here. It will have broad appeal and you'll continue
to get a good You'll be able to keep it occupied,
you'll be able to keep it rented. If you look
(22:51):
at it and go, I wouldn't live to you, then
that's possibly a bad sign. Well, you know, so maybe
don't fall in love with it, but don't don't don't.
Speaker 2 (23:00):
It has to be pleasant, pleasant to live in, I guess,
But of course some people have for their own house,
they have delusions of grandeur as to what they would
want to live in, versus well, that's perfectly adequate. That's
a clean bathroom, it's a nice functional kitchen. As opposed.
It's not the latest marble from Rome.
Speaker 3 (23:18):
Absolutely absolutely, but it's striking the balance. I yess, it's
the key thing.
Speaker 2 (23:22):
Well, so how accurate? All I think is that as
time goes on, the AI tools, which are not just
analyzing data but it's they're going to get cleverer and
cleverer when it comes to be able to get a
decent idea about what a property's worth.
Speaker 3 (23:40):
AI is now enabling us. We are experimenting with using
the AI to examine images. So look at the photographs
that we've got of a property and get a sense
of your comment earlier about you can't tell if it's
the paint's peeling off. When AI can get to the
point that it can tell if the paint is peeling off,
or can tell that it has recently been refurbished, then
(24:02):
it really starts to take another step up in turns
of it.
Speaker 2 (24:04):
Also, do you think it's more likely that we'll get
to a stage where Okay, this is what the data
tells us about the square meterage of this house, the
section it's on, you know, all the number of other properties,
and then the user can come along and go, okay,
it's made of the substance and it looks like you know,
it needs to get it's going to need repainting in
(24:26):
five years or something. Where you could punch that in
and then AI would go, oh, thanks for giving us
that extra information. By the way, I'm making out of
this up as a go along, Helen, you pulled some
funny faces.
Speaker 3 (24:39):
The challenge is around the validation of that, because I
could go in and tell the machine that it's got
the latest marble from Rome and it's been refurbished and
the sun is always shining on the side of.
Speaker 2 (24:50):
The city, and then you know the oh, I meant
for the user not to put it into any public system.
Sure to ascertain your own sense of the value? Would
that be speechless?
Speaker 3 (25:06):
You can take the number and just apply maths. Really,
don't you don't? Really, I think this is one hundred.
I think I think it's better than that.
Speaker 2 (25:15):
Okay, by the way, we'd love your cause if you'd
like to join us. What sort of property are you
drawn to when it comes to making an investment. Is
it a standalone home, is at a townhouse? As apartments
and units? When what have you been dealing with? Because
there'll be there will be property investors in every part
of the market who are in it for specific reasons,
and I imagine in the case of for instances and apartments,
(25:38):
you might not be expecting the same growth, but you
are also probably getting more of a contribution to your capital.
I guess from the rent is that generally how it
works with apartments.
Speaker 3 (25:48):
Generally, generally you're in it for the ongoing, steady, secure
cash flow. So you get to the point where when
I get to my retirement, in addition to what's coming
in from keep Saber, you've also got rental stream coming
in to augment that pension that won't be there when
we get old.
Speaker 2 (26:07):
Now, hang on, let me just check a text I've
got here. I've just got it because I think this
is a follow up to an earlier text.
Speaker 3 (26:15):
This is a supplementary question.
Speaker 2 (26:16):
A submetric question to that earlier text says I did
and the bank nominated velocity, so.
Speaker 3 (26:24):
Well, that sounds Velocity is also evaluation ordering platform. Right,
So if you so that so that you can't try
belong to your value and go, hey, Tim wink wink
um buying the property for X, and magically the valuation
comes back at that number. Now the value is are
very rigid about not doing that stuff generally, but in
(26:45):
any case, the Velocity platform actually disintermediate, so the order
is placed through the platform, but it still goes to
an individual value. And so we have a desktop valuation
number and then a valuing valuation ordering mechanism.
Speaker 2 (27:03):
Okay, here's I'm not sure to be able to provide
the answers to these questions. Quite a few texts coming
in with questions for you the helen, When is a
good time to sell? You can hear it. It's already
very broad question. When is the good time to sell
my home to then build a new home? Is there
any generic answer which is safe here? No specific financial
(27:26):
advice by the way, Yeah.
Speaker 3 (27:27):
Look, I think the time not to do it is
when the market is seriously when the market for builders
is seriously overheated, So you know the time to do that.
The best time to the best time is when you're ready. Ultimately,
and when you have very firmly designed here. So think
(27:50):
you how the build process through, right from the beginning
to the end before you get started. Don't try and
half design the house and then go for gold, because
that is when your costs start to inspiral out of control.
Speaker 2 (28:05):
Yeah, because I mean if you're selling before your build
and cost change and your stuff. So I mean ideally
you'd want to be able to hang on to your
own Well, it depends what the market's going to do.
Speaker 3 (28:15):
Interesting, Hey, look, it's a really tricky time is you're
basically choosing what time do I untie the dinghy and
push off, and I won't necessarily have started the engine
on the other side. But my suggestion would be to
get as certain as you can about the costs of
the build, and when you're there and you're ready, then
(28:38):
take your property to market and see how much of
your build budget you actually get out of the side
of the first property.
Speaker 2 (28:44):
Okay, I hit my microphone. Then we'll take a break
in just a moment. In fact, we'll take the break
right now. We'd love your calls, I know eight hundred
and eighty ten and eighty about what sort of property
you would be interested in if you're an investor or
what type of property you did invest in, because with
the market being a little bit sloppy at the moment,
people having a bit of time to think about whether
they go for the standalone home or the apartment or
the unit. Give us a call one hundred and eighty
(29:05):
ten and eighty. My guest is Helen and Sullivan from
real Estate. She's the CEO of real estate at Velocity.
We'll be back in just a moment. It's twenty two
to five.
Speaker 1 (29:18):
Now we got to be.
Speaker 2 (29:31):
And welcome back to the Weekend Collective. This is the
one roof radio show. My guest is she is chief
Chief executive Officer CEO, should say, it's kind of just
called the chief, which sounds a little bit sort of.
I don't know, quirky, doesn't it of real estate at Velocity,
and her name is Helen No Sullivan. We're talking about
what sort of property are the ones to invest in
and why you would make a choice for an apartment
(29:53):
or a standalone home, et cetera. The other question that
I did pop up as part of the conversation was
just about how you go around valuing a property or
working out what is worth what in a particular neighborhood.
Speaker 3 (30:08):
I guess that's research research.
Speaker 2 (30:11):
Yes, indeed, we've got a bunch of texts actually, but
you can interrupt if you think that your text might
be at the bottom of the cube. Giving us a
call on eight hundred and eighty ten eighty, somebody said him,
it's more of an observation. I think, agreeing with you, Helen.
I bought a place in twenty ten for eight hundred
thousand and got told we were mad. It flew up
to a million and six months. There's no way of knowing.
(30:34):
I say, live your life and buy it when it
suits you, not the market.
Speaker 3 (30:39):
Hey, look Tony Alexander rideco that advice as well, and
I'm buy when it works for you, and look at
the fundamentals and don't don't like I've never bought on
the passes of an anticipating huge amounts of capital growth
because you just don't not you know whether or not
that's going to happen, and the capital growth won't help
(31:00):
you pay the mortgage. So incomings, you know, incoming income
versed outgoings is the most important factor to make sure
you can still afford the mortgage next week, next month,
next year.
Speaker 2 (31:15):
What about investing in commercial property, asks this person, is
it worthwhile? I'm not sure if that's your ballpark or not.
Speaker 3 (31:20):
Oh look, I look at commercial property from time to
time as well. The thing you've got to weigh up
is with commercial property is risk in terms of your tendency.
Speaker 2 (31:28):
The thing I do yields are higher generally, aren't they generally?
Speaker 3 (31:33):
Yes. The thing though, is that your income stream is
generally one. You know, if one, you've got one their
longer term three to six year deals. Commercial property can
stay vacant for a lot longer than as a RESI.
I've got a residential rental as long as a good quality.
If the market gets a bit soggy, you may have
(31:53):
to drop the rent, but you can always rent a
good property. You can have commercial properties cit empty for
a year or two years, and that it gets really expensive.
Speaker 2 (32:03):
Gosh, you know what. It's too late now, of course,
but you know, would have been good to talk to
about that. Mean, sir Bob Jones is the king of
real estate property and I'm trying to think of the
word for it. Inflammatory and interesting rhetoric.
Speaker 3 (32:18):
He was never boring.
Speaker 2 (32:20):
Yeah, okay, more texts company share apartments, Well, first, we
need to explain what a company share apartment is, and
I've sort of forgotten.
Speaker 3 (32:29):
Yeah, So a company share apartment will be when there
is a limited liability company which exists, which all of
the It's a mechanism that sort of predates the unit
titling apartments and the resident societies that often are used
the more red socks are used much more frequently now
in the modern environment. And everybody in the building owns
(32:50):
a share in the shareholding company and that owns and
manages the common property.
Speaker 2 (32:55):
That's right, and you have it exclusive use of your
particular apartment or property.
Speaker 3 (33:00):
Isn't there right normally that normally you have a freehold
title to your own property, or at the top of it,
there might be an encumbrance on the title that requires
the owner of that property to also own a share
in the company and then pay their bills.
Speaker 2 (33:16):
That sounds it can get quite unappealing, it can.
Speaker 3 (33:20):
It is a mechanism, it's sort of it's an old
fashioned tool that kind of predated the nineteen seventy two
Unit Titles Act, which is a you know, the body
corporate is actually a better mechanism for managing that kind
of thing because it gives the other owners tools for
collecting debt if one of the owners doesn't pay the
(33:40):
challenge with things that are cross lace and unit title
and resident society. If one person decides, for example, they're
just not going to pay the bills, it is a
lot harder to enforce the debts. So I personally prefer
the unit title. But you know, the company's share tends
to be associated with real character properties from a certain era,
(34:02):
and you know, look by all means do But the
saying is you've got to do the DD on the
company that is associated with it as well as the property.
Speaker 2 (34:11):
Does it put people, Does it affect the value of
a property, the type of ownership model it's been used sometimes.
Speaker 3 (34:16):
Or it's less of the value and more that it
limits the target market, the potential market for the sale.
So it may you just factor in it may take
a bit longer to achieve a sale because you'll be
looking for a more sophisticated buyer and or you're going
to have to put a bit more effort upfront into
explaining the structure and the transaction and providing potential purchases
(34:38):
with the due diligence materials they need.
Speaker 2 (34:40):
Okay, here's another one slightly out of our ballpark, but
I think we'll have a quick easy take on this.
Is it wise to sell privately? It's been suggested to
save on AGENC fees as we're not rich, but I'm
a bit ware of doing the wrong thing. But good
section on best Street. I'll offer my uninformed, unexperienced you
should use an agent, as the advice that I've got
(35:01):
from just about everyone who's ever come on this show.
Speaker 3 (35:03):
Yeah, look, I do agree that, and you know, certainly
my customer is a real estate agent, so yeah, possibly
I would. But the end of the day, real estate
agents have done this before, and you know, repeatedly. They
know the market, they know the process of negotiation, they
know the legalities. And the thing is, you do you
tend to be a lot more emotionally involved in your
(35:26):
own property. The real estate agent brings a They don't.
They're not embarrassed to ask for the extra money. They'll
tell you, you know, they just it just makes the
process a whole lot less stressful.
Speaker 2 (35:37):
It's also a bit like, I mean, unless you really
are a wizard marketing yourself and you think you can
get the word out there, but it's a bit like
selling to a smaller market and a smaller audience. And
given the competition of the market, there's a lot for
sale at the moment, isn't the I mean, I've done
what the numbers are, but it's certainly a hell of
a lot more in terms of the supply was a
few years ago.
Speaker 3 (35:57):
There is a lot more choice of available on the
market at the moment. So yeah, you do need look personally,
I'm selling a property at the moment and when I
wouldn't even contemplate selling it without using an agent.
Speaker 2 (36:07):
Yeah, it sounds like I've got of hard work too.
Speaker 3 (36:10):
That is the other thing.
Speaker 1 (36:11):
You know.
Speaker 3 (36:12):
Buyers do like to phone you whenever, the hell, whenever,
the hey, the buyers want to call you, and that's
what you pay the real estate agent for us to
take that call. Four o'clock on a Saturday afternoon, seven
o'clock on a Sunday evening.
Speaker 2 (36:24):
One more before we head off, not head off, We're
going to take a break and come back with the
one with probably the week. But this is a random one.
Hire Tim and Helen. What about a freehold car park
and a central downtown location. I don't know what the
question is.
Speaker 3 (36:36):
Well, the question is is that a good investment? And
they can be a very like they're low maintenance for
obvious reasons and can be very good yield. Okay, because
you know car parks. Car parks in downtown Auckland are
pretty much always.
Speaker 2 (36:53):
In demand as long as you can get well, I
guess they aren't They mentioned if you're the only one
who doesn't rent their car pack that would be that
would probably be a bit bit boring.
Speaker 3 (37:03):
Hey, look, you'd have to look at this track fure
of it. And you know, there is a building in
downtown Auckland which is actually start There are quite a
few of them as structured as unit titles, so the
principal unit is the car park itself. So there's a
body corporate that does insurance and managing the building and
that kind of stuff, and there's an income stream out
(37:24):
of it. But hey, definitely those those can be quite interesting,
little quirky options and again.
Speaker 2 (37:31):
Well certainly less expensive than buy a million dollar property
somewhere as your first entrance into the property market. Yeah right,
we'll be back in a moment. The one roof property
of the week is next. It is ten to five
New Stork set Bak.
Speaker 1 (37:42):
The one roof property of the week on the Weekend Collective.
Speaker 2 (37:47):
Yes, welcome back. My guest is Helen O. Sullivan c.
I've real estate at Velocity. In these the one roof
property of the week. Look, they were always usually gorgeous.
We've only had a couple of ugly properties, but they
were just such so quirky were the ones that were
ugly because they had such amazing land value. But these
were the property of the week for today. Is one
of the Six Sisters, one of the iconic Six Sisters
(38:10):
in Napier. It's on Marine Prade. It's two O one
Marine Parade, Napier, South Napier City and it's a group
of Treasured Heritage listed villas. It's a two story home
offers a rare opportunity to own a piece of Napier's
rich history. Built in the late eighteen nineties, their pre
Art Deco gems, as they're described, boasting architectural significance, unmatched character.
(38:35):
Of course, their views of the foreshore and the Pacific
Ocean just in there on their own would be enough
to make you think that would have a lovely place
to live. But interesting thing are there two interesting things
about this Helen. One is that they are zoned. There's
no there's no one roof property on this, there's an
RV estimate. But because there's zoned commercial as well, so
(38:58):
you can live in them, but you can also their
zone for we don't know what you can get away
with because they're historic as well.
Speaker 3 (39:04):
But well we can see in the pictures of the
place next door is at coffee house, so it is
a commercial zone as well.
Speaker 2 (39:11):
Yeah, and also they're for sale by tender, yes, which
is where you basically put your best offer and they
don't even necessarily need to accept. I don't know. The
tender sounds like it's it's a game for experienced people
to play.
Speaker 3 (39:27):
Much. The thing about tenders is it enables you to
make an offer that's conditional, which you can't. So basically,
from a vendors point of view, you sort of get
the competition approach that you do with an auction, but
without with the potential purchases being able to, for example,
put in a conditional bird or an offer that's conditional
(39:49):
on selling another property or doing some d D or
and then you can weigh up the different the different
potential offers in a way which when you run an auction,
you can't necessarily do.
Speaker 2 (40:02):
So you put your best offer in, but you say, look,
we're we need to sell our house.
Speaker 3 (40:06):
You often may well be conditional and so it gives
the vendor. It's it's a multif it's a it's a
tool for managing a multi office situation and you're taking
and it is particularly useful I think where you've got
a unique property. Yeah, and a market that is is
that is moving at slow pace. So I think that
(40:28):
is actually a good mething. I think it's a good
method of sale for such a unique.
Speaker 2 (40:32):
Very pretty area. Isn't it too gorgeous house National Views? Yeah,
so there you go. You can go check that out.
It's two o one Marine Parade. You look it up
on the one Roof website One Roof dot curd at
enz go and check it out. It's r V for
whatever that's worth. And we've had plenty of discussions around
what r V. It's one point four to five million. Anyway.
Great to see you Allen, Thanks so much for plastic.
Speaker 3 (40:54):
Thanks so much for having me back, Tim. It's always fun.
Speaker 2 (40:57):
We'll look forward to it again. By the way, we
will have a commercial property expert in the next few weeks.
We're working on that at the moment, so we'll have
some more announce about that in the coming weeks. We'll
be back with the parents Squad. Google Sutherlands joining us
is what we're gonna have a chat about. Well moody teenagers.
Is it something you need to be worried about or
is it just a mistage that they're going through. We'll
be talking about that shortly.
Speaker 1 (41:17):
For more from the Weekend Collective, listen live to News
Talks it'd be weekends from three pm, or follow the
podcast on iHeartRadio.
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