Seven years ago a quietly spoken Jimmy Ho reached out to us. He had just signed up for an APIA membership and heard that we were looking for a volunteer
to run one of our meeting groups. At 22, he had just left uni and entered into a career in traffic engineering. He was also, at the time,
a fresh new investor. The rest, as it has often been said, was history. Over the last seven years Jimmy have invested across Auckland in
markets ranging from the CBD, central suburbs, Waitakere, Manukau and tried his hands at different properties including apartments, townhouses, home-and-income
and minor developments. These days Jimmy is still a mainstay on the APIA scene convening the Queen Street monthly meeting group. It has been
an absolute pleasure for all of us at APIA to watch Jimmy grow into a confident investor. Today we sit down with our favourite man to talk about
his investment journey so far.
APIA: You started investing at only 22. Pardon me for saying this but 22-year-olds are not exactly known for putting financial planning ahead of other priorities. What prompted you to start investing and what is keeping you motivated all these years?
JH: There were a couple of drivers that got me started. The first few months of my engineering career were really tough. One
of my good friends was made redundant a month after I started working. All of a sudden the idea that a regular salaried job is not always as
indefinite as one would think became really real to me. I started investing in shares just before news of the GFC first broke out and my shares
were performing very poorly. I realised then that I did not want my financial fate to be in someone else’s hands. That is when I started
pursuing property investment seriously.
I’ve grown to really love property investment. Over the years my reasons for continuing have changed alongside major life events. I find property
investing exciting and invigorating. I am as motivated an investor now as I was when I just started.
APIA: What is the most unexpected lesson you have learnt from the last seven years?
JH: Definitely the importance of finding a strategy that not only works well financially but is aligned with your values and your why.
I used to laugh off this type of talk and prefer to leave it to motivational posters and pop psychology but I understand now that the right strategy and
goals pushed me through the tough times in the last seven years. There are many different ways to prosper from property. What is comfortable
and exciting for me (right now minor dwellings and developments) might give some other investors nervous fits and sleepless nights. Conversely
for example, I am uncomfortable with negative gearing but some investors with higher incomes are happy topping up properties in high-end suburbs.
Overall the best strategy for you is the one that aligns with your core values, motivates you to take action consistently and habitually and makes you
wake up in the morning full of energy to look at property.
APIA: You have dabbled in so many aspects of the Auckland market how has it changed in the last seven years?
JH: Some thing have changed and others have stayed the same.
It is now harder to build a larger portfolio using a pure buy-and-hold strategy because of pressure on yields. Generally speaking, you have to put
a lot more work into adding value to your existing holdings. Strategies such as adding bedrooms and cosmetic renovations have lost some of their
effectiveness in creating cashflow although they are still great strategies for equity. Previously areas such as CBD (apartments) and south Auckland
which were cashflow positive are now neutrally- or even negatively-geared.
On the other hand, strategies such as minor dwelling and development have become a lot more effective in my point of view. Minor dwellings still
generate great yields. The higher density provisions within the Unitary Plan allow for effective medium density developments and multiple tenancies
Overall what I would say is that so long as you are committed to putting in the hard work to add value, there are still plenty of opportunities
for you in this market. Or any market in fact.
Related article: Minor dwelling or subdivision?
APIA: How has your investment strategy evolved over the years?
JH: In the early days I didn’t have much of a strategy. Looking back, there are two common principles behind all investing strategies:
The first is to be able to add value to anything you buy and the second is to find an angle to the property that others haven’t already seen. When
I figured them out I was running around doing cosmetic renovations and adding bedrooms to increase yields. These days I am still propelled by
the same two principles but just on a larger scale – I now add value using minor dwellings and resource consents.
APIA: So apart from all the development projects, what are you up to these days?
JH: I have been relatively quiet on the investment front these few months because I bought my own home in December last year when the
LVR rules changed. My wife and I project managed its renovation and we finally moved in last weekend! We did a significant portion of the
renovation ourselves so that has kept us really busy for the last few weeks. But I have to say the whole thing would have been far more tedious
if we had not the experience of renovating our rental properties!
APIA: Come on Jimmy, don’t be coy. We’ve heard through the grapevine that that is not the only news you have. Don’t hold out on us now!
JH: Well, ok. For some time I had been thinking globally, looking at my corporate experience and finding opportunities for me to
springboard into a property related business. We have just joined Pukeko Rental Managers and are now heading the Manukau branch. It has been very exciting to be working in a sector that we are both so passionate about. Having
a strongly cashflow positive portfolio has made that shift from salaried employment into self-employment a lot easier which gives us the freedom to
focus on developing the business. In the next few years I want to be dedicating as much time as possible to the business. What that means
is that our future investment strategy will need to change to accommodate our business goals.
APIA: So with that in mind, what is next for your investment portfolio?
JH: There are a number of law changes pending which would require improvements to rental properties. We are looking at installing supplementary
insulation, heat pumps and potentially further improvements as well.
Related offer: Discounted photoelectric smoke alarms for APIA members
The Unitary Plan also opens up many opportunities and we have engaged architects and resource planners to look at potential medium density developments
in Manurewa and Papatoetoe. We will also be looking into different strategies such as joint ventures.
APIA: Finally, because this has been a very loooong 5 minutes, what is the one tip you can give APIA members to get the most out of their memberships?
JH: APIA is an excellent resource that just seems to keep giving. Even after seven years I am still learning new things at each meeting.
My tip for members would be to go to the meetings and talk to as many people around you and network. There are plenty of investors there who are more
than happy to share their experiences with you.
Related article: A wallflower blooms – networking tips for introverts
Jimmy will be speaking at the upcoming Highbrook meeting on How not to be a cookie cutter investor where he will be exploring more on some of the ideas he has touched on during this interview and help you find ways to make your property investment your own. Have your registered yet?