Team, welcome back to this week's Blueprint Podcast. We're incredibly excited about our guest this week, aren't we, Rory?

Absolutely. We’re always in conversations with our clients about the different types of property. Obviously, we’re bread and butter residential, but when you get to a certain level, the allure of other asset classes starts to kick in, doesn’t it?

For sure. So, we’ve been prodded and poked to get someone on the podcast to talk about the commercial space. When it comes to commercial, there’s only one bloke. And that is Colliers sales broker, Logan Roach.

Honestly, I’ve known him for a very long time, and he’s the most experienced person I’ve met in the commercial space. He really understands the game, knows what’s suitable for which type of clientele. This is the guy to talk to, so I’m extremely pleased to introduce our guest.

Logan, mate, thanks so much for coming on.

Thanks for having me, mate.

Legend. So today we’re going to have a bit of a chat about your journey. We really want to talk about the commercial real estate space as well, do a bit of a health check, and then we’re really going to get into the ins and outs of commercial real estate as an investment and how it actually stacks up to residential. I’ve got a few thoughts on that, you’ve got a few thoughts, so we’ll break it down. But before we get into that, tell us a bit about how you actually found yourself selling commercial real estate.

Yeah, so I did the traditional thing where I went to uni. Didn’t really know what I wanted to do, probably like a lot of people. Did a Bachelor of Commerce, knew I wanted to get into business, didn’t know what that meant. Did a bit of travelling after that, went to America, did a ski season, which was heaps of fun. I was getting paid $10 US an hour, maybe some of it in cash, and I thought I was getting overpaid for what I was doing. That was an awesome experience, met a lot of people.

So I came back and got a role with a company essentially selling rubbish bins. I was in the waste industry, working for a manufacturer in the waste and rail industry, and my focus was on these solar-powered rubbish bins.

Solar-powered?

Yeah, solar-powered. I’d never heard of it until then either. The idea was that these bins compacted waste, so they were put in areas that had issues with overflowing bins—freedom camping areas, tourist hotspots, and the like. My role was basically to hit the road, meet with waste managers at councils, and sell these bins. They were pretty expensive, about $8,000 to $10,000 a pop, but the angle was that instead of having 10 overflowing bins, you’d have one with 10 times the capacity. It was all off the grid, and there was a platform to monitor how full the bin was and when it needed emptying.

That was awesome, B2B sales, loved meeting people. But I was in that role for about three years and decided that, if you’ve ever dealt with council, they’re pretty painful to deal with at the best and worst of times. People typically only last two or three years, and you put all this work in, then they leave, and you’re back to square one. A lot of it’s tenders and grants, so they can only really buy the product if they’ve got a grant from central government. I found it a bit tedious in the end.

After that, I thought I was a pretty good salesman and wanted to stay in the industry, so I applied for every different sales role under the sun. I don’t even remember applying for it, but I applied for a residential real estate job. She called me up, said let’s catch up, and at first I thought, there’s no way this is me. But then I met with her and thought, this is actually cool. I liked the idea of working for yourself, being remunerated for the work you put in, uncapped essentially. But selling to mums and dads, I was still a bit younger at the time, and my background was B2B sales, which is essentially what commercial real estate is. Rather than B2C, like residential, which is a lot more emotional—indoor-outdoor flow, which I have no idea about, I’m not an interior designer. So I thought, why not commercial? That’s theoretical, based on square metre rates, yields, all that good stuff.

I met with a bunch of commercial agencies, decided it was definitely me, and was lucky enough to get a job. Six years later, I’m here.

Wow, what a journey. I think it’s about identifying things you’re passionate about, like looking at that opportunity between resi and commercial. Coming from a business background, it makes sense to pursue commercial because the buyers and vendors are people you can understand and talk numbers with, whereas residential is a bit more emotional and more of a marketing thing.

Tell us about your first entry into the market and how things changed, because you went in at such an interesting time, right? You joined just before COVID.

Yeah, that’s right. I experienced both extremes of the market within a period of three years, which is pretty wild. I did a speed run, yeah. I went in a month before COVID, had my first week of meetings, and then we went into lockdown. Nobody really had any idea what was going to happen—it was unprecedented.

But I flipped it on its head and thought, this is actually perfect. I get to sit at home, get a database, and prospect. Where I work, we’re very patch-focused, so you focus on a geographical area and become an expert in that market. My bread and butter is the Eastern Fringe—Panmure, Mt Wellington, Ellerslie, Greenlane, everything eastern-central Auckland. I databased that whole area, just on an Excel spreadsheet, name and number of everybody.

Once we came out of COVID, I had this whole database. The first week back, I called up a guy, said let’s catch up for a coffee, give you a market update. He said, love to catch up, but I’m based in Christchurch. So we did a Zoom, as was normal back then. He said, thanks for calling, I have three properties I’m looking to divest—one in West Auckland, one in St Heliers, and one in Rotorua. He said, you’d be doing me a real service if you sold these for me. This was literally my first day after lockdown, hitting the phones. I thought, this is easy! That’s how I got my first stock to sell, and those properties all sold on deadline or auction date, which was magic.

So at that period, 2020 into 2021, it was really just about getting the stock. As long as vendors weren’t unrealistic, deals happened—even some unrealistic ones got results because of the crazy market. Then, 2022 onwards, interest rates rose and the market shifted quickly. We went from a market where investments and vacant property were both transacting well, to one where, from 2022 to 2024, most transactions were vacant properties to owner-occupiers. The major driver was the ability to get finance—if you had a good business and wanted to buy a retail, office, or industrial building, you could actually lend up to 100% of that acquisition.

Wow.

There were investment transactions, but for them to make sense, yields needed to be 7–8% plus, and there just wasn’t a lot of that transacting. Most investors were just holding on unless they got premium pricing.

Those 7–8% yields, was that specific to the COVID period, or has that historically been what commercial investors expect?

Yields are always a reflection of interest rates. Most investors look at property and go, if I’m getting lending at 5–6%, I want a yield around that mark to cover my costs. Typically with commercial, it’s a 40% deposit. We did see transactions with 8–9% yields, but they were typically inferior, B- or C-grade office buildings with lots of vacancy. In that 2022–23 period, most investors were just holding on unless they got premium pricing.

If we talk about market factors, we always talk about residential—interest rates are the biggest driver of cost of borrowing. But you also get this underlying market where things change, people need to move on. A big driver of first home buyers is that they’re going to transact regardless. Comparing to residential, which do you think is more impacted by interest rates?

That’s a great question. I think commercial buyers probably are, because it’s less emotional—it’s just numbers. The biggest challenge we have with commercial is people go, why would I buy at a 5% yield when I can get a term deposit at that rate, which is low risk? But with commercial, there are so many things you can rejig to add value—tidying up leases, rent reviews to increase income, and capital gain as well, which a lot of people looking at term deposits forget.

So I’d say commercial is less emotional, and the negotiation is very black and white. If you tell a purchaser the price indication, you get a quick gauge if they’ll put in an offer or not. With residential, it’s a lot more emotional—school zones, partners stretching budgets, etc.

Are the banks still lending 100% for businesses, or is that shifting now?

Yep, it’s still happening, but typically only for the owner-occupier market, and it comes down to cash flow. If they’ve got good cash flow, they’re willing to lend up to 100%. For investments—tenanted property—banks typically require a 40% deposit.

30% for an investment property, right?

Yes, depending on what you’re buying. With some caveats, you can do 10% on some investment if it’s a new build, but there are some non-bank lenders who allow 10% for residential at the moment. It’s a bit easier to get finance on residential.

Commercial sounds pretty sexy, but there are so many layers to it—yields, valuations, financing. We get a handful of commercial deals, but it’s not our bread and butter. What I find super interesting is valuations of commercial properties. Renting a commercial lease myself for Blueprint, and talking to many landlords and people like yourself, the way properties are valued can change drastically based on the income.

I had this situation where there were heaps of vacancies, and tenants were keen but not at the requested price. Say they want $100,000 plus opex for the lease, and the offer is $80,000. The landlord would rather leave it empty than rent it.

Yeah, it’s interesting, isn’t it? Because if you rent it, you’re confirming a lower value for your property—you lock in your value.

Isn’t that absurd? Wouldn’t you just take that?

It is, yeah. We see a few interesting things in our industry, and that’s probably another thing about commercial property. There’s a large chunk of high net worth family trusts who own a lot of property, and they have the ability to stomach that lost income until they get their number. The other thing is, if they give someone a deal at $260 per square metre, how’s that going to affect the rest of their tenants? They might have all the other tenants knocking on the door saying, “Hey, they’re paying this, why aren’t we?” For rents, especially in commercial leasing, it’s all based on comparable data. Some landlords have a monopoly on an area, so if they drop the rate, it might negatively impact the rest of their portfolio.

If it was my one asset and I had a vacancy, I’d do a deal at $80,000, maybe put a market rent review in two years to fix it in, but provide a discount on the front end to incentivise people. In the office leasing space, because there’s more vacancy, there are a lot more incentives for tenants—couple of months’ free rent, fit-out contributions, that kind of thing.

For those of us leveraged up to our eyeballs, we couldn’t afford to knock back a tenant. But some people out there, it’s not a problem.

Do you see many mum and dad investors coming through—people who’ve built up a resi portfolio and now want to diversify?

Absolutely, and that’s picked up a lot in the last six months, especially in my market. My market is sub-$20 million, but the bulk of my transactions are $2–5 million. That sub-$3 million space is very active, and there’s a severe lack of stock in the market for that bracket. The buyers are typically mum and dad investors who have a residential property portfolio and want to diversify across asset classes.

Where’s the bulk of your stock in terms of price range?

Typically $2–4 million. We transact less frequently in commercial, so a high-performing residential agent might do 20+ properties, but our dollar bracket is higher, and we typically transact 10–15 properties a year. Some brokers might do 2–3, but are very successful because they focus on the $20 million+ bracket.

I’ve got a bone to pick with you. Logan’s been talking to some of my clients and maybe steering them in the wrong direction, in my opinion. I’m a residential guy. From the finance side, the commercial real estate numbers may look sexy, but sometimes investors can get too big for their boots thinking they can stomach commercial. I get a lot of clients who, once they’ve got six or seven rental properties, want to take the next step. The net yields of commercial real estate look really attractive, but I think residential is the best way to build your wealth, especially in the leverage stage. Interest rates are more affordable, loan terms are more reasonable, and you can do a high LVR in most cases. Sell it to us—why do you think so many clients are now trying to get into commercial?

I’d say, look at most successful investors in the world—they’ve got a diverse portfolio. Focusing on one asset class isn’t the right way; you want to diversify, whether that’s commercial property, residential, or shares. The major difference and why you’d pick commercial is the obvious one: yield is a bit higher. With residential, your returns are typically 2–3% gross yield. Commercial yields are typically 5–7% at the moment, and they’re net yields. On top of the income, tenants are responsible for your outgoings—rates, insurance, even management fees—so the income you’re getting is pure net income. With residential, you’re responsible for that.

You’re not getting calls from your tenant at 5am saying the toilet’s broken. You outsource that management, which the tenant pays for in most cases.

Speaking of yields, what are your thoughts on the broader market? Are there pockets of NZ with abnormally large yields?

It’s very similar to residential. If you’re chasing yield, the highest yields are in the regions, and that’s typical with residential as well. We do see high yields in cities, even Auckland, but there’s a reason for it—typically the building’s got a lot of vacancy or needs a lot of CapEx. Higher risk. What a lot of investors forget is, you can chase yield, but there’s more risk, and you’re not going to get the capital gain like you would with a better property. Personally, I’d rather buy something at a lower yield in a really good location with a tenant who’ll be there for a long time—very hands-free. A lot of those high-yielding properties require very active management.

With the regions, there’s also lease or tenancy risk. Lease terms are another difference between resi and commercial. What’s the longest lease term you’re seeing in commercial?

We’ve seen government entities go up to 20-year terms.

For an investor, that’s a dream, right?

Absolutely. But that comes down to the tenant spending so much on the fit-out—they’re not in the business of owning property, they want to lease it. They’ve spent hundreds of thousands on fit-out and specialist equipment, so they’re protecting their investment and are well entrenched.

With residential, you’re lucky to get a two-year fixed lease—12 months is pretty standard. In commercial, minimum is typically a three-year initial term with rights of renewal. Residential is periodic or, at best, a one-year fixed lease.

And with residential, the government tends to favour tenants, making it hard to evict if they’re not paying rent. With commercial, it’s a B2B transaction—the government doesn’t really step in, it’s between businesses. If things get bad, it’s between the parties. For example, with rent reviews, if the landlord thinks the building should be $350 per square metre and the tenant thinks $280, they both get valuations and meet in the middle. Sometimes it goes to arbitration, but nobody wins in that situation.

For commercial lending, as a blanket approach, it’s 30–40% deposit for an investment, interest rates are usually 1–2% higher than resi rates, and banks like to reduce the loan terms to ensure you’re amortising the debt. You might get a couple of years interest-only, but it’ll be on a 15-year loan term max, and the loan term is dependent on the leases in place. With really long leases, you might be able to negotiate a longer loan term. Residential investors have access to interest-only and 30-year loan terms—much more flexible.

Commercial has super sexy numbers, but over a shorter time horizon.

What about cost of capital? What are our interest rates?

Commercial is typically 1–2% higher than resi. Right now, you can probably get 5.5–6% for commercial, and a one-year fixed for 4.49% for resi.

I’ve heard there’s a way around that—if you’ve got a million-dollar investment property or your family home, you can fully leverage up to 80% and use that cash for the commercial investment, getting home loan rates because that’s the security in place.

That’s right. So, let’s meet in the middle. The best way to build a portfolio or start wealth is to get a family home, then a steady rental investment portfolio. Once you’ve built some equity, you can consider commercial, because you might have some cash to inject or enough equity to leverage, and even get interest-only or a 30-year term to make the numbers look better.

I’ll meet in the middle—I’m not going to write off commercial. It’s important to diversify. But I don’t think entry-level investors should discount commercial. There are options out there. If I had a million bucks and wanted to buy a commercial property, I’d probably buy an industrial unit—very simple buildings, concrete block, iron roof, very little management. You get a tenant in there, maybe a workshop, 800 square metre unit, typically body corporates, but as I mentioned, it’s net yield—the tenant pays the body corporate fee.

There are entry-level investments out there for people. You can pick them up for not much cost—maybe $500k in Hamilton, $650k+ in Auckland.

Have you dealt with investors whose first entrance into property is commercial?

Yes, but it’s rare. More common for owner-occupiers. I’ve had situations where someone in their mid-to-late twenties has built up a deposit, decided to go travelling, doesn’t want to buy an owner-occupied property, and wants a hands-free investment. They’ve gone for commercial—net yield, good tenant, good lease, sit back and forget. With residential, the return isn’t as good and there’s more management involved. But there’s not a lot of that stock out there—it’s been snapped up.

In industrial, vacancy was less than 1% in 2021 in Auckland, now it’s crept up to about 2.5–3%, but still low. If your tenant left, you’d have a flood of tenants wanting to get in.

Can you give us a state of the nation on commercial right now? Are things feeling stable, is there more confidence back?

Let’s do a quick 30 seconds on each sector.

Industrial: Still trading really well, vacancy at relatively low levels, lots of construction going on. There’s just not enough industrial land in Auckland, so it’s pushing out to Drury South, which is going gangbusters. Yields for really good investments with good leases and tenants are still in the high 4%, early 5% range, which is phenomenal given commercial lending rates.

Retail: Typically yields are 5.5–6.5%, maybe higher depending on the property. I’m pro-retail, probably a bit biased, but suburban blocks—five or six shops serving a large residential catchment—are always going to have local people feeding them business. Good suburban retail, especially sub-$2–3 million, goes really well. If you go to areas with vacancy issues, like parts of Newmarket, you’d expect a higher yield, closer to 6.5%, because if you lose a tenant, you might have a loss of income for a while.

Office: Typically the asset class with the highest yields, purely due to vacancy. There’s a lot of opportunity there, though. High net worth, add-value investors are buying properties with vacancy, putting in tenants, increasing income, and creating equity. It’s like residential—get it revalued, use the equity, rinse and repeat. But with more people working from home, office yields are higher.

Is there anything we haven’t touched on that’s crucial?

If you’ve got a commercial property, give me a ring!

You couldn’t help yourself.

No, absolutely. For your audience, just don’t discount commercial—there’s a lot of opportunity out there, and I’m happy to have a chat about it. We’re in the best buying conditions at the moment. Yields have come down, vendors’ expectations are more realistic, and business is starting to trade better.

Interest rates are coming down, and things have got to improve—it’s just how the world works. These interest rate drops are great, and while we’re not seeing a direct correlation to property values yet, in six months’ time there’ll definitely be a shift. We’re in the busy summer period, getting more enquiry as people want to buy before the end of the year, settle in the new year, and maybe interest rates will be lower by then.

You talk about office space and what COVID did—high vacancies everywhere—but there’s opportunity there. With retail, you hear the scaremongering that retail’s dead, but there’s still opportunity, especially in local shopping strips. Keep an open mind.

Absolutely. I’m really keen on commercial—after a few residential, I’m keen to jump in.

You almost bought a commercial property, didn’t you?

Yeah, I did. But you didn’t call me!

You were involved, mate.

Logan, it’s been such a treat having you on. That was enlightening, so really appreciate it.

Thanks for having me. And it won’t be long before you’re back for your next market update. Thanks again.

So let's jump in. Lawrence, super excited to have you here, mate. Obviously, you're starting a new venture, moving away from the old and pivoting to the new spot. Tell us a little about Limitless Real Estate and when you're planning to launch.

Thanks so much, Madhav. I really appreciate it. So yeah, we started Limitless Real Estate, and in two weeks we're going to be launching. This is basically a real estate agency that I've wanted to set up for the past four or five years, but I decided I needed to become a good salesperson first. So I said, I'm going to sell a hundred homes as quickly as possible and then set up my agency. Three years ago, I sold my first home, and I've sold 175 in three years. Now I've decided I'm ready to launch the brand and build my own real estate agency.

That is super exciting. Look, we're big fans of young people doing big things when it comes to property, finance, any business essentially. I've seen your content, I know you work hard, but what do you think will be the secret sauce to take Limitless Real Estate to the next level compared to your past performance?

Yeah, so Limitless Real Estate is going to be about duplicating my systems. I've written about $1.9 million in the past 12 months, and I'm looking at how I can duplicate my administration, my systems, my marketing onto other agents so they can earn more money in the future. We want to give agents the opportunity to earn more potential income with the splits, and we give them full admin support. In terms of the backend systems, most real estate salespeople don't want to do administration.

A main pivotal thing we're doing is agent personal branding. What we see is people remember personal brands 67% more than just text. If you drive around and see real estate agent signboards, all their faces are really small. But if you look at one agent, they've got big signboards with their face and big photos on all the open home signs, and people remember those faces. It's all about that personal brand, because people don't stare very long at the signboards, but when they drive quickly past and see a big face, that's it—an impression in their brain. The more impressions they get, the more market share in their brain, and the more likely they are to call that agent.

Wow, that's awesome. All about that personal brand. We want to build backend systems with the administration and also give them hands-on mentorship with my system. So I'm just trying to see how I can duplicate someone's GCI—from, if they're doing $500k, how do I turn that to a million? If they're doing $200k, how do we push that to a million? How do we go to $1.5 million and manage that team structure? I think to succeed in real estate, just copy and duplicate someone else's success and pair up with them as quickly as possible.

That's super interesting, like the fact that you sell real estate in 20 to 40 days in one of, if not the most competitive real estate markets in New Zealand, which is the South Auckland market. We know in South Auckland it is competition galore when it comes to getting the best for your vendors, working with buyers as well. It's a fine balance, a fine dance. You're going to carry on that legacy, obviously moving forward into Limitless. How do you see attracting the right talent, who you'd give this sort of opportunity to work with you, with your processes they can replicate and become a great salesperson? Because obviously, you've got a hard job on your hands. There might be a hundred or maybe 200 people that you'd interview. So what would be the way that someone would stand out?

Yeah, for us right now, we are focused on agents that have a track record, that are starting at least eight properties per year, and that enables them to plug into our admin system and plug into the system without needing to be trained up and everything. So we want agents with existing skills, and right now I'm basically a recruiter and a trainer, providing value to agents. My job is how do I provide the most amount of value to agents to increase their income, decrease the amount of time they need to put into the business, and increase the leverage so that they can either increase their business or maybe take a step back if they want to have a bit more time on the side and let the team run the show. So essentially, I'm trying to see where I can create the most value for these agents. We're going to be working with agents that have got businesses already up and running so we can just tweak it and hopefully double or triple their business in the near future.

Alright, so if that's the goal, you obviously seem like a person that's really driven to have processes and systems in place. You follow the system, that process that's built, along with being coachable, and you'll most likely succeed. Obviously, you're taking someone that has a basic level of foundational talent and you're upskilling with the system or the processes that Limitless would have for them. So, I guess one thing that I want to ask you across all the firms and across all the agents, what would be the standard of Limitless Real Estate moving forward? What would it be that you would want to see in every agent in your firm?

The main standard that I want to see in agents is self-development, because that's one of the fundamentals that's increased my business so much. All my sales—selling 175, writing over $4 million commission in three years—it all came from self-development and practice and training myself to do better and better every day. I see a lot of agents try and freestyle. They walk in, think they can do a listing presentation, think they can cold call, but they never practice their skills. I've tried to focus at least 30 to 60 minutes every day, practising, watching videos, rehearsing, recording myself. I used to have social anxiety, I was afraid to record myself, afraid to do public speaking. I did two years of Toastmasters public speaking in front of a group of 20 people. It was terrifying, and I went again and again, and now I've done speeches in front of 500 people, like a 20-minute speech, and I feel this boost of energy and enthusiasm. But I've done the reps—I've done 200 reps, and now I've watched myself on video, rehearsed, practised, and then learned again and again. So the system that I want to push onto other agents is how do they implement self-development into their business every day. How do they get better at calling? Better at prospecting? Because this is not rocket science. We are selling property, but if you want to sell a hundred homes in a year, if you want to sell 15 a year, it's a different skill, a different game. You need to get better than other people. That's all we're trying to do—we're trying to beat them, so let's get better with the skills rather than just brute force.

That is awesome, man. I guess the key question that perhaps you've thought about already, but we'll put it into the limelight. So what keeps you aggressively motivated in such a highly competitive sales environment, being South Auckland's real estate market? What is the secret core? You've said that you've mastered the skillset of where perhaps there was a weakness and you've put in the reps—we agree with you. The reps need to be put in—maybe a thousand for some people, 200 for others, until they sort of see the light. So where's your drive coming from to keep going aggressively?

With myself, I've always been quite a competitive person, so I've always tried to win at competitions, win at sports. I actually went down quite a bad pathway when I was 18 to 20. I went to a lot of festivals, substances, went down a really bad pathway, and it was really good because I went down such a dark pathway that my life needed to flip. By flipping, you start to realise you need to get your life in order. That's when I started on the self-development journey of trying to get over social anxiety, speak, do public speaking, and just get over all of those nerves. Once I found I had the problem of this nervousness and not getting out there, then I needed to try and fix it. So I've always gone on the self-development journey to get better, and also, the reason that I wanted to do this is because of experience.

We can either live a life of just average goals and average things. Then I read Grant Cardone's book, The 10X Rule, and he's just like, 10X your goals. I was originally thinking I want to earn a hundred thousand dollars per year, as you do, and then he says, 10X. I'm like, all right, I want to do a million. Then I read the book again. He says, 10X. I'm like, I'm going to do 10 million. If I look at money, I only spend maybe 13% of my income on myself right now, the rest goes back into the business.

I wrote $1.9 million, 13% saved, and basically I'm just looking at how do I squeeze the most amount of experience and fun out of life? When you get a lot of money and assets, then you can do a lot of good and create value. If you want to create a massive organisation and create a movement, you need funds, capital, influence to do that.

So I think in the long term, once—let's say you achieve a billion dollars—money's quite worthless. It becomes worthless, where time becomes extremely expensive.

A hundred percent. And what do those people do to get value? Well, they start to create this company and organisation that's created a movement. You look at Mark Zuckerberg—he could have stopped working 10 or 20 years ago, but he's like, what else would I do? I want to just keep building this company.

Well, purpose is a big thing, right? And I can tell that you've got purpose. There are people that speak, that are clients, that are very purpose-driven, whether it's in business or even in their career, or just, you know, they're doing things where the time is ticking, but they're not ticking their patience. So what I think from that, based on what you've said, is that it's become so natural to you. And look, you might get to a point where you've mastered real estate to the point you've fine-tuned, replicated it, trained a hundred agents, 200 agents that are making great GCI, and then you might find some other bigger problem that you want to solve. Because like you said, you've got the capital and funds to perhaps think for bigger purposes that are not yet crossed your mind, I guess.

Yeah, and also coming back to the name of my company, Limitless Real Estate. I like the name. We are held by limits in our own brain. If you want to achieve something in life, if you decide that you want to do it and focus, have intense desire—a burning desire, and that's from the Think and Grow Rich book—have a burning desire and take action and surround yourself with people that have achieved similar goals. You're going to eventually achieve that, you just have to believe it a hundred percent. So I try and look at sports people, people that have achieved great things. Let's just pick a crazy big goal and let's go for it. And if you fail, you're going to fall over and you get back up and try again. And you just keep going. And if you can't get up and you die, then you're dead anyway, because everyone's going to die. So just keep going.

Well, you're dying every minute, right?

That's it. Everyone's expiring, everyone's going to die, so may as well just go hard. Let's just do things. Be safe, try to live as long as you can, but let's maximise that experience. Let's squeeze the lemon and have a really good time.

Lawrence, you know first home buyers are active in the market. Property investors were a thing, and they were doing things until sort of 2023 kicked in, and the handbrake was pulled and interest rates went back up. Now you must deal with a ton of people that are either selling their existing property and upgrading to a new place because they would have bought pre-2020, there's capital gains there, haven't been cashed in, now they want a nicer place to live. So if you look back at the last 12 months in this dynamic market, you know, it's hard for agents as well, for anyone that's working in this market. Where do you see most of the transactions? Is it first home buyers? Is it do-uppers? What's sort of going through?

In terms of just the real estate stats, there's probably around 20 to 25% that could be first home buyers. There are investors, there are developers, second home buyers. The type of buyer fluctuates. As the interest rates drop a bit more, there are more first home buyers that come into the market, which is good. One point to raise is that if we look at all real estate agents, yes, the market has been lower than it was. I sold my first home when the market dropped a hundred K, so it dropped a hundred K, and it's the only market I've ever known. So my reference point is only this market, and I've achieved our goals within this market. A lot of people say, oh, it's a bad market, real estate agents are struggling. Look, if you're a good agent, you don't struggle in any market. You create the market, you reinvest in marketing, you boost things up. I mean, the first year I spent most of my money back in the business on marketing and training, building admin support. So, personal brand. I'd say looking at the market side, I think this is, right now, a very normal market. The amount of buyers coming through properties is normal. Auction rates are normal. Prices are flatlining, they've just been flat for two years. So I'd say it's quite a normal market. It's not dropping, and it's still up about 10%, 15% more than 2019. I'd say the confidence in the market is that people are looking to make that upsize because they see that they may as well do it now before the price goes up. And then the first home buyers, let's actually buy a property before the pricing does go up, because if it does go up about 20% next year, then you're priced out of the market. So it's actually a really good time to buy right now.

So, flipping the script now on vendors, right? Sellers, what are the seller expectations that you have to work with and perhaps knock down or realign the expectation from the ground up? Considering they have the mindset perhaps of a 2021 market, and obviously we're in 2025, what's the most common stuff that you reset for vendors wanting crazy prices?

Yeah, so with our reset time with vendors, we find that the best resetting conversation is happening at the appraisal. I've done about 600 appraisals in the past 12 months, and a lot of those are in person, and a lot of those are giving them honest conversation to say, this is the market, this is where it's going to stay. It could stay like this for another year or two. I'm not sure—my prediction expires tonight. Given that, and letting them know that, and letting them make the decision. If they want to take the risk in terms of where the range is, the range for them, great, let's move forward. But I always try to focus on the motivation. So I'm focusing on what is your motivation to make a move? Is it upsize, is it Australia, is it downsizing, has someone passed away that we need to help? Because if that motivation is very low in this market, it's an absolute waste of time to work with those people with low motivation, because the market's not increasing to anything. So if they say, "Well, if I get the right price," I just say, look, fantastic, let's keep in touch. I'll give you a call. This is the price today. If you're not interested, let's keep in touch until you're ready. And as an agent, you need to know when to walk away. So I've actually said no to probably 500 people in the past 12 months in person, but said yes to a hundred. So we're actually choosing who we want to work with rather than just, oh, we'll take anything and we get the listing. So resetting the expectation before we even get the listing signed. Once it's signed and we're working with the vendors, we want to get that maximum price for that vendor, want to squeeze every dollar out of the market and then let them make the decision. Because if it's the right, if it's the market, it's the market. If that's too little that they can't make the move, then at least we've tried, but hopefully we can get over the expectation and that's all. What we're here to do is deliver that market as quickly as possible, hopefully over what they expect, and get it all wrapped up so they can make that next move. It's about focusing on what's the next move, how we can solve that problem.

That's really good. That's the thing that we deal with all the time. If someone says, are property prices going up, you know, we can talk about interest rates to an extent. We can talk about rates dropping. We can talk about OCR, we can talk about stats that come out three months from GDP, unemployment, inflation. Now those change, we didn't know that, obviously GDP will drop by 0.9%, which is a massive drop. And the economy is doing wheelies in a muddy field at this point. And resetting any expectations when it comes to, "when are we ever going to have more equity in my property to be able to buy more investment?" It's a question that should be analysed periodically and the decision is perhaps on them rather than the market itself. So look, if the house is too small and you need a bigger house, your kid is seven years old and now going to a better school zone, your motivation's way higher than someone perhaps considering downsizing but is yet to think when the time might be. And I think with what you've said, it's quite early that you realise where someone's motivation is. Those that are driven will get what they want, if they're realistic with what is available, versus those that are not as driven will probably kick the can down the road a little while before they're driven enough to give you a call.

I mean, the question I ask all the time, I ask myself before we list the property is: Do they have to get sold? Can we help them? Because if they don't really have to, then I'm just going to say, this is where things are at. We need to make a decision. If you want to go on the market, this is where the market is, and if you want to go for it, if not, that's fine. We've got 10 more appraisals through the rest of the week and we've got lots of people to help.

Yeah, a hundred percent. Look, if interest rates drop by 1%—so say from right now, 4.49% as of the video that we're making, might be, the interest rates are way lower, but as of October, I think dropped a bit. OCR today, yeah. So the floating rates dropped, the banks factored in the drop, fixed rates probably a week. I mean, they're the banks that hold transaction data compared to perhaps the governor sitting on a seat measuring what needs to happen in the next two to three years. Despite that, let's say interest dropped to about 1%, right? The cost of a mortgage, $600k, first home buyer, and an average debt that they'll take is costing them $631, right? Let's say, and right now the rent is about $650, those are going to start having light bulb moments and need perhaps now go to your open homes on the weekend and see what's on stock.

Translating that into the current market is interesting because there's such an oversupply of new builds, right? And there's a lot available on Trade Me to rent, prices are also dropping. So if you see interest rates drop by 1%, do you think the oversupply would recover and property prices would then go from flatlining to perhaps increasing? What do you reckon?

I think it depends how much interest rates drop. I did a four-year honours degree in property, worked out modelling to see what's the effect on different factors in the marketplace. What is the interest rate? How much is inflation? We looked at the immigration inside and out, we worked out, we created our own house price forecast models. And no model is a hundred percent accurate. Everything, all have different flaws. And what we saw is that each factor would only play a 20% factor into the model. So if you look at just interest rates, it's very tough to determine where things are going. But if you get interest rates, go to like 0.25% and the OCR is 0.25, that's like extreme in terms of free money. So it's all about how big that decrease is. And then always, right now I'm looking at just demand and supply. There's so many people that are moving out of the country and not too many coming in. A lot of buildings, high supply in terms of new builds. So I'd say it's still tough to say in terms of that demand and supply. People look at OCR and all that, but I'd look at all the different rates and I'd just look at the past two years—it's been flat. I also look at 2000, I look at 2008. Those are when we had the more downturns in the market. And then in 2000, the market flatlined for like four years before it started to increase. And in 2008, it flatlined for another around about four years. So 2016, we flatlined for about three years before we had COVID up to 2019. So what I tell my vendors is, look, now with the market, on average, it flattens out for three to four years on average. So we've been flat for two years. If we just look at the history, there's a chance it might be a bit of a quieter market for the next one or two years, and that's totally fine, there's nothing wrong with a flat market. I guess in New Zealand we need to get away from this great pill that we've swallowed in recent years of property prices increasing at a dramatic rate, because that's not normal, right? Having a $50k capital growth month on month and months down the line, the property's gone up. That's very abnormal. It's probably not a good thing for everyone. There's a lot of property speculators. I'm sure you hear news, this and that. It's always good to, like you said, bring it back down to facts, the real truth, right? If people are leaving the country and are going to Australia and unemployment is record high, you're not going to have an uprising market. If interest rates drop by one or 2%, immigration plays a huge role. And with, I guess, we need a lot of skilled migrants and the national sort of, rolling that policy in, in terms of getting the right people to come in. You know, you want your structural engineers, or if there's a data centre that Amazon's starting in West Auckland, you want to have all the engineers coming to New Zealand, make it lucrative for them and that sort of thing. We're quite an interesting economy. I think we're not very similar to most other countries. Real estate is a massive part of our operation as a country.

With the elections being there next year in October and Labour coming in, do you think that would have some more of a difference to what the market would look like or do you reckon government one side, real estate is the other?

Oh, I'll have to get my crystal ball, mate.

Well, crystal balling is really hard here.

The crystal ball. People love crystal balling.

So an interesting thing that I tell the real estate agents that I work with is a lot of them do get quite focused on the market, the interest rates, immigration and all this. I just break it down to think, you want to look at your real estate business as a business. How many appointments are you doing every week with a potential vendor that you can help? That's all I boil it down to. You could actually delete all that information, just for more real estate agents, you don't need to remember that at all. Just, how many appointments are you doing, let's see the clients and help them. And then I'd say that the market information's really, it's valuable to talk overall when you talk to the client. You talk about the general trends, sure. Talk about the future that we generally predict, but then also the past on why maybe it is a good time to buy based on the current rates and everything like that.

You've got a listing, someone that's super keen, they meet the vendor's expectations, you've sort of dragged it out, got a great deal on both ends, let's say. Now the finance clause falls over. What's your immediate recovery move there, and the buyer says, "Hey look, finance has fallen, or we need an extension of seven or eight working days." Is that something that should be talked about five days before the finance is due, or do you reckon the last minute would be fine for them and yes, we'll extend it in this market?

I think communication's really important, and if we can deliver communication earlier to the vendors regarding finance conditions, if there's going to be an extension in the contracts, we really need to know that as soon as possible. Because if you let someone know on the last day, there's a high-pressure scenario that they need to make a decision. So the earlier we can deliver maybe uncomfortable news, the better. Someone can absorb it and they can sleep on it, they can think about it. I think it's quite good to let everyone know as soon as possible. And look, if it does fall over, then it is what it is. We just have to move on to the next buyers that are in the area and just work on them as quickly as possible and see if there's another property. Is it better priced or is there another property that just has less? If there's any problems with the property, just see why it fell over and how we can rectify that on the next one.

So Lawrence, obviously you've been doing this for a while, mate. How has the industry changed since you first joined versus right now where you're at this point of your career, starting Limitless Real Estate?

So in terms of the technology, speaking to all the other agents that have sold before I even joined in, they were all running around with a lot of paper, and with having a lot of technology now, I just run everything off iPhone, iPad, and a Mac, and I've actually got like 10 other different Mac devices. All of our technology enables us to do quicker transactions, so we can sign contracts and get properties under contract almost immediately. I was literally, two hours ago, just in my car, on my phone, just dated a contract and sold a property. That technology enables speed. So the thing that I'm going to maybe foresee in the next few, could be months or years, is that administration's going to get more taken over by, whether it be AI or AI assistants that are going to do all the administration work, it's just going to leave the bare bones of what is the sale process. What is it? It's speaking to the client, having a connection, helping them get their property sold and meeting the buyers. So I think we're in quite an interesting shift point in the time in real estate, or the whole world. That administration, like a full-time administration person might cost you $80k or $100k to hire, if you can get an AI bot to link into WhatsApp, your emails and do everything in the background, then suddenly you've just saved that money. I think that's going to be the pivotal point in the industry, which is why I've built Limitless Real Estate as a digital agent-based agency. So we'll have one office and we're going to start to hire agents across New Zealand, throughout the whole country. Quite similar to Aristo, where we'll still have stronger fees, where we can charge better fees and also invest more into marketing. But that digital model is, real estate agents don't need an office to go to. They can actually run mobile, right? They're just mobile. Do the contract, you go to the, your office is the client's home. So most agents realise that—they just go to the home, sign the contract, can run an onsite auction, and that's basically your office. So I think that's going to be the next pivotal point in the industry. It's whoever can adopt this type of admin support that's going to, I think, get ahead of the curve.

A hundred percent. We're in the same boat, mate, like we work in a way, we're parallel to you, right? Where there's no intersectional point, but it's side by side. And for us, especially in the AI space, when we have a client meeting or anything, the way it takes notes to, you know, how it was doing in 2018 versus where it's at now is crazy. Then secondly, the amount of information it can sort of work with. What I think starts being the biggest thing for us as a business for Blueprint is making sure the service, speed is unmatched. You know, your personal brand, your personal service to the client, regardless of who you're working with, so good. And your speed, so fast, it's almost flawless. It's art in the sense of the way that, you know, you're working with the client. I think you're right with the AI stuff that's going to come in and administration being an easy thing now. The salesperson had it tied against their foot really when they were doing as much as possible. It's going to allow them to scale more. And I really like the fact that, you know, you don't believe in the whole coming into the office for an agent. You said, client's home is their office.

And then also, I'd say training. So, once an agent, if you can get AI to record your calls, record your meetings, then you've suddenly got a personal assistant that's training you on how to become a better salesperson. So just giving you direct feedback and delivering all that to you after your next meeting, so people will be able to train up even faster, which is quite cool to see.

That is awesome. True or false, Lawrence.

Yep.

Let's see how we go with this. Auctions dead in 2025. True or false?

I'd say it's false. And the reason is that auctions work really well in a bad market, they work really well in a good market, and it is about the type of property. So if it's a very tricky type of property that needs a lot of building consent work or research done to it, I'd say it probably might look at a different type of method, whether it be a tender or negotiation, but auctions right now, 76% sold within a 90-day period is our stats, and getting on average about 22 to 23 days to get sold. So it is a superior method and we are getting around 4.5 buyers on average right now per auction. And that's just that competition. It's transparent and yeah, they're definitely working really well.

First home buyers, we deal with plenty of them that can't attend auctions, right? So the whole story around limited deposit, 90% leverage against the property, essentially wanting to get their foot in the door as soon as possible. Obviously, attending auctions for them is possible. We do get the clients take a risk, we know it's possible for them to do so, but most of the people would prefer tender, deadline, negotiation, that sort of stuff. Any tips for them in how they should structure an offer that you think would be somewhat entertained to your vendors that are looking to sell?

In terms of an auction?

Oh, nothing related to auction. So just if they're tender, or negotiation. What do you reckon would be a clean offer from a first home buyer who's limited in their ability to get things done fast?

Yeah, so with first home buyers, I'd recommend, let's see, try to get the biggest deposit you can, try to decrease the days on market as quick as, as short as possible. In terms of your finance, try to get as many ducks in a row as possible. The cleanest deal is cash. Like if it's just cash, deposit paid straight away, that is a very clean deal. If you can't do that, make it as short as possible. And if you really do like the property, sometimes you just need to bump the price a bit more. You need to think, okay, well if I lose it for $1,000, is it worth it to push it up a bit more? Am I going to regret it if I miss out on this property? So it's just, get decided on what price you're going to work at, decrease those days as much as possible. And if you need to extend it a bit more, you can do that. That's a worst case. So know that there's a bit of flexibility there. I'd say have a conversation with the real estate agent, say, what does this owner really want with a sale? Do they want a short settlement? Do they want more deposit? Do they want a long settlement? What terms and conditions can I provide? Have they got rubbish on the property? Can I pay for all the rubbish to get removed off the site?

And you'd entertain that, right? Like if a buyer said to you, he's driven, he's pushed as much as possible and he's asking you anything that would help the vendor, you'd entertain that, right?

100%. And that's going to give the vendor, the vendor will see, oh, I don't have to clean up the property, I don't have to do this, don't have to do that, the buyer's going to take on this themselves. The vendor's going to realise, okay, this is more favourable. We've seen contracts where the vendor would select a lower price because the purchaser is going to do all the rubbish removal and just take the property as is.

That's awesome. So try and be creative and see what do they really, really want.

That's true and false. Cash buyers always beat pre-approved buyers.

So it's false. Cash buyers, they can beat pre-approved buyers, but typically cash sometimes would go a bit lower. So the pre-approved buyer, if they go a bit higher, and they do have conditions, the vendors are going to view them potentially as favourable. And they might decide, let's give them a few days to work out the finance. So it's really dependent on, those are the two factors you're going to play with—the price, you're going to play with the terms. So you can either buy it on their price with your terms or your terms, their price, and just try to see what's going to work best.

Nice. Awesome. Other methods of sale such as tender or deadline beat auctions when it comes to the South Auckland market. True or false?

I'd say it's false depending on the type. So auctions work really well for most properties. In terms of tender or deadlines, we had a property in Otahuhu that we are negotiating with around the $5 million mark, and that one, it wouldn't work with auction just because it has lots of problems with the road transport agency that's going to be buying out part of the land. So a lot of developers need to spend probably at least 20 to 30 days working through those consents and information to decide if the price is going to stack up to buy this property. So auction, it's a bit tough to put pressure on them and get the maximum price. So rather, giving them more time with that, so having that flexibility with the tricky, curly deals.

Nice. Otahuhu & Point England have a higher chance of capital growth value compared to Papatoetoe and Māngere. True or false?

I'd say that might be higher. Yep, I'd say it's true.

Yeah. I don't know why, man. I just think Otahuhu is the most under—well, I'm being a bit sidelined, but if you look at the map of Auckland, Otahuhu is pretty well placed compared to what you get, you know, in terms of price.

So compared to Papatoetoe, land of the developers. Big sections sell for good prices there. But yeah, that's my 2 cents on it. But obviously you're the man who sells real estate.

Yeah, so it comes down to how close you are to the city. So properties that are closer to the city could have a bit more energy, more demand there. Papatoetoe, a lot of the Indian community like to gravitate towards there. It's almost like little India. There's so many people going towards there and a lot of development. So I'd say, and if we just look at all the averages over all the suburbs, they're all within a percent of increase per year, of pricing. So I wouldn't say there's, I wouldn't choose a suburb based on its percentage growth rate if you're just going to be living there. It's just more, work on what's closer in terms of work and driving. If you drive 30 minutes to work, your chance, your happiness decreases like 10 or 15% because you're spending like an hour or two every day on the road. So I always advise people, let's try and decrease that time to drive because less drive time, more time with the family, you could work more and earn more money. If you're going to just sit in the car, you're not earning anything. You're just looking at the car in front of you.

You know what? That actually made the biggest move for me because I was living in the North Shore and me and my wife were living there for a while and I wouldn't think of the commute much to central Auckland from, you know, Bayview or Albany Highway where we were before. And now that I look at it, I'm like down the road now, moved to Sandringham and way more closer. 10 minutes to work and back. I'm so much more happier. Go for a run in the morning, get something achieved before even the day starts—a big thing for me.

Yeah, so I completely agree with you on that.

Next one, true or false: City Rail Link is going to help property prices go up.

False. I've got no opinion there. At the end of the day, I'll just look at the averages.

Yeah. Or just sell more property.

Train's not going to help your house prices, guys.

It'll be beneficial to people right by the station.

Yeah, no, so a hundred percent. But then again, do people really want to live next to a train station?

Some might. Some want to, people that don't have a car.

Yeah, exactly. Most in Auckland have a car, so a hundred percent. I think driving is more preferred in Auckland than public transport for most people.

Yeah, but we should be having a great public transport system, however, that doesn't correlate to your property's price.

Yeah.

Okay, last one. Is it possible to get 9% gross yields in South Auckland?

It's very rare, but there's been some deals at nine, 10%, but you probably have to put an offer for at least a hundred or 200 properties to, or get the right connection to get that property which is multi-income. You're looking at maybe some add value. You buy a property that's really low condition, you put another house on it, you divide up some bedrooms. So it's all about how much value you can add to the property rather than just picking up a 9% deal.

Yeah. What's the highest gross yield property you've ever seen that's hit the market and sold in the last sort of two, three years in your time?

I've seen boarding houses that would get like 15 to 20%. They do have a lot of other costs. So that would be gross margin and you'd have a lot of management fee. You have an onsite manager, that sort of thing. So I bought a house in Gisborne at the end of last year.

No, we heard about this. We are big fans of Gisborne because there's a big rental demand there, right?

Yeah.

Most people sleep on small towns and, you know, a two-bedroom townhouse might be somewhat of an investment, you should really do the numbers on if you're buying that in Auckland versus Gisborne.

Yeah. Where it's 70% off the Auckland price and the rent is more or less very close to what you'd get in Auckland.

Very similar. I paid $350k for the property, reno-ed it for $120k. Now it's worth $600k.

That would've been a good experience, man.

Well, I didn't do anything. I just got the tradie and he did the whole renovation. Didn't pick up a paint brush.

Nice.

I've only been to the property once, I bought at auction, then went, flew to look at it, and it's all rents managed and now rented at $775 a week.

Is that the plan, to hold it long term?

Just to hold it long term. So I've refinanced, so I've pulled the money out.

Get some equity.

Get some equity, and I'm just putting it into the business right now.

Nice man.

Yeah. There you go. People think they need to go get a business loan. How about you get a nice property for a decent price, add some value, refinance, take the equity out for your venture. Now you're getting business finance, might be north of 10% unsecured versus something that might be in the fives or sixes or even lower.

So great call on that.

Thanks for joining us, Lawrence. Everyone, if you're looking for a sharp shooter, an agent that crushes it in South Auckland or even beyond, someone that is building a journey and a legacy, you should definitely reach out to Lawrence. Obviously, if you've enjoyed this podcast or if you have any feedback, we'd love to hear from you. Please subscribe. We want to hear anything you've got to say, and we'll see you next time.

A lot of rate drop announcements hot off the press as we speak.

OCR, OCR

Firstly was that the BNZ dropped their one year fixed dramatically to 4.49% my opinion looking at the OCR now I'm just gonna say, I think it's gonna be a 0.5% cut. I think it's good to say the date we're putting our credibility on the line here

There's gotta be a window opportunity there right?if you're waiting your window's closing

they've got a net worth of $5 million. They've got household income of $400K. And the question that they're come to me with is, do we need insurance?

 

Rory, Daniel, my brother in arms. Welcome back mate. Ah, mate. Likewise. It's been such a crazy, couple of months, you know, and I think this podcast, we really just want to educate our clients, business partners, referral partners on what's going on. We do, what we're seeing, on the front line. In the trenches and get everyone up to speed because there's some crazy stuff happening with the interest rates.

I'm sure you've been hearing the guys in the office or the advisors talking to clients about these recent drops.

Oh, a lot of rate drop announcements hot off the press as we speak. Yeah. so we're gonna touch on that, aye, OCR, OCR.

This episode is gonna be a bit of an educational one, so an update on the mortgage side, and then we're gonna deep dive into some, wealth stuff for our clients and some case studies we've done recently, aye?

Yeah, absolutely. And we're gonna be making some predictions, but by the time this podcast goes to air, the results will be in, so just a date stamp, but it's the 2nd of October. And it's 8:00 AM so we are here bright and early. Yeah.

I think it's good to say the date, right? Because we're putting our credibility on the line here by

thinking about the OCR when we know our, before, it's the announcement on the October the eighth or ninth. Yeah. Or next week. Correct. we're putting it all in the line here. Our reputation, you know, if we're wrong, our businesses. The FMA will shut us down. Yeah, exactly. No, no. We've got some educated, we're gonna make some educated assumptions, but we do have some hard facts, so we'll start with that.

Cool. Firstly was that the BNZ dropped their one year fixed dramatically to 4.49% last week. Just dropped it. And, it was a bit of a shock really, to have it quite significantly. But before the OCR review, yeah, and it was a significant drop. So the one year drop from 4.72 to 4.49, there was some murmur in the industry, you know, is BNZ gonna lead for a couple weeks, what the rest of the bank's gonna do.

And then pretty much two days later, all the banks drop their rates to match.

Some will also bring it down the sixth month as well. So it was super, super exciting time. Obviously for us. The phones get really busy whenever that happens, especially for our clients have got pending settlements, but those who've got refixes coming up as well because everyone wants to know, you know, if they want, if it's time to make the right decision, if this is gonna be the end of the drops, if we should float for a bit longer for the actual OCR review.

yeah, and so my opinion looking at the OCR now before we jump back into interest rates, is, I'm just gonna say, I think it's gonna be a 0.5% cut.

Yeah. Right. So they are pretty hefty.

I've, I've put my, my line in the sand. When,

when was the last time we had a 0.5?

must be three, three or four months ago.

It's, could have been consistently 0.25%. Yeah. Yeah. Okay. But the reason for my, obviously this significant drop in the one year is a massive clue because that tends to match. The margin that's passed on with the banks, with other 0.5 cuts that have happened the last two years. Yeah, so that's where my big, my biggest clue.

You know, if I put my detective hat on,

the banks are confident, you know, you don't go dropping in rates if, if you're not preempting an OCR.

Okay. Yeah, I think so. And previously we've had a 0.15 or 0.1 drop for the one year fixed for a 0.25% OCR Cut. Yeah. As I've been tracking it coming down so,

that's a big clue for us that it's gonna be significant. And the other clue is our GDP data, which came out two weeks ago, they were forecasting a 0.4% negative growth for our quarterly results. And it actually was 0.9%.

Yeah, yeah, yeah, yeah. It was bad. Aye. And, interesting thing about the GDP results is, so they reported that in September last month Yeah.

For the June quarter. So it's lagging. Yeah. Yeah. So. Quarter three's already been gone. Yeah. Which will come out sort of later on in the year December. Exactly. if

that's bad

as

well.

That's right. And there's nothing that we can, that can be done now. Yeah. Because we're in QQ four.

Yeah, exactly. I mean, you'd assume the Reserve Bank would have those, those figures coming in live or a bit more advanced than the, that we get.

Sure. So maybe if those are bad too, they've got even more reason to push for a bigger cut. Internationally, markets are gearing down for cuts as well. Yeah. You know, there was a hold in Australia, but the Fed potentially messaging a cut as well. So taking those things into account, I really think, yeah, we are probably looking at least at, at, you know, obviously 0.25 could potentially be on the cards, but I I would mirror say a 0.5.

Cut. Yeah. Yeah. Which is super exciting for mortgage holders. Okay. It's also exciting for, well, not so exciting for first home buyers because the biggest correlation with property prices increasing is cost of borrowing, right? It's historically proven over time. If you look at all the rate movements over time, as interest rates drop.

Significantly. Like where are we getting to now? Close to the 4% for one year fix, which is kind of where it's heading. you're, you're gonna be paying more for real estate, you know?

Yep. There's gotta be a window opportunity there, right? Yeah. So if there's people that are like almost ready say to buy.

Yeah. Or, or they are ready. Yeah. we're at a time now where interest rates are really appealing. Yeah. And the property prices haven't shifted yet, right?

Exactly. Yeah. I don't wanna say the window's been and gone. I don't wanna say that, but I do wanna say that it's most likely kind of closing. because as we've seen these, these obviously good properties, the, the good thing to note about this whole period of higher interest rates is that good properties are still selling, you know?

Mm. They're selling and they've got multiple people. Even at rates of 7% for one year fix. Great properties are still selling. Right. You know, so, what happens when rates get lower is those properties that are more, maybe not, you know, less desirable, maybe, you know, run of the mill. don't have any, you know, significant features that make them stand out and make them really unique pieces of real estate.

Those ones start picking up in popularity too, and you find yourself competing with more buyers for those. So, yeah, I mean, get, it's important for first home buyers to get a understanding of, you know, if you're waiting your window's closing, right? If you're one of these people that are saying, I really just wanna wait for the market, it's pretty clear that.

At least, you know, close to that point. Yeah, yeah, that's right. Yeah. but at the same time, we never recommend anyone to wait based on the market movements, you know?

but it's probably, it's a good time right now, right? Yeah, yeah, yeah, yeah. If you go back 2021, interest rates were super low. House prices were really high.

And then, then we've seen that, you know, prices come down, interest rates rise and yeah. But now we've seen rates steadily coming down. Yeah. It's a great time to buy.

Yeah, a hundred percent agreed. A hundred to week. Yeah. If we just look at the impact of this recent cut, so you know, looking at the 800K mortgage for that 4.72% rate, that was a one year fixed for about four weeks.

Now I've dropped down to 4.49%. It's about 150 bucks a month and it in savings on interest, which is significant. You know, that's a couple of subscriptions. That's just Sky Sports. That's your

life insurance

for mom and dad. Yeah. That's your life insurance? Yeah. Nice one. Yeah. You know, so it's 1800 bucks a year in savings.

if you keep your payments the same and put that onto your mortgage, that's gonna compound, that's gonna save, you know. Two, two to three years on your loan term. You know, that's massive. Which is, which is huge. A lot of activity that we're seeing, we're talking to many our existing clients that are doing their refixes, maybe they got a portion still fixed on the higher rate and some cases clients are choosing to break and refix, obviously there's a break cost, which is dependent based on the wholesale rates at the time of you taking that loan.

It's not necessarily equal to your interest savings, which is quite interesting. Yeah, it can be higher, it can be lower. So it's unique to every customer. But worth having a chat and just checking the break costs and seeing if it's worth breaking and refixing or breaking and refinancing if your existing bank can't give you a cash back to cover those costs.

Yep. So we, that's keeping us pretty busy right now is people just restructuring. Some people are taking the savings and like I always talk about. Keeping their repayments the same and paying more principle. But some people are just using it to improve their cash flow, you know, which in these pretty tough challenging times is understandable.

Yeah, yeah. And that's ultimately what the reserve bank wants, isn't it? Is improve cash flow and Yeah. More get some money into your economy.

Yeah. No, a hundred percent. We've gotta get some dollars running. Competitions between banks were fond of. They're pretty, pretty, you know, tight on interest rates.

You're not really finding discrepancies between banks, you know? Yeah. They're all pretty much doing similar sharp rates and cashback incentives as well. So it's, it's good for us because we can just place clients at the most suitable banks that have the most suitable products, rather than having to

fight for interest rates. Yeah. Clients get better customer outcomes, which is really good. Now the, the price parity is pretty, pretty solid. which has been great. And I think just another one that I've always thought just colloquially having chats to clients who are first term buyers, that I think is a big driver of the market.

It's people comparing the cost of renting versus their mortgage. Yeah. Now this is a conversation I'm actually like always having with first home buyers. And what I mean by that is at the final stages, once they've secured the property, we're going through our loan structure recommendation meeting, and we are just comparing, you know, what their cost is gonna be, show them what, what their new loan cost is gonna be per fortnight or per week or per month.

They'll always compare it to their existing rent. Yeah. You know, naturally. Yeah. Naturally. And they'll say, oh, that's less than what we're paying now. Or It's 200 bucks more than what we're paying now. We can rent, you know? Yeah, yeah, yeah. So keeping that in mind. Having met with the first home buyer population for the last 10 years, yeah.

That is a big driver in purchasing confidence. You know, for first home buyers, is my costs gonna be comparable to my rent? Yeah, sure. So if we look at a $800K mortgage now, 4.49%, you're looking at a repayment around four grand a month, and then, if you, you're looking at renting a three to four bedroom property for $950 a week, then you're looking at $3,900 a month, right?

So now we're at this point, neck and neck, obviously we're gonna add on the extras. Yeah. Insurance and, and cost of being a homeowner. So add an extra 500 bucks to that. You know, but for an extra hundred bucks a month or a hundred bucks a week, 150 bucks a week, you're a homeowner. You're building equity in your position.

Yeah. You know, it's achievable, isn't it?

Yeah. So that's, that's the conversation I have with a lot of, first home buyers when they make that comparison. As simple as it is, I think that's gonna see us bringing a lot of first home buyers back to the market, in the next 12 months.

I always like to ask your thoughts, mate, because we. Sit here all the time. You listen to mortgage brokers talk every day with their customers. Yeah. Like what are you feeling? What's the market sentiment? The clients that you are talking to? Are things getting more positive out there?

Like what do you thinking?

Well, obviously interest rates coming down as, as positive news. Yeah. For everybody that's, that owns a home. Yeah. Or is looking to buy, it's interesting that it's off the back of, retracting economy. That's, and, you know, unemployment in some areas is difficult.

I was talking to an Uber driver yesterday actually, and he's a software developer. You would chat up to Uber driver

look, you know. Were you in the Uber? Or? I was in the Uber. Oh, yeah, yeah. He wasn't a client. Yeah, yeah, yeah. You know, and, and he's a software developer in New Zealand, and that was an interesting market where he, you know, he's two years experienced.

There's just no roles out there. Yeah. For that level, it's, it's all senior positions. Yeah. Yet he is saying there's no senior people available because they're gonna Australia. For better money. So we've seen that, you know, and you hear the government, well, particularly Labour, talking about how many Kiwis are moving to Australia.

So it's mixed news, I think. I think it's, it's great for a lot of people, for Kiwis that are staying here and that are, you know, buying property. It's good, you know, hopefully it's gonna, give people a little bit more freedom in terms of their disposable income and things like that. Yeah, so I like it.

I think it's good, but you know, it's like a bit of a double-edged sword ' cause of the reason why it's happening. Sure. Yeah.

I a hundred percent agree. Like and you mentioned those, those numbers about people shifting to Australia. I think we had our worst net migration last month of all time. Yeah.

People permanently migrating from New Zealand's, which is a real shame. ' cause I just think there's so much opportunity here or there. There is. If we can just get on a really good wicket, you know, and get some good momentum going. Yeah. I think it just comes down to what you said, like, businesses need confidence to employ people.

So we need to bring the interest rates down. We need to stimulate the economy. We need to get things moving. Yeah. So that these businesses have the confidence to employ people. Sure.

We're in a difficult spot, New Zealand a little bit because we do have Big Brother over the ditch. Yeah.

Tantalizing people.

Tantalizing people. Yeah. and again to this, this Uber driver, he said, you know, the Australian recruiters are more than happy to pluck people outta New Zealand. Yeah. They love it. Such a similar culture and good talent, similar workplaces, good talent. Yeah. Language, you know, we're a great talent pool for Australia.

Yeah. So they really got their hands in our pockets. Yeah. So to speak, when it comes to talent. So, it's a challenge for New Zealand to stimulate growth in the economy and for the government to do so with projects and such. And yeah, get jobs on the map here and good paying jobs and

Yeah, no, for sure.

I don't have the solution.

They've got their work cut out for them aye. Yeah, you want to do, you wanna stimulate it, but you're also so mindful of how can we still keep the economy effective and efficient and not let us get to what things got in COVID. You know, we had these ridiculously low interest rates. Government was

throwing cash everywhere and then you just get this lazy economy that's falsely propped up.

Yeah.

Then you know when the rates go up, when things change and you start to realize we're actually not being efficient. Rates have to come up, you know, to stop inflation. Yeah. Yeah. you just wanna keep things so tight and I mean, at the end of the day.

We don't need a big economy. We just need an effective and efficient one, you know?

Sure. There you go. Yeah. Yep. Absolutely.

So that's enough of my rant, mate. But there we've put our line in the sand, yeah, 0.5% cut on the OCR, which we're super excited. for our existing clients, like honestly, it's such a relief just in the fixed rate reviews, giving some good news, you know?

Yeah, yeah. It's coming down 'cause it's been two years of, Hey mate, your repayments going up. You've got less money to feed your kids now. Yeah, yeah, yeah. That's a, so now we're back.

Yeah. Back baby. So it's, it's a's really, the downward trend is real. Yeah. So we're pretty confident we can see a drop, coming up next week.

What about in sort of six weeks time, do you think this continues downward if you wanna make a long range call, or is that, not enough information for you to speculate that far out?

Look, I think it does, I think it goes at least 0.25 again. Yeah. You know, fall forward because where we need to get to.

I just think that with those numbers in our face about net migration and, the negative GDP again. Hmm. So many negative quarters over the last five years. We're just gonna have to get a bit serious about stimulus, you know? Yeah. Um. So I think again, points probably 0.25 for the next one.

Alright. You heard it here first, ladies and gentlemen, I'm making all the, just I pulled that out of you aye, I'm being bold. Yeah. Oh, that's what I'm doing. So, hopefully that works out. But mate, I really wanna move into the next part of our chat because you've been working on some awesome numbers, which I really love, and it's like a big part of

our business that when you, I hear you having these conversations with people, I just get so excited. 'cause I feel like we're really nailing that holistic part of advice for people. Yeah. And what I mean by that is, okay, mortgage cut out works cut out for us, get the best interest rates, give some advice on structure, give them a long-term plan, but then with the insurance and protecting their wealth and actually forecasting.

You want to end up the legacy, you wanna leave your family, that's where you come in. And I just love the idea of being able to put through a plan that's like no matter what happens, your legacy's almost locked in. You know what I mean? Yeah. So can you just give us a rundown of what we're gonna look at today?

Yeah. So we're gonna, hopefully people will stay tuned for this segment, as we dive into insurance.

Mate, what are you talking about

No, they will. You're

Mr. Insurance. People will Yeah, people will come. People will come just to hear this mate.

We're gonna put a little bit of a different spin on it.

'cause you know, oftentimes when we are talking about risk, it's protecting the downside. And especially in, you know, health where the risk is ill health and loss of life and loss of income. Yeah. you know, we look at a lot of scenarios where, either two people, you know, jointly on a loan, and

both those incomes are crucial for servicing not only the loan, but other essential household costs.

We look at scenarios where, what happens if one of those incomes was lost, and, and how do we cover it? Yeah. This example is sort of flipping it on its head. Yeah. Where we're gonna be, we're flipping the script, we're flipping it. So, and, and I think in any case you could do this. but we're talking about protecting the upside.

Yeah. So. We've got a example here where we've got professional couple, they're both in their forties. We've got a couple of young children and they're in a really good position. So

they're well healed. They're they,

yeah. Look, it's, we'd all love to be in this position. So they've got a $2.4 million home.

They've got no debt. Yeah. So they're not a mortgage client. Yeah. and they've got about $2.6 million in, in cash and investments. Yeah.

So now we're talking about, this is our sort of, you know, later stage family, you know, they've worked hard, they've invested really well. They've paid their debt down. And they're at a new plateau.

That's right. You know, they've, they've got a net worth of $5 million. Yeah. Yeah. they've got household income of $400K. And the question that they're come to me with is, do we need insurance? Yeah. And this is a common question and it's good to address it in kind of an extreme example where someone's got

such a good network. Net wealth. Yeah. 'cause 'cause we get this where people say, I've got a hundred thousand dollars in savings. Yeah. You know, I'm self-insuring. Yeah. but I also have a million dollars in debt. Yeah. You know? Yeah. the two scenarios we look at the most, premature death and loss of life.

So we've got the scenario. We will look at, we'll look at Dad. Yep. So he is bringing in 250K before tax.

Yep.

Pretty healthy income. And that's about $163,000 after tax. So I mentioned that they're 40 years old. We're gonna assume they're gonna retire at age 60. They wanna retire at age 60. They've got 20 year runway until retirement.

Yep. This family is like comprehensively insured. So they've got, you know, the whole family's got medical insurance, and they, they've got risk benefits as well. So, looking at dad's cover, he's got $910,000 of life insurance. Yep. $300,000 of permanent disability. Yep. $ 200,000 of trauma cover. And now, yeah, $98,000 of agreed value income protection.

Is that, that's before tax or that's his,

that's agreed value. Yeah. Yeah. So that's not tax, that's, you'll get that, that's received on claim. Yeah. So that's the risk benefits, and mom's got similar coverage. They spend 2.3% of gross household income. So that's a pretty good band. Like a normal band for people to be spending. 2.3%.

Yeah,

that's, come on. That's really not that much, like, that's less than your Kiwisaver.

It's not that much. I mean, their income is, you know, like gross income is 400K, so it's still, you know, almost $10,000. Per year. So it's not a insignificant expense. Yeah. but yeah, generally 1.5 to 3%. Yeah.

Of gross household income is what we'd suggest. Yeah. particularly for the first home buyer. Let's look at scenario number one. Dad gets a permanent illness. Yeah. He never returns to the corporate world again. He's, he's out. Income's gone. Okay. Yeah. So his after tax income's, 13,600. If we project that over 20 years, assuming that, his salary increased by 2% a year, that total loss of income over the next 20 years is $4 million.

That the family's just not gonna

earn. That's just gone. and that's just the earnings. Yeah. Like, we're not actually calculating what they do with their money, which in this case is obviously investor. Yeah. Yeah. so this, so the true loss would be much, much higher than that. Yeah. and so the position where they're at now.

You know, I said if this, if you lose your income, you're not gonna lose the roof over your head. Yeah. And you're probably not gonna have a bad life. No. They've got enough that they could keep going. but your legacy will be impacted. Your wealth at retirement will be significantly impacted if we lose this.

So they're losing $4 million. So looking at what they've got insurance wise, they have $500,000 in lump sum. So they don't actually need that money to cover any household costs. They've got medical insurance, so if they invested it at 8% over 20 years. That's $2.3 million roughly.

Yep. Just from taking that,

taking that immediate lump sum that gets paid straight into their account.

Oh, that's their, trauma and

their TPD combined. Yep. so, and they can just go put it alongside their other investments. Yep. 8%, that's $2.3 million. Now the income protections index as well. Yep. So that $98,000 a year increasing by 2% per year is about $2.4 million. In 20 years. Wow. So the total insurance value is $4.7 million.

So they lose four. We've ensured them to cover up $4.7 million.

Yeah, pretty good. I, that's incredible. So this is why I just really wanted to have this conversation today again, is like we talk about this idea of self insuring. And you're in a position where, okay, yes, something happens. You can sell off one property, access to one asset, and then you're debt free.

But then your legacy is you were debt free. You know what I mean? Yeah. Your legacy is that you, you left your family with, you know, one paid off house or that you probably had to sell in retirement to fund your healthcare in retirement. Yeah. You know, whereas something like this. This is an extreme example 'cause these people are already very wealthy.

Correct. We wanna break it down to, you know, a couple with a mortgage and just one house. If something happens. Even if they had a KiwiSaver, they could cash in, declare the debt, what's, what's next for you. You know, people would say, oh my, my house is my retirement plan. Well then, you're gonna have bills when you retire.

You know? Absolutely. The income is so crucial. Yeah, and it's, and it's also being able to. You could set, you can set this up for two to 3% of your income. you can set this up where you are, you know, you're bulletproof. You're bulletproof to leaving your legacy. Yeah. That you're working so hard for. You know what I mean?

If you talk about like what motivates people to go to work, people say, oh, it's their children, it's their family. It's their legacy. Yeah. Correct. Then like, if you're not doing this. You are not serious about it, to be honest.

It's people, I think just turned a blind eye to risk, it's, it's almost like considering it as just part of your portfolio if you like, if your house is exactly, yeah.

Yeah, yeah. And, and that's sort of like the example that we're using here. It's a small percentage. It's always a small percentage. Yeah. And we are always factor in affordability and we're constantly recalibrating client's policies. Yeah. Year in, year out. Yeah. So that they're affordable and it's, we get the mix that suits a client and fits the budget.

Yeah. That's the key point. A lot of people go, it's just like, it's a waste of money or I don't need it. but no one knows that. Yeah, a hundred percent. And I always, I say like, have you, are you driving a car? You know, so Yeah. Have you got it insured? It's like, why? Yeah. You're not insuring your income, but you're insuring your $15,000 car.

Yeah. Cancel that now and save the money. Yeah. Like that's your attitude. Yeah. Literally. Literally.

And then if you literally think about it like. This figure of what he's gonna earn for the rest of his, his biggest asset that he owns is not the house, it's not anything else. It's his ability to make an income, you know?

Absolutely. It's the 4 million bucks that's coming. So if he's can't insure the 4 million bucks, but he is ensuring like the house and the car, which is worth 2 million and the house, and the car's worth 50 grand. What's going on? We've got our priorities all messed up. Yeah. You know what I mean?

Inside that 4 million, obviously we got your 6% KiwiSaver contributions, yours and your employers. That's gonna compound into what, you know, 500,000, come on. Yeah, yeah, yeah, that's right. We're actually just not addressing the bigger issue here, which is, your forecasting something that's not guaranteed to you.

that's right. this example I sort of said the next 10 years are probably critical. Yeah. You know, you've got, the kids are young, they're like young, primary school age. Yeah. We, we talked about the income and the impact that would have on, you know, what their wealth looks like in 20 years time.

After 10 years, that shifts so much. Yeah. You know, so like that's 10 years of this income and this wealth growing. It may, they may be in a position where they're like, okay, I'm comfortable accepting this. Might not, I might not get the dream outcome. And so you could recalibrate at that point, and wind down some of the coverage potentially, but at the same time.

You might not as well.

Yeah, no, a hundred percent. I've got a client, really lovely couple, and, he's had lung cancer diagnosis five years ago and he's had full income, he had the works, full income protection cover, TBD. He's buying investment properties. Yeah, he's going through chemo and he's growing his wealth, you know, incredible.

which is, which is a testament to the situation that yes, horrible things happen to us. You know, life it's not guaranteed, but what we can do is actually set up our finance financial futures for the next generation that is guaranteed. Yeah. You know, we know the things that work, we know investing in the markets, we can guarantee you eight, 10%.

Like that's almost. Lock.

Yeah.

So let's get everything else on the same wavelength so you guys can just get a really secure outlook on the rest of your life, you know? Yeah. And what you're gonna hand over. So, no, this is just really exciting to me, and, you know, myself and Sarah on a very similar plan.

It's just makes me really excited about the future and being able to be a bit more fearless, you know, not like, you know what I mean? Like, not just like feeling. Feeling looked after, you know?

Yeah. Yeah, yeah. Nah, I love that, Dan. Yeah, a hundred percent. Let's finish this off quickly because it's sort of like same scenario where if one of them passed away or dad in this situation, again, it's total loss of income.

Yeah. So his income's gone forever. So the loss is the same $4 million. The insurance coverage we have for this example is $910,000 of life insurance. Yep. So mom's still got her income. If we took the $910,000 again, invested it at 8% over 20 years, the net result is $4.2 million. So that's not truly replacing, this income.

'cause again, we're not factoring in what they do with that income. Yeah. but It's still making a difference.

It's something very significant. Yeah. It's,

it is significant. Yeah. So this was a good case of, you know, clients who did not need net insurance per se. You know, the health insurance was never negotiated.

It was always important to them. Yeah. But it was like, do we need these other benefits? and this is the conversation we had and, and it was really like, I just put it to them and, and gave them the option, like I said, this is a small allocation of your household income. Yeah. This is what it looks like.

you don't need it, you're not gonna lose your house. Yeah. but they really got the protecting the upside. and, and the fact that it was a small percentage of their income. Yeah. That it was worth allocating.

Well, you can see that. I mean, you don't get this wealthy net worth of 5 million without

you know, keeping value in investing and that idea of constantly investing, you know, they wouldn't have got this far unless they valued that premise. Yeah. Of how important it's that even if something does horrible happens to them, they're not just gonna stop going, we're still gonna, you know?

Yeah, yeah.

That's right.

Yeah.

Oh, so excited. So there we have it. It's, we see it all the time. Aye, and this like, as we see this is an extreme case, but you know, people get themselves into good positions. Yeah. And to various degrees. And not everybody, like lot of our clients are insured and we don't push insurance down anybody's throats.

Yeah. We move on to the people that want to be protected a hundred percent. And I have conversations every week just about with people that are like, nah, yeah, I don't need this. Yeah. It's like, that's fine. That's all good. I'll explain it to them and then move on. Yeah. and it's okay, but, you know, people work hard to get themselves into a good position.

Yeah. It's worth protecting, you know?

Oh, just without a doubt, man. No, it's super, super important.

Everyone's just on their own journey, you know? Everyone's on their own. And that's what the best thing I think about is that, every insurance recommendation is completely different, you know?

Yeah. Absolutely. The same products, but different varying amounts and different plans. And so that's why I find it the most exciting about it, is like, it makes you ask yourself those tough questions. Like, what do I actually want? What does the future look like for me? You know? Yeah. and we answer them.

We answer them here at Blueprint, which is, which is so fun. a

hundred

percent. Mate, such a pleasure doing this poddy with you. This is, no, I think this is, you know, number 14 or something. Yeah. On the road to a hundred. Yeah. We'll keep it going.

Yeah. Yeah. That's great Dan. Always a pleasure mate. Thanks guys.

The next episode, a very special episode of The Blueprint Podcast. We've got Brandon Lipman on originally property investor, a financial adviser, a business entrepreneur, venture capitalist, and also a member of the, the family, not my family, but the blueprint family as well,

but also your family.

A hundred percent.

You guys go back quite far.

Known each other a very long time.

known him his whole life.

29 years in fact.

Yep. he's my closest mentor, and he's also an investor in Blueprint. So Blueprint would not be here. At the scale it is today without his help. but we're not here to talk about that.

We're here to educate our clients, our referral partners, and just the blueprint network with, some interesting thoughts because your journey's a bit of inspiration because we can track it. We'll go through your origin story in a second, but we can track it and identify all your learnings, your growths and, and how you came to your current investment strategy and what you're trying to build for your life.

So mate, thanks so much for coming on mate.

Mate Anytime. Pleasure to be here. It's always great to spend time with you guys, especially you. And, yeah, I'm really humbled to see the kind of business that you've built Oh, because obviously work together in business before. I'm sure we're gonna touch on that as well.

But it's, it's amazing to see you be able to put together something like this and it makes me very proud.

Oh, thanks mate. No, happy, happy to hear

that. Yeah,

We're pretty proud as well,

Yeah, we're proud mate. Yeah, we, Rory and I bloody flog ourselves and we work pretty hard, so Nah. And so the whole team as well, so no, we're, we're really happy to have you on.

Well mate, you, you're one of us, you've been there, done that in the financial services space and, and now you're an entrepreneur, so doing something quite different.

But take us back to when you were on the tools as a financial adviser, kind of what you created and, and, and Just fill us in on that part of your Yeah,

Right. Well, I guess the first, when I had a job, right. Which sounds very, it sounds wild. Yeah, it sounds really wild for me to like, think back to when I actually had a job, I was working at a bank. Can I say the banks? That was it? Not,

we won't have to bleep it out,

Yeah, yeah,

the,

No, you can

We'll edit it

bank, right?

So at

It was a dark blue.

of the blue banks. But, yeah, I started to really gravitate towards wanting to understand what business was like in general and working in the bank, I was very kind of enamored about working in a, in an environment where I could engage with different business owners to understand very much their origin stories, their business, how they run their companies, because I would find inspiration in that.

'cause I knew that that's where I wanted to head in the future.

and yeah, like working for the bank was great and I ran into. Very early, the semantics or office politics of mid-level management or, needing to do your time in certain roles before you can be promoted or move to a certain move to where you want to

we've all gone through,

everyone goes through, yeah, through that. Everyone does. And rightly or wrongly, I took to that with a very poor attitude, right? Like if you, it's, there's like an element of stubbornness right. That I think I just exuded probably as a person. Where I just ran straight into a brick wall and I thought to myself, if I was gonna face that, that there is just no point in living a life full of that and having other people responsible for my trajectory or whatever I wanted to do.

you didn't want to do your time.

That they wanted you to do your time and you your time was

was, it was very much up and along the way I was thinking about other things that I could do. Like I ran a small basketball league for a bit, which I think he played in. Yeah, right. So ran that for a little bit. had like a couple side hustles going on.

Interestingly it was one, one of my side hustles was actually flipping like concert tickets. So I don't know if I ever told you this. I like No, not scalping. It's flipping.

Right. Okay.

Right. Like, I just,

so interesting.

I never told you this because

I worked at Ticketmaster, mate. You didn't,

No. It was never, it was

you didn't wanna tell me because you thought I, I'd, I'd

conflict of interest

And then we're both in trouble. But this one, this one flip was really interesting. It was, a six60 ticket. And so yeah, it was when six60

was really on the up. Like, and so,

sort of 2015, 16.

And I really wanted to go to the show out at Mount Maunganui.

Myself, my girlfriend at the time, we were gonna plan a little trip and we were gonna go to see 'em at the Mount. It was gonna be fun and, and I looked at the tickets they had sold out already and they doubled in price. So I, I didn't want to pay like 300 and something bucks for the ticket. But the Villa Maria sale was still on.

Oh yes. So I bought some for Villa Maria, waited for it to sell out, and then I flipped it so that I could then have, I only have paid the $160 tickets over.

Instant equity

equity

genius. Genius.

equity, sort We, we were just trying to be as resourceful as possible. Right. And in that process, one person who actually messaged me to buy the tickets ended up becoming my future business partner.

Right. And that was Andrew.

of course. Right.

And

so in the conversation, he was interested in buying them and he had seen that we had had some mutual friends. 'cause we went to the same high school. I think he was five, six years older than me.

So Macleans College up the castle. Right.

Exactly.

Represent Right. And so, And that led to a conversation just saying, look, if you ever get tired of the bank, like, let me know. And I was tired months ago. Right. Like I was, I, I never really wanted to be there, but I played it cool and I wanted to learn more about it. And when I started to see the kind of company that they were building, I realized that I was gonna get to operate much closer to owners of a business.

Yes. So key decision makers, people who are young and our age, and just really inspiring to be around too. Some like genuine like entrepreneur geniuses as well. Yes. Right. Like if we think about that we will touch on it later. But that company like was full of great people

if you see where they're all at now. Totally. It's like, That, that environment, not, sorry to interrupt, but even down to the likes of Paul Minors, a very successful Productivity consultant and sort of CRM coach. Totally. And just the way he thinks about task management and how to run your day. Right.

Right.

You don't have to be self-employed to know that time management, whether you're good at it or not, is gonna make you or break you. Right,

exactly. And just, we were a highly effective team. Right. And we could name individual. It was really like the poor man's PayPal mafia. Right. Am I right?

So, who's Elon Musk? Are you Elon Musk?

No way. No way. Paul.

Probably

Chuck Paul, Elon Musk. Yeah, yeah,

we have, well, maybe one of the Krebs twins.

Oh, true. Maybe. Or both of them. So yeah, so I looked at the opportunity and I realized, well, before that I was really into, into property and think that that was gonna be the investment strategy, that strategy that I would carry through. But,

because you, you would purchase your first home, I, sorry, interrupt. I need to let the viewers know. This guy, we lived together, our parents, and you was saving for his first home deposit when he was 22. And he worked full-time during the day, and then he worked night shift at countdown night filling,

9:00 PM until 5:00

there you go.

so let's,

you go. It's not

ex any, delusions that this guy is just. he, he's not afraid of hard work and he would work fricking hard with the hardest guy working guys I know. and he worked his way up at Countdown Highland Park, and he was known for his scan rate.

He had incredibly quick scan rate. I think

fastest hands in the game, game that's

what they knew him as

and

Is that verified that you, you were one of the fastest

I

didn't win any awards, but like colloquially, like if you are in a

we'd about it.

at checkout was known.

yeah, yeah,

office chat.

People in a hurry would find you out.

out.

Yeah, exactly. Well that, that part was actually a really, I don't really see it as anything aggressively tough.

'cause we could, it was back before AirPods, so we had like the, the cabled the cable thing and like iPod touch. Right. And I found that you could download all of Hamish and Andy's podcasts. Oh. So I just went and locked all of them. We'd get like 10, 15 episodes a night, just shovel them in.

And I'd just be listening to Hamish and Andy the whole night.

Just like, you're not even working, eh. Yeah,

And I, well look. So yeah, that I was really,

you, and then you bought your first

property right

before this,

Before going to

the, the bank

Right. So yeah, if we, if we go down that rabbit hole, the, the environment to buy investment property back in like 2014, 2015 was completely And Exactly. Yeah. So I bought a place in Hamilton, 'cause Auckland was running hot, but you could buy with the 10% interest only mortgage, like a 10% down payment for an interest only mortgage for an investment property. That's insane. Right. And the rates were about high fours, maybe five when I had done it.

And everyone's concerned about how we had all this crazy property inflation.

What were we

people could buy 10%. And people could revalue their properties immediately. And access the equity at the main bank. Exactly.

And so the market was about to run hot and I obviously got in, I got at a great price bought place for $270,000, which now would've been worth, I think, upwards of six.

Quite easily. Had a bit bit of land on it. but what screwed me up was that shortly after buying the property, the LVR rules changed. And so we went from needing a 10% down payment to 40%. So all of a sudden, any equity that I could have drawn out, no matter what I did, built like a palace or anything on the property or whatever, I'd now be subject to much harsher like equity requirements to keep doing deals.

So again, I took, I took a look at that and thought, well, that's really, I know a lot of things are gonna be out of your control, but I felt like the, the rules and the fundamentals that I needed to play that game at the scale that I wanted to be able to play it was just completely changed overnight.

And so if I was gonna base like a, a strategy off of building wealth or building income off of a particular asset class, I'd need to be ready for that. Mm-hmm. And I just looked at it and I said, well, okay, that's just not for Right. So it's just, that wasn't the game that I was gonna play, but I had this brilliant idea because I was work working at, countdown at the time, that if I wanted to learn about money, I should just go where they keep the money.

Which is at the, at a bank

Stands to reason.

It's proximity

Perfect logic.

Exactly. And so, and then that's when I started to see that at the bank, they would treat different customers differently.

But you'd hear how different clients would be subject to different things like term deposit rates or interest rates, and that there were different segments of the bank that you could fit in. Mm. And it always seemed that business owners got towards these certain areas of the banks where the rules were a little more grayed out

than the black and whites that you have for, retail like retail

mum and dad investors.

and so we know that those rules were different and I understood that that's where we, I needed to start operating within. And so to me, it just made perfect sense that business was the way forward.

And so then fast forward after working at the bank, running into issues with mid-level management, it then made so much sense to leave the bank. And then go and work at this early stage company where we would be closer to the founders, closer to the decision makers, closer to people who are similar thinking and just surround myself with people who were always gonna go on and do great things.

Because that's what I was gonna be able to absorb. It's very different to working in a corporate environment. And you transcend, like, you transcend your knowledge and your comprehension of business so much quicker by being, by putting yourself in an environment like that.

Absolutely. So, we'll fast forward through that

adviser

journey, but the headlines are, you were very successful as an

adviser.

You ran a highly successful advice team exclusively doing mortgages, for many, many, New Zealand homeowners, and you mentored the three directors of blueprint through the process.

So you, you gave back.

got got you

into the game, didn't he? Did

a hundred percent. Pulled me into

it? Invited you in.

I was thinking of going to the bank as well. I've always followed in my brother's footsteps, but,

Did you get your work at Countdown?

No, no, no. I did, I worked at the tickets.

Yeah, that's right. Yeah,

Best job I ever had other than this. Best job I ever so much fun.

at, at the peak. At the peak of the, the, sorry to interrupt your flow there, but just, just at the peak of your, mortgage career, what sort of volumes of, of lending were you doing?

Hundred million, baby

baby Have to, have to hit the a hundred million figure at some point. Like I think that as an adviser you can make the argument that you want to be personable and that you want to like

give your clients like a very, like huggy feely kind of a service, which I think you can deliver at volume and at scale as well.

It's It's process. But at that point, when you do so much volume as a

mortgage advisor, think about it this way. If you sat next to someone who is doing 20 million in mortgages, or if you sat next to someone who's doing a hundred million in mortgages, you are gonna run into the real nuts and bolts of the actual mortgage process that are gonna make you a phenomenal adviser.

It'll take you five years to learn, to learn the lessons of a hundred million dollars worth of

Yeah, yeah,

right? And so you have to sit at volume. You just can't, 'cause you need to run into the problems. You need to run into the bottlenecks so that you can learn how to unwork all those constraints very quickly.

Otherwise, you end up in an environment where you're learning too slow, you don't know how to operate with quirky deals. You think about an environment like blueprint where you guys do so much lending as a group. That's where you're gonna be able to learn and, and actually teach people and, and also teach yourself more about mortgages, not just, for example, if I came into the mortgage industry today, I'd need to start, I know the basics, but the rules are different.

So it's, it's also about the modern lending rules and lending regulations as well. So you need volume. And we had another one of our, the owners as well, also doing a hundred million at that point too. And we were ranked, I think third and fourth in the country in terms of volume. so we were a proper factory.

Yes. Smashing we were,

It was

good times.

And my opinion is, volume leads to better customer outcomes because you refine the process each, each and every deal. You get a bit better, client gets a better experience, but you also learn all of the current potholes.

Mm-hmm. So you can avoid any issues that the clients are gonna run into during their lending, application process. But yeah, no, that was really good. And then it came to the point, obviously you're a partner of the business and you made the shift in your career where you moved away from financial adviser, service.

You are the product to, I'm going to be a true form entrepreneur and be a business owner. And We wanna talk about that, that thinking in a second. But for the, for the, the layman's myself, I just wanna explain a bit about what you do. So you find you you find really good and you negotiate and exit with the existing owner.

You take ownership and you improve that business. If we compare it to properties, our listeners would, be able to, you renovate, you do the kitchen, you do the bathroom, you, you improve the process, you tune up where things are, and you increase the, what we refer to in accounting or financials, EBITDA of the business and make it more profitable.

Yes. So, so you're building equity, like when you renovate a property, you build equity, you're building equity in a business. and that allows you to keep growing the same way you do with investment property. Have I explained that?

Yeah, totally, man. Like that's straightforward. Buy good businesses and aim to keep them for 30 years.

A hundred percent. We're building a portfolio. Totally. And so the principles for buying a good business is also starting at the point where you're not trying to buy a headache in the first place. Unless if you're really experienced in dealing with headaches. But I don't think anyone who starts out in business probably is in the first instance.

But yeah, if you find something that's good in its own right and doesn't need any changes, then anything that you add incrementally is just a bonus.

A hundred

What was, talk to me about that shift. 'cause you, you talked about your first investment property and, and looking at that asset class as a vehicle for wealth, and then the rules changed, Yeah. but then you were in this business, as you mentioned, was a juggernaut and you were doing very well.

property investment would've been like an easy, if you like the natural, if you like, pathway for you, but you, you switched, you'd change what happened.

So, yeah, a great question. I took a trip to the United States and just saw the scale of a

all comes back to the US

right?

Like,

yeah,

I remember the day that I needed to leave. It was actually a really funny day. I, I ordered lunch accidentally to a place that I was staying at. So I was in New York, right? I was about to leave, packed all my stuff up and, that was a side story. It was just a really funny scenario. I was packing up, ready to go and I ordered some food and, this part of the story actually just is not relevant whatsoever, but it's

funny Indulge yourself

I ordered food.

To an address that I stayed in, in Los Angeles accidentally.

Oh my God.

I just door dashed it. I was like, I sat there waiting. And I looked, I, I, I guess I could spin it in this way that I looked at the map of the United States and realized how big it truly was.

you think about catching a cab to go pick your food up.

Oh,

days away.

What the hell?

so far. I've never been hungry in my life. Both like internally and then also

Yeah, yeah, yeah.

I remember that entire, I remember seeing the Manhattan skyline on flight into New York when we came over from Los Angeles. And I was just enamored with the scale of opportunity that existed and it, it just dawned on me that on the other side of the world, quite literally, almost the opposite side of the world.

Mm-hmm.

we are here a crew of 5 million people. We are just ranked, I was about to be ranked in the top five of mortgages in the country. At 27, 28. I just thought to myself, shit, I've got more in the tank. Right. There's more like there's more. Like I, like do I want to try and chase down number one, do I want to chase do what?

Like what do I serve? Like I could do more of the same, which don't get me wrong. That's good. And there's so much merit to doing the same thing for 30 years and being the goat at one.

See that's what I'm into. And

that is your thing. That's, and you will be a hundred percent percent right.

So I looked at that and I thought, okay, bigger job. What is that? And I spent a bit of time thinking about it and at and yeah, in the mortgage role we talked about buying books or buying more advisery firms and growing through acquisition.

So buying a book refers to buying another adviser's client base.

Pretty much buying another advisery firm. Right. And because I had bought into this business, I'd already done a deal or a part of an acquisition in the first place. So a lot of like the perspective that I had on acquisition was already broken. Yep. Right. And. To me it made sense that that would be the next thing that I would do.

Do I want to come up and start something? When I saw like all the pain and effort that it would take to build something, I thought that, well, you can actually, instead, if you try buy a business, you're actually, rather than going through the pains of starting and learning all of these lessons, you truncate that and you end up starting at year 10, 20, 30.

So not, not as if you avoid lessons in general, but the whole process of gathering resources, defining a customer base, setting up systems and processes, that's all done and you start with so much wind in your sails Yes. That you can just, anything that you do from that point to improve it is exponentially more additive.

Yeah, a hundred percent. So, yeah, so I, I came back from America back to New Zealand and if you ever go from looking at the Manhattan skyline to the Auckland CBD it looks

Yeah,

know? Hang on a minute.

so like these ambitions of something greater than just like continuing to operate the factory line of mortgages were just It was inside of me.

And so, and and also there's another element as well, like when you're in business and partnership with other people, especially if you are like the younger. The younger of the group or, and also I was a minority shareholder as well. Naturally, part of my progression was to want to be able to try and do it on my own as of course.

Mm-hmm. To self justify the fact that I actually can too. So that was part of the, the process and I think like a lot of the emotional aspects to wanting to also make a move from like a group, like from from the group that we had built. And, so it just became a no-brainer. Like it was gotta move on.

We're gonna focus on buying businesses. I'm gonna build somewhat of a very small private investment company or a private equity firm, the smallest in the planet. Right.

Yeah,

And,

but quality.

quality, right. And quality of life as well. And, and just to try and match the inner ambitions that I had as well. So, yeah, that was, that was that it was a no brainer.

And then the day came and yeah, there were catalysts, like moments that led up to it. And then that was time to, to move on and start. On the new journey.

Yeah, absolutely.

That's awesome, man. Like that fire that got lit inside of you, just seeing the magnitude of the globe and what was possible. There was obviously then steps, so obviously this, this is like the mindset shift that's going on now.

You've like, you are kind of fizzed up about opportunities. So naturally, I assume that you now start opening your eyes a little bit back here in New Zealand. How did you, there's still a, you made the leap at some point,

right?

You

found an opportunity.

you

did some, you you did the deal.

Yeah, well I would say that that gap between actually leaving to then, doing the deal that that was actually the loneliest part of the journey, which was like horrifically hard to go through

I remember.

because you'd go through like a, this one all of a sudden, one day I was no longer in the office, no longer surrounded by the team that we had like built.

So I was not seeing, David wasn't seeing Madhav, wasn't seeing Dan, wasn't seeing my business partners, any of the office staff and like I'd hired a lot of these people and we'd really gone into battle and like fight it just, despite it just being mortgages. I think anecdotally in business when you build such a strong com comradery with a team, like your work bleeds into like your personal life and friendships.

Sure. So then to all of a sudden, just cut that and then be in like my flat in Upland Road like walking down to the Benson Road Deli to get a coffee and scratch my head and be like, okay, fuck, what are

of an identity crisis, eh? Like, where am I really?

Yeah. And so, and I didn't know where to start.

Mm.

and the first step that I started to take it was actually from a mentor of mine at the time.

He would send letters to business owners. And so what we in New Zealand actually have great access to is a database in the company's office to find where directors and shareholders live in the country and other parts of the world actually don't have that kind of access to that information. It's all

Yeah, well it makes sense, right? Like if you have a disgruntled customer or supplier or

or can come knocking on the door. Right? And so that's, the window for that is definitely gonna close 100%. sometime in the future, people will decide that it's no longer worthwhile to have director. Or they will really, they will set high standards for anyone who wants access to that information.

Right. And they should. So I started writing these letters to business owners and I had no clue what kind of business I wanted to buy in the first instance. And you might think that being in business. In a finance company, you would learn a lot about business, where you learn about the finance of business and

Mm.

that's actually one very segmented element of a company in the first place.

You know how to read a balance sheet and a profit and loss. Totally. And that's pretty much it.

Right? And that's it. That's where the line ends. So I had gone into it thinking that, okay, look, I think I know enough. And then realizing I actually know nothing. Well limited, right? I know how to hire the boys and do mortgages and sell a little bit.

That was good, right? That was, that was enough. And I had some kind of a track record, so I had no clue where I was gonna start looking for businesses for sale. so what I actually did was I got a copy of the yellow pages and I just started flicking through it, and I just started looking at different, I guess. Businesses that were in the Yellow Pages. Like you'd find like a listing for, or you'd find different categories of businesses and I just look through it. Because it would at least start tuning me into like deal fm. Mm-hmm. Right? Like I'd be able to start thinking about, oh, okay, well that's a business.

How does I, I, it would just sort of sparked this very curious mind inside of me as to, okay, well how does that business actually work? What are they literally doing to make money? So you can also, when you drive through industrial areas or you're driving through areas where there are like commercial buildings, you can look at these signs and actually just start to be in wonderment as to what these businesses are actually doing, how much money they might be making, if it's something that you think you can grow, if it's something that forms part of like a bigger acquisition opportunity.

And I was really trying to expose myself. As, as fast as possible to what the opportunities were. I was also looking on Trade Me every, and actually since then, I have looked at Trade Me since 2019, 2020. I've been on Trade Me every single day without fail at least once or twice a day, seeing what pops up for business listings And it's, it's, it's so habitual now.

Also Holden Commodore.

Aye, it's a not, not just businesses. Nah.

Man. And so I'm trying to, and so, and through doing that, you see all these really unique businesses that actually exist Pop up. And it just gets you thinking. And that's the first thing is being in proximity to what opportunities actually look like.

And that's, and that's a lot of what that journey was, was actually figuring out what is the thing that I'm gonna buy.

I think this really makes me feel when I reflect on myself and, and the differences between a pure entrepreneur. 'cause as a financial adviser

and business owner, yes, I'm an entrepreneur, but not really.

We're an agency for the bank and we provide high level It's cut and paste. obviously there's things, our business that we do that's unique and the level of advice, I think is high level, but it's cut and Whereas true entrepreneurship requires not only the guts, but also some creativity.

that's what I'm picking up is the creativity. To generate and create opportunities for yourself. We know what we need to do. We need to meet with as many as people as possible per week and, and, and sell them on our service and provide a high level And it's that right? But for this, it's across different industries.

Obviously we've got some target industries that would speak about that you've had great success in, but it's, it's looking at every opportunity with a unique lens and being creative and seeing how you can make a deal work while also not just trying to make anything work. Right. So that has been such a cool, cool journey to watch you go through.

And then, I mean, if we just reflect on those opportunities and those, those deals you created for yourself, how many have you purchased? Like how many businesses have you, is now under the,

what was one? What was one? I wanna go to one. We're emailing, well, handwriting letters actually to, company directors looking through yellow pages, driving around

And looking at businesses and just like,

The

cogs are turning and you, you eventually make a move. Like the first deal

Well, like, even before then, like in terms of like the driving around and seeking, there's like

doing drivebys.

Not even that. Like, I remember this one time, I, I had a couple mates who moved to Wellington, right.

And I was like, I'm gonna, just gonna, I'd actually sent a lead in a letter out to a person who had a business where they were importingCommodities from Jakarta and what they were doing, it was sort of like this, these specific kind of coals or wood chips that were used in, in restaurants to create like a very certain type of flavor.

And they had relationships up and down the country with different chefs and different, restaurants, and they were just importing into was it Masterton? I can't remember. It was just some weird warehouse in the middle of nowhere. And I remember I had sent a letter out and this guy responded to me. So first thing I got on a plane, went to see the boys and stayed and crashed with Shane and Adam.

The fellas. And so I went and saw them for the weekend, but then on that Friday, I remember catching, I went down to the city station down in Wellington, caught a train, got on a bus, got to the skies like factory

outta Masterton.

yeah, just to see what was going

Nice tr, nice train. Trip as well up there.

Right. And

this is just a sightseeing, don't try and mask this as an entrepreneurial sort of pursuit.

You're just having a, nah, just,

But I

the beauty of New Zealand.

yeah, totally. And so, and, and I guess that was, it's part of the creative or like the, where curiosity and creativity kind of splashed together, isn't it? Figuring out and, and just knowing that. That's not a task or an action that can scale, but it's part of like a step that you would take in order to try and figure it out.

I remember sitting down in front of, these three people who owned the business and it was like, I just had no clue what I was doing. I just wanted to meet them to try and figure out more about their business and at least have a conversation to see how that went. 'cause up until doing the first deal, there was just so many failed attempts at even like finding a business where the owner wanted to talk to me or finding a business where it was actually feasible to like, as an acquisition opportunity in the first place.

And so it was kind of nudging against all of these paths that would never go forwards, but along each of those attempts, I'd figure out something that would give me a lesson so I didn't make a mistake or it would help me filter better in the future. So yeah, in terms of the journey, just end up going to all these like weird places.

That's one example to just see what was going on for the sake of it, and use it as a learning experience. and then, yeah, we ended up, I ended up doing one deal. So if I, I think about the industries that I've been involved in, obviously finance, right? That was the first, first one. Then construction, which really I'll talk to you about that.

That didn't really go out so well. And then, yeah, hire equipment and then now food production. so with the construction business, we ended up finding this guy who had tried to sell his business and he was making like awnings and pergolas and it just like, he had a website that was still getting traffic, but he had stopped operating it.

He couldn't sell the business. And yeah, it was just very much like on death's door. Like it had no staff. It had no, like, no one who could actually operate. And he was of retirement age. Right? And so you didn't want it, right. So it was practically just a website that. Like just worked and it was just getting traffic.

Someone need to go and knock these pergolas together. And so I knew a guy who operated in construction as well and we tried to do something together where I would acquire the business and that he would be able to operate it and like do the construction piece. I can focus on all front end stuff, like setting up the sales process, setting up the quoting process, then handing off all the work to be completed.

And Then real quick, I realized that some businesses are just really dead ducks, right? Like it was already, it was just really hard to resuscitate. It was, it was practically going through the process of starting something again from scratch. And so that one really didn't

it in the ICU, you couldn't, the defibrillator wasn't

totally. And that was again, that was, that was good. 'cause that was a no money down deal. What we were gonna be doing was paying out like a set number, that we'd agreed on that we would give to the owner, as payment for the business. And it was a, if it

was successful

And it was done on completed work as well, so that we could maintain margin in the business and we could buy, obviously the kit to be able to knock together the pergolas.

That's another great point. You created an opportunity where you actually didn't have to make a capital investment. But, it made sense for the owner to take that on.

right?

'cause there was no better alternative for that business to be sold. And so I, I guess that's a really good place to like put a market down and just say that I know that there's a huge amount of content that exists around buying businesses with no money down. There's. There are real, there are a couple key important pieces to that.

If you want to do something that's truly no money down whatsoever, you run the risk of it just being terrible. And like a waste of time. Because you do have to think why wouldn't someone be able to find a buyer for their business? don't get me wrong, I've been in front of opportunities, which would've been absolute stunners.

Right. and

they required little to no money down, but for some reason or another they couldn't come to fruition. you can buy businesses using other people's money, so raising capital either as debt or equity investment and having that as the injection that you need to do an acquisition, I think that's a far more realistic and sensible way to do deals.

Primarily because you can then take your pick of the good stuff Rather than being subject to scraps

because good businesses, there's a market for them. There's a market for them. It is much smaller than obviously comparatively like things like property. Residential and commercial.

But there is a market for them. So good, good businesses will get snapped up.

seen it happen. And I've lost out in moments when it's getting competitive. There are a couple, which I really did like one that fitted well into like our rental equipment space that we missed out on. and there was another one recently, which is an absolute winner, but the owner really, it was just an valuation I wasn't willing to pay.

It was a couple of trampoline parks actually.

No way.

 

And I really liked it 'cause they made good money in winter.

So the actual property or just the

The business.

So

it was a lease, big risk in the business. 'cause obviously if you can't extend it, then you've gotta go and fit out an entire trampoline park

and

and

you have to get consent to be able to have people coming in to park. Like a lot of people coming in to park and then so it's, yeah, it's that one that, and that was this year. I really would've liked that one, but it was just far more than what we were willing to pay and someone else wanted to pay it.

So all good

Awesome.

uh, In terms of, investment

and capital, people are looking to float dead or put money in for a stake. What's the market like out there?

is there some deep pockets and individuals that are like really pumped and ready to lay down some cash?

Great question.

Yeah, there is, and we are about, I believe that we are on the precipice of realizing that that is a genuine

opportunity for a lot of people who are highly capable operators in business to be able to find people who are maybe 10 or 15 years ahead of them, who either are successful in what they do for work in the first instance, have a lot of property, but are actually realizing the limitations of cashflow from real estate investments, or successful entrepreneurs themselves, or business owners who have actually taken an exit and know what it takes to go from start to finish and don't wanna run that race ever again.

And they'd rather find the younger version of themselves and choose that person to back over going back for another, another round. Yes. So, I, I think that those people there kind of get it. It's a, there, there's, a small community, but yeah, you're right. There's money for it. And I think we're at the point now in New Zealand where, and other parts of the world, Australia, the United States, the United Kingdom, everywhere, we're at this point where there are these great businesses that do have to transition.

What is true from having spoken to a lot of these owners and attempting to buy their businesses or being interested in it, is they have children or younger members of their family who they always intended to run the business and they're just saying, nah, I'm not, not keen. Like I saw you're never there for me, dad.

Right. you kind of, I've heard all the yarns already, oh, I don't really want to go and like recreate all these stories that sound boring. I'd rather keep getting the keep getting the check from you and going to Bali

like I kind of. Yeah, totally. Like I've, I've got o they've got other agendas.

Right. And they don't, they're, they're not necessarily a product of, they, they're not an entrepreneur at heart or even an operator at heart,

they just don't have they don't have it. And maybe 'cause of the, the fruits of the, the older generation, aye

just before you carry on, really interesting thought is that's scenario about the other way around.

So, not that the parents wanna hand over the business to the younger generation or the kids, but, that's that parent, many of them who've, who've salary sacrificed into their business. Taken less wages into their business for a, a payoff at a later date.

It wouldn't make sense for 'em to pass it on to the kids because that's their nest egg. they need a sale to another private, or they need to switch over to another private that's more lucrative because that's their retirement's tied up in the business. so make, handing it onto the kids just doesn't make sense, 'cause obviously the kids will expect mates rates,

Yeah, of course. Or a free ride.

you've, you've busted your ass for 20, 30 years to build this great business. So that's another reason why they would look to private money rather than hand the business down to the next generation.

Right,

Right. When faced with the sale of their business, some owners look at the total sum that they get, and based on the way that you value a business, they typically would consider that. To not make sense sometimes. What I mean by that

is you might

sell a business, let's say that it's owner operated.

The owner works in it and they're making 250 in earnings. Right. So that's what they're taking home. Right. or the total benefit package that they get for themselves. If it's two 50 and they're working in it, it's really despite what brokers say or how anyone else sees it, the reality is it shouldn't be really going for more than 500.

Right. Like a two times the total earnings. It shouldn't.

so for the folks at home, businesses are usually valued at a multiple of the Yeah, the

earnings. Or earnings, There's some profit, there's some cash flow metric that is used and that you multiply that by a particular number. So it could be anywhere from one or less than one to, 3, 4, 5 more. But there are different, as you go through the thresholds, there are different reasons as to why you would be valued lower or higher. So we use this example, 250,000 to a business owner is a great wicket. 250,000 to anyone is an amazing wicket to be

You're in the top 1%.

yes.

in the, Like.

smaller portion of the 1%. it's, it's a great earning. Exactly.

So if you are earning 250,000 in income from a business that you run, and you can only get up to two times the value of that on exit, sure you fast forward all of your earnings into that moment, right?

But

no capital gains tax at the

money, no capital gains tax on the sale of a business as well. So what are you gonna do with that money? Right. If you sell that business for $500,000 and it's giving you $250,000 a year, what are you gonna do with it?

Buy another business. Or

well,

no, it just doesn't seem like a great

exit, doesn't it?

You kind of like,

So how do you engineer a great exit if you're that

size?

True.

So, so yeah, that's, that's, and I don't want it to be sort of leave any of the listeners being like, oh, all businesses are valued that way. So you can value a business to be worth more if it's one got a greater size of earnings.

That's one of the, one of the metrics. So when you start to get plus 300,000 to 400,000 or half a million, that two multiple can move somewhere closer to three, three and a half. And then it's on the upper end of that. If there's some level of management in place where the owner isn't the face at the coalface doing everything, they're not wearing every single hat.

Yes. Et cetera.

that's a, that's gold for investors, right. Because if you're buying an asset that's income producing and is not gonna take much of your time, it's already got the, it's plug and play

now, you can actually increase the multiple.

You have time to be able to focus on other things like business development.

You're not opening the shop. You're not closing the shop, you're not serving customers, you're not also filing returns. You're not taking the bins out. You're not

you've got some sort of infrastructure that gives you separation from doing the thing. To be able to think strategically about the thing that you were doing so that you can focus on growth.

And so that sort of starts to happen from that 300 plus

size. Yeah.

And then when you're working with 6, 7, 8 figure, six, seven, $800,000 upwards, you're now in the realm of somewhere from, it could be anywhere from three, four, sometimes five, depending on the industry as well. So yeah, it's on the, the lowest scale of businesses, which provide excellent income for people.

The exit. Or the value that people get from the exit isn't life changing. It should be a life changing amount, but based on the income that they're getting, what can they do with that? So the, the conundrum of what, selling, passing the business on or looping in your child to be able to run it, but somehow you get like a retainer on it.

I don't know. And then you start working in the dark magic of like family business arrangements, that kind of

Yeah.

might not turn out well.

Exactly. And touching on that, I mean, the biggest point that you've made is that there's so many businesses in New Zealand that have, one to five operators, family business, that, over the years we haven't been able to build proper processes to remove the owners.

maybe that's the owner's choice. 'cause they want to keep more of the revenue and they don't want to grow that way. But there's these businesses that'll be looking for sale, but they're actually, it's actually just a job. Yes, it's actually just a job. It's a job, where you get to control your hours and but there is no structure and process in place that makes it a scalable business.

Like the purchaser would have to scale it themselves, So that's another thing I think that you've done really well, is looking at some of these businesses that are maybe set up like that and built the processes, built the systems around that to remove yourself from that business. And then you've just got this, obviously it's never that easy, but you've just got this nice income, right, that you can add to the portfolio,

Right. So I think the key issue in that is that people are really. Reluctant to find belief that there are other people who can do the thing that they can do. Especially in business. Could you imagine operating a business in a way where you believe that you were the only person who can do the, the job that you were doing?

Could

you,

I mean, confidence is a really big part of our business, so

I definitely

replaceable. Everybody is

right? So I think you want to realize, I think all you're saying is right, like no one is, like everybody is replaceable, right?

Maybe not to the same level, but people can do the stuff that you do. That goes for business owners as well. Unless if there is something, unless if you are Leonardo da Vinci and you are making the Mona Lisa, that's, and that that is your thing. Like it is all you, it is all

or or if you're Taylor Swift, right? That's a perfect example.

If it's the, yeah,

needed.

Until we get the AI Taylor Swift bot. Right. She's needed for the gigs every, every weekend.

Totally. I'm more of a Sabrina Carpenter, to be completely

you would be, aye

And the album's out today, so,

you're giving her free promo on the

Why wouldn't you? All

To our pool of

Right. So. I think it's an element of not wanting to let go and I've sat opposite plenty of business owners who are in the thick of it who've maybe tested the water run up against a problem, which is normally a training or recruitment problem as well, and never really back themselves to understand that if you give it one shot and that you don't hire someone that's gonna work out to do the gig that you need to do it.

And they cause you issues. It is kind of your fault. Right. Like you are a participant in that reality, so you should think about what you've done. Probably do things a little bit differently or at least learn your lessons and then make an attempt. That's all. And make an, make a second attempt.

Make a third attempt to try and figure that out. So if it's a hard job, if you solve it, you will bear the fruits of the solution. That's right. So I think that's really what holds a lot of business owners back is that they will get to this point where, It's a, not to say anything that there's anything wrong with being an owner operator.

Being self-employed or having a business that is a job. It's awesome. It is. Because there's an element of sovereignty that comes

Of course. And some people they, they want that. And they're not thinking about an exit and a big capital gain on their sale.

What I say to people like that though, is that if you're that ambitious to have that kind of level of sovereignty over yourself, you have so much more inside of you to be able to take it one step further.

already taken the step. You're halfway there.

The second step is just basic momentum.

That's it. And if you, and that's the next step of character development, because if you're saying things like, oh, I can't make enough money in this business, I don't know how, like the numbers just aren't working. Fantastic. You've got a new problem to solve.

a hundred 100 percent.

that's what's in the way a lot from a lot of owners getting to that point where perhaps they're a bit more distant.

But if you want a shortcut to that, I'm not saying that it's easy, you could just, do another acquisition. You can buy a competitor, you can buy a business that's similar enough to the one that you operate within. Collect the revenue. You practically grow the size of a business overnight. So if you were to double your revenue or increase your revenue significantly, the same would happen to your profitability.

And if it's just a numbers issue, then you've got all of the financial resources to be able to start hiring staff. And re-engineering the operation of a business so that you've got the machine working. It's there.

Because I, I do wanna talk about something amazing that, I was talking to Rory about this week that you've done in a section of your hire businesses, right?

So you run these hire businesses and you've bought in a, equity partner. By doing that, them taking on the load, that operational load of this massive pool of businesses, you've been able to remove yourself from the day-to-day of running that business. So the business has been built, it's earning an income. And you're able to continue working on the portfolio, growing other businesses while that's just sort of ticking over the side, which is something that, I mean, most business owners, that that is that sovereignty that we're talking about, right? If we're talking about wealth creation, why are people so drawn to property investment?

Everyone uses that word, passive income, I mean, it's incredibly not passive when you're making it, but that we're all working towards that day where maybe we could make a little nest egg or empire for our family where it's, it's, there's a passive element to that

income, it's an achievable goal and we know many people who've done it.

And so you've done that through the businesses, which I think is just such a feat. And is that something that you're trying to continue to extrapolate and,

 

keep doing that, or you, you want to be more involved in certain businesses? Like what, what is the goal?

That's a great question. And it's off of the back of hitting the constraint of I'm still just one person.

bloke. it's another constraint. Right. And think about the journey. Went through five years of figuring out what the strategy was gonna be. Right. In terms of developing and creating wealth. Then went through the, team orientated stage, is obviously finance and doing that as a team. Right. Then go through another five years of like this solo slog. being the one person who's responsible, who's the decision maker? No, no team teammates to a degree, but like the, the one person Right? It's still a solo battle. And then I just hit the point where I realized, okay, if we want to move forward

I'm gonna need some f****** help. Yeah, right. A hundred percent. I just thought it's getting to the point where,

get get the bleeper out there

please. The, the F-bombs are coming, coming in hot now, but I just thought to myself like, the journey is gonna be so much more fun if I get to curate the team that I get to do this with now.

And that's gonna be the best part about the journey now, which is, which made me incredibly excited to bring Reagan on board to help out.

Oh, he's a great partner.

And we're sort of talking about that initial experience we had in business with the original iRefi company. Recreating that sort of atmosphere of people who are growth focused, good values, family values, and just want to build great businesses that provide great services and products. is is how it's all about.

You can't do it by yourself and

And the good thing about having gone through a business relationship previously was that you learn all of the lessons of that. Mm-hmm. And all the shortcomings of that.

And all of the lessons in what worked well, what might not have worked well, understanding personalities. Then going into like a solo stage where it's okay, you start learning. I needed help with this. I needed help with that. This could have been a lot easier if I had someone who was really good at this.

So then bringing into like a new partnership where we had, where I have a minority shareholder in the fund or in the private investment company now it has allowed me to. Again, cherry pick who I think is the best person and the best match for, for me, which is obviously my best mate. Right. And we compliment each other really well in the way that we operate and mutual respect for each other.

Hundred percent. So that

Similar goals. Right. And it actually has created an environment where we've been able to build what each and where each person thrives in. Mm-hmm. Myself, front end, deal orientated, vision, content, building, relationships, that's my focus. Regan, operationally driven, pursuing perfection.

To the

he's the, he's your pro to this

ends of the world. Right. And for anyone who kind of reaches that point of where they are stretched too thin. They need that person, especially if they're front end orientated. There can be people who are backend orientated in business who then need that the front person as well. But I think it's a lot easier to find that person who kind of wants the operational responsibilities ahead of the, especially

he's

an engineer, Yeah, yeah,

He's an engineer who gets it.

Yeah,

do you see any opportunities. I suppose with maybe a growing number of Kiwis moving into that retirement realm and very much operating that, that owner operated style business, that 250 K type model that you're, you're talking about, that they're gonna be kind of cheap deals for what they, what they

are.

and then businesses like that, that can be then turned into what you are doing is rather than the owner operator, just the owner, do you see any big cash cows out there that you're just like,

are you telling me to snitch on an industry

What's

the most

lucrative industries that our customers should look to buy businesses in? Let's just speak candidly

totally. We're trying

to get everybody wealthy.

the,

the best thing you can do is just start looking on trade me. Right? And seeing what's actually for sale. So that you can see volume of transactions right.

Online. You see all the, oh yeah, let's get a laundromat, let's get a vending machine. business, which it's very, oh, we let the machines do it. Yeah. Car wash. It's very, the car wash.

It is

Car wash. It's another good one. The gas station. No one really talking about doing deals on dairies though, which is a little bit, a little bit of a shame.

But, if you take a look at what's actually listed for sale, you'll start to see where trans transaction volume is. So you really have to put your eyes on it and say, okay.

To your question, where could I string two of these together? If you wanna try and build an owner perspective, you're gonna do it one of two ways.

You're gonna buy the thing then grow it, or you're gonna buy one thing where that you're gonna be able to pair it with another thing and you're gonna have some kind of management in place to run it. That is probably a three year process. And it's a fun three years and you'll learn a lot and you'll make great money doing it and you can very, you'll be able to re-engineer the kind of sovereignty that you want a lot sooner than taking the pathway of real estate.

'cause if you're gonna do it, you might, you can get into the throes of flipping property and trading property, which I would argue is actually a business. It's not property investment. That's a property business. You're buying a product. You are doing something to the product, then you are selling the product.

That's it.

Can we talk about, this is tying into that. Yeah, go on. And I think it's something that we wanna discuss at the start, you would've mentioned it's, we've been covering it in this chat, but buying business versus starting one.

Right. But what is the philosophy? What

is the philosophy on that? Like, why are we not starting from scratch? Rather than getting an existing one

my belief is that people want to start a business for a couple reasons. One, they either don't wanna buy one, so it's the money and like spending the money to buy something.

bootstrap it. bootstrap Bootstrap refers to starting a business, growing it with your own capital

own capital, your own time. Figuring out all the equity lessons, right? So people can think that that is the better way to do it, which in some instances it will be. Like, if you're highly talented in one particular area, then you definitely should be, and you are one of one.

Or you can become one of one doing something that you're very skilled and passionate about. Then by all means, that is what you should be doing.

Yep.

But the fallacy that I think people fall into is thinking that that is the easier route or the better route. Where I would disagree, I would say that you are far better off to have bought something that has all of the momentum, and business is a resource orientated game.

So if you buy a business, it's a collection of resources. It's a collection of systems, it's a collection of customers, it's a collection of products or services and everything that is known to currently work, and that there is evidence that that works. So when you buy that, you have a running start. So that's where you can figure things out. You can improve things, you can learn more about business, and you can figure out how to grow it.

If you think about starting a business, you run into all of these issues just like talking about the mortgage volume as well, right? You have a lower volume of work, so you can't yet figure out all the problems that you're going to run into in the future.

And I think you end up getting business fatigue in the starting process as well.

that's all your sweat is going into it. It is. Which you could replace with capital by buying one,

Yes. And so people would say that capital, that it's the capital that they don't wanna forego, that it's expensive to buy one.

But when you think about it, if it spent, if it took three or four years for you to get that capital back after tax of the earnings in the business that you were to buy. Compared to 10 or 15 years of figuring it out. I would say that that time is so much more expensive than the money that you could lose if you were to make a bad

hair loss. A lot of hair loss as well.

you're not, and you're not actually paying a premium for that. 'cause you are actually, like the multiples we are talking about is like a multiple of the EBITDA or whatever it is, or the director's revenue that all that blood, sweat and tears isn't even priced.

It's a hack.

 

Yeah. I think it all comes back to this concept, obviously why we're here, at Blueprint Finance and how you started out, is debt, the lifeblood of this game we're playing called capitalism that we're all in, regardless of if we love it or hate it.

that is the true lever for wealth creation, leverage referred to as leverage. So obviously property owners use it. All of our customers use it. I use it. You use it, use, everyone loves it, but it's dangerous, right? It's fire. It can cook food, it can create incredible things, right?

It can mold glass, but it can also burn your house if it's not used properly. So there is these ideas. Obviously I'm always referring to Dave Ramsey on this podcast. Dave Ramsey,

I know him.

Educator, he hates debt. He thinks you shouldn't borrow more than 25% of your household income and you should, if you're borrowing money for on a home mortgage, you should have it on a 15 year loan term, and that's the maximum you should borrow, which in New Zealand would just not be possible.

Everyone would just be living in apartments or leasehold apartments or something like that, right? But debt is such an important thing because it allows us to jump forward into time. But with that time travel, it requires a lot of thought out. processing and planning and financial planning about where you're gonna end up, right?

I'm gonna buy this house. I'm gonna take on a 30 year mortgage, but in 30 years time, or if I can pay it quicker, that's great. My house is gonna be paid off. I'm never gonna have a rent expense and I can retire, right? That's the goal for our most of our customers. But when we talk about investing a property investment, I'm gonna buy this house.

I'm gonna have on interest only debt, and I'm gonna expect to have gains in 20 to 30 years from the capital growth and inflation devaluing my debt. When we talk about the pairing in business, we are gonna use this capital to buy the resources, buy the income, and how can we make a return on that?

Obviously, debt in the debt market, debt for business purchase is priced more expensive than for property

why is that?

' cause it's inherently risky. It's risk priced. That is a fact. When you think about, and it's based on liquidity. 'cause the liquidity of real estate exists because there are people who understand that that is a market and the banks are incentivized to lend against residential real estate.

So you can always cycle out bad investments and it's easy for them to capitalize on an actual deal gone bad. We are with businesses and we are in a period right now where we've had record levels of liquidations, right? So when those businesses go bad and they're holding bags of debt, it's very difficult for anyone to get anything out of it because there's debt to this person.

There are customers or suppliers that are owed money here there are the staff and employees, the inland revenue or the tax departments from particular companies of countries are normally involved. And then you also have, the liquidators who get paid first. So you have this very interesting car crash that happens when a business goes down.

And it's, it's a crash. Right. And it's holding the bag, right? It's holding everyone's bag. That is an accident that happens on a main highway. In front of everybody, but with real estate you can just cycle it out 'cause there always is a, a buyer for that, not normally the case for business.

So those deals, when you end up being able to access finance for businesses. You typically have a good business in front of you. Mm-hmm. Because you are putting it in the face of someone who doesn't know anything about business for the most part, like the bankers who you would deal with on entry level acquisitions or maybe mid-size acquisitions.

They don't know everything about business, but they just understand the key metrics that they're looking for to when the bank will be interested in lending you money. So they have a very watered down view of it, and if those work, then typically the debt and the deal is okay. They can't be said for

every deal or every bank loan that gets issued for a business, but it's priced differently with that risk involved. But then what I've realized is really interesting with banks and debt for businesses is that they start to be able to offer you different products based on the comfort level that you business and you as a person and how you operate the comfort level that that provides the banks.

So you can end up doing, and I've had conversations with bankers where they end up rolling business debt into similar products that are just like mortgages, except they're just not secured by any property. So you can work it into interest only lending. You can work it into 30 year style products or 15 year style products based on the fact that

your business has always cash flowed consistently. You've always been able to operate in time. There's no defaults or late payments to any tax departments, and you've got some kind of established relationship with the bank and they know you to be a good operator. So the way that debt operates at the business level can be just like a mortgage.

It's earned though. It's not given initially. Yeah, so I, agree that people really shouldn't be borrowing and leveraging businesses aggressively.

Yep.

I a hundred percent agree with that. I don't believe that anyone's first deal should be 100% financed and borrowed from this person and that person.

'cause I've been in positions where I've financed a lot of debt to buy businesses, but I've always been cash flow heavy and still not red lining, but getting to the point where, you are operating within an element where you feel a little bit uncomfortable. So, and, and that's very different to real estate 'cause you have the, if you are owning real estate and you're an investor, you typically have the luxuries of having a job.

So that you're gonna be getting income. Every week a set amount in the bank account, and you can split the money however you need to, to put out fires with debt or unforeseen expenses, et cetera. When it's business and if you're holding debt, if you run it too close to the, to the line, you'll get in trouble very quickly.

So

yeah, there's a level of experience and operational understanding and understanding of cash flow that you need to be able to operate a business under debt. And I just don't think that people can do that off the bat with not much experience.

Yeah, a hundred percent. You hear stories. I've got a friend who, he recently sold his business for quite a good take and he came off the back of a failed venture and he started it on credit cards.

How about it?

just got a couple of credit cards and just, so,

do what you gotta do. Aye.

That's not what the, I mean, he just, he just,

business.

points.

The rewards,

he went to Thailand. What you said was great. I'm just saying, the risk is, is a spectrum.

And you can, you can do this business thing, you can do this property thing, this life thing with really calculated risk. It's pretty much mathematically certain that you will be successful, as an entrepreneur or You can set up that way with the help of insurance.

Not to plug this, but like, you can literally set up your life. So I'm gonna have the wealth that I want to hand down to my next generation or for myself for retirement. You can set it up that way and things, would have to go horribly wrong for it not to work out, but you can manufacture that life for yourself through business, through safe debt structures and calculated so I think that's what you're saying. There's a, there's a full spectrum to it. I don't think you would recommend people to do it exactly the way you did it, because I feel like it takes a lot of more per personal backing and just faith in yourself. That you, someone else can't tell you to do it.

You have to go and do it. Right.

It's really sort of being drawn into the fire. Right. And it's just,

the unknown.

it's hard to explain it to in a way where everybody can understand it, being willing to know that while the next few steps might not necessarily be certain that they're worth walking because of all the lessons that you'll learn.

And typically the fruits of labor on the other side are very difficult things to do and very hard things to accomplish. So, and the same goes with business. And you're right on, on your point to like structuring everything. Correctly and safely. What tips most businesses over is lack of cash flow and lack of capital in the bank.

money

So if you take too much money out if you do not have stored just like your, your business is a thing. It's its own living, breathing entity. And if you decide to rob it of all of its money and don't pay the people who need to be paid to keep that thing alive, it will not be alive.

It will cease to

So impatience and greed. Right.

and greed. And then no focus on growth. So the growth that we've been able to focus on has always been acquisition driven, like I said before. If we buy a business, we grow by the size of a business. So that's what fuels the top part of the funnel, which means we can keep more at the end of the day and operate from a baseline of comfort.

So you need to be focusing on growth. You need to keep cash flow, you need money in the bank, and you just don't want to be frivolous once you get on the board. The way a lot of people will see it is they'll think that buying the business or getting the deal is the big job, and I'll see that as this huge obstacle.

Like that's the thing that they have to do. But really that's just the first step. And then it's a lifetime of more steps like that after you have bought that business. So, yeah, that's kind of a, that's something that I really hope that people leave with is not just thinking that it's as simple as just buying a business.

You wanna buy a business and then have a plan as to what that enables you to do, what a growth plan is, if you're gonna buy one more and what that business actually means for you and why you are actually buying it.

you've, you've spoken about like different mentors that you've had, and then you've obviously just like learned a lot through the journey.

There's probably only so much you can learn before you dive in the water. Would that be right? Like you're never gonna solve the problems because you're actually not gonna know the problems that you'll run into until they arrive on your doorstep.

Definitely. So you kind of get your list and your textbooks and your tools and everything, and a backpack, and then you kind of head out.

yeah, yeah, and so

you have to learn it through the fire, which is the best part of the journey

Hundreds difference between like going to a job interview or getting offered the job, and then just knowing that if I just go to that place every day, I get paid.

a wild ride.

nothing more satisfying than coming home, sitting down, drinking, a cup of water, and then thinking back on the day and being like, well, I really f***** that up.

Like, there's nothing more satisfying than like,

probably not a cup of water you drink here,

And so you learn so much from people. I've found it particularly difficult to find people in New Zealand that I would consider and gravitate towards as a mentor in this space because it's nothing that we've really covered in detail.

But I think part of the origin story, which is really important is this one moment where I'd sat, it was during COVID. So it was during the lockdown. Oh And it was

you've started your business journey

After start trying to figure out what we're gonna buy. Right. So I've started, try and figure out what kind of deal I'm gonna do.

I've done some duds. Right. Nothing's working. You guys having a great time rebranding to MHQ. I'm no longer part of the, are

loans are flying around.

Everybody's getting wealthy over there.

exactly. I'm thinking I've really made a mistake. I had this conversation with a great friend of mine. And he, on the phone, I told him I was just running into all these walls.

And I just didn't know what was next. And he said to me, it was so genius 'cause how, how simple it was. He said, well, you're trying to buy businesses. And that's what Graeme Hart did. Why don't you just

figure out what he did. And why don't you just Google it and do a bit of research. Maybe there's something there.

So Graeme Hart is one of our great entrepreneurs,

wealthiest

one of the wealthiest people in New Zealand.

He, he's known for Whitcoulls.

wco

Whitcoulls. But you, something different.

And.

Graeme Hart's journey, I think is one that definitely needs a little more light on it. I think that people obviously had known him to have been the richest person in New Zealand for so long, but I think that the, the deal journey of his is something that a lot of Kiwis could probably really benefit from.

From understanding how you can go from towing vehicles and working like in a, like if it was like a, a mechanic shop or whatever, to them being one of the richest people.

Being the

guy.

Being and the guy from here. Hopefully one day more of that journey comes out in like a, like a colloquial environment where it's, it's willing to be talked about.

We'll have to do the documentary

Well

yeah, yeah,

so, but, but Graeme Hart, he wrote his thesis in the 1980s about a roll up, which is a strategy of buying several businesses that are in a similar industry and was of the rental equipment space. So it was just 70 pages of just really straightforward, no fluff.

Every word purposeful. A detailed plan of how he put together a series of transactions to build a holding company of rental equipment businesses. And I took one read of, that 72 page document, I said, that's the Bible. I'm sure there's some of these for sale right now and I'm gonna go buy some for myself.

And that's what sparked the journey into the hire industry. So the clues are out there, they've been there for decades, and people would just need to look and then take action. So no real mentors had kind of existed in New Zealand, except for at least this like tail of like a, an acquisition trail that happened.

An idea 30 years. And then. Proof and evidence. And so that's, that's what sparked that journey. And yeah, obviously he's not being able to, I've not been able to sit down and have a cup of coffee or jump on his podcast and talk to him about it, which obviously I'd love one

one day.

But it's a, that's that kind of mentorship representation here.

And then along the journey. That's the great thing about business is you just meet all these phenomenal people who see the world so similarly to you and also different to you. Who add tremendous value in your life, who you kind of pick up along the way and they just become absolute champions for you, your mission, your cause, and then fill that mentorship role in some way or another.

mean that,

that Graham

Hart story about finding his Bible is such a great lesson and it's, you, you called it simple and it's really common where pick people that you like that have done the thing that you want to do and just copy them, do what they did, whether it's fitness or whether it's acting or whether it's business like it, like it doesn't matter.

there's great examples in the world of people who have done the thing that you want to do a hundred and it doesn't need to be more difficult than that. do a bit of DIY do your own

research, roll the sleeves up, get in the truck,

So

gotta go after it.

 

and I think that there are repeatable steps to it, so it'd be interesting. I've got a question for you, Dan.

Oh, okay. Flip. He's, he's flipping on you.

Get your own podcast, mate. This is what the,

If you, I'd be interested in your take on this. If we had a younger brother. And he's, let's say he's early twenties. Right. And he's looking at you and me.

And he's like, I don't wanna be, I can't be like these two jokers. 'cause I'm me and I'm different

Not at all saying that we are the vision of success, but

no way. He's

He wants to work towards the

what are you gonna be recommending for him to do if you had to give him some kind of advice.

And he is like, all right, I just finished, or I'm thinking about uni, or I'm, I've just finished uni. What should I be doing?

he's already got a massive advantage and it's not because, we're his older brothers, but it's 'cause of his parents, right. He's got these incredible parents who are supportive and encouraging and,

a sweet thing to say.

No, it's a hundred percent true. That's, that's the reason that we're here.

We had a massive leg up and it's not anything financial. It's from the foundations of our family. and the teachings from our parents and the guidance and support. So he's got that. but then he's going to need some extra, a bit of grit is what we call it.

It's the main value of Blueprint Finance is grit. Doing the work that no one wants to do, working at Countdown, doing the late shifts, taking the late night meetings, driving out eight o'clock to meet a client. All that stuff that is just, it's not like a skill, it's a just a, it's just a characteristic.

So he needs that. and then he needs to figure out what he's pushing for. So you and I always talk about you, you tell me about the 30 year goal, right? Stop. Yes. We've got these short term achievements we're trying to achieve in, in our lives and, and our business. But what's the 30 year vision? So we need to, we need to do that roadmap for him.

So we'll sit down with him. Get the felt tips out. We'll do a bit of a, a sketch. We'll do this

he can write. Yeah, that's all we are He's literate. We'll give him that. He's literate. He can read and write. let's say he's got no university degree, right? He's just got the grit, right?

So he's got the grit. Now he is got the 30 year vision. He wants, he's drawn wife. He's drawn kids, or maybe it's a man. And some kids support that a hundred percent. Anything. He wants a family and he wants just a great life and he wants to be wealthy, right?

He wants to have money in the bank. Let's work towards that. So he is got the grit. He's got the vision. And

thrifty. Thrifty.

needs to be thrifty. Okay? He needs to be thrifty with his money and other people's money, okay?

And that's how you get ahead. You get that compound growth on every little single thing that you can. You save money where you can, you don't, not to an extremist, but you're always conscious of your resource, reserving it and saving for later, right? I had lunch with a good friend of ours who's a very, very successful entrepreneur.

10 mil plus in business equity. Took me out for lunch,

got

to the checkout, and then the thing pops up. Here's your bill, $70 or whatever, PayWave surcharge, and he's holding the debit card in his hand and he looks at it.

he,

he doesn't do the payWave, he plugs it in.

Right.

avoid the surcharge and this guy is worth $10 million.

You don't give it away. You don't give nothing away for free he's not too good

for the

surcharge.

He's plugging in.

You want the surcharge come get

it That's the, that is

that 1% that the, this guy has to have to be successful. He's plugging in.

He is not doing the pay wave. He's plugging in and he's saving that money even though he's so wealthy already. And that's because that's how he got there. It's just always having that thrift, that grit, and that vision, and then it all compounded to this point where he is at now,

And I'd say that compounds even further because how hard it was to In the first instance and never forgetting that. And that's right. There are elements between you and I, which are really aligned with everything that you've

said.

There's stuff that I think's front end as well that I'd be giving advice to, or like a direction that I think they really should go.

Number one. Is find something sales orientated. That is it. Like if you're gonna do anything early on, it has to be not like an operational or functional element of business. It has to be front end. That's

your potential is uncapped.

You're gonna unlock your charisma, your ability to speak to people, your ability to be confident, the ability to go into situations that you're not necessarily aware whether or not.

You either belong or can be successful and you walk away with lessons, it gets you ready for rejection. If you can sell one thing, you can sell anything. And that's the first thing. It has to be built around something like that. So it's either gonna be mortgages, insurance, real estate, cars, something like that, which is

solar panels, whatever.

And a bonus is being able to do that in a small business environment. So you're not gonna go and do that at like big four. You're not gonna go and do that anywhere where the company's bigger than 30 people. You wanna be as close to the coalface with a

You're

in the financials.

Yeah, you are right there.

You're next to the decision makers. You see the inner workings of business owners minds and you learn by proxy all of the lessons that they're learning without taking any of the risk so that when his time or anyone else's time would come, they've already pre-packed a lot of those lessons and they've got the ability to be a go-getter as well.

A hundred percent

So that's the 100% the direction that I would say that anyone in that position should go.

Did we miss anything? Rory? What would you

well, no, no. I'm just wondering what do you think about university? Because you can go straight into a sales role. Pretty raw dog. Yeah. like skip the trade. Skip the university, or do you think there's something that needs to be learn there? First

I say skip it.

Skip it.

I would, I think.

University or learning needs to be far more intentional than just being the next thing that you do out of university. Just out of

Yeah, yeah, yeah, Absolutely.

intentionality behind it,

raw must haves

100.

So if you have a intention to work in a prof in a certain career that you need accreditation for, if you need a degree for, right. But I think if it's coming in there just to do it, you will end up burning three years. And don't get me wrong, there's value to being on the turps. There's value to meeting new people.

There's value to going to, unless if you're gonna uni outta town, I think that's relatively valuable.

learn a lot in that process.

You would, what I've noticed is a lot of entrepreneurs. Can self-regulate environments that they don't want to be in. So they would look at, okay, well if I go to university here, am I gonna get sucked into like drinking?

Am I gonna get sucked into, partying, drugs, whatever, like, am I gonna, is that what I want be a part of?

I wouldn't want to discredit anyone who is at university or who has gone to university or aspires to go to university, but there has to be some purpose to it.

If it's just by proxy of having finished high school and everyone else is going there, you are being, you, you are being herded. Right. Whether or not you understand that or not, you are just being pushed in that direction. a lot of people who have spoken to me and are aware that I've been buying businesses, they have the assumption that they need a finance degree or an accounting degree to be able to do that.

Where I would say that, that is probably one of the most underutilized elements of, business ownership and acquisition is your degree. Like there's no, I haven't sat there and been like, yeah, like accounting has been the reason why I can buy these businesses. Finance and understanding finance is why I can do this.

Mm-hmm. If you can add and subtract and multiply and divide and know the order of operations, which is just basic BEDMAS. And you can apply a business and how it functions to BEDMAS, you can run a business.

Yeah. So just focus on

your bed mass and you're sweet,

BEDMAS and you're sweet. So, and there's obviously the application of actual what is going on in business, but for the most part, that's like 80% of the work with numbers.

The rest of it you will only learn on the job. There is no way that anything in a, in university will prepare you for business ownership. Maybe marketing, maybe connections, but from a numbers and financial perspective. F*** em.

Agreed. I think when I took the time to reflect on my university degree and, and how it. It helped me in my career, was when I paid, made the last student loan payment. 'cause obviously I had some time to reflect on,

I had to earn that money to pay it off. And my takings, my findings were, it was a $40,000 networking

it was a

it was a $40,000 networking event. And when I'm, don't say that with any, an anguish or like talking down to university, but had a great time through university, outside, very formative years. But all those people I met through university and on that journey, I would trade $40,000 for in a heartbeat.

So that's how I view my university experience. But yeah, I've never gotten to a point where I've, I've thought what I've learned here directly is helping me here. We might be taking that for granted. It might be very passively learnt, it might be muscle memory, but yeah, I agree. $40,000 networking event.

who's to know what the networking event would've been if you, you went down like the Harvey Norman Sales Road and went straight on the tools. Exactly.

What kind of people I would I be around? exactly.

I like the intentionality part of it, and, maybe I'll just add to the lipman's younger brother, don't try and solve the rest of your life in a single sitting and work out what I'm gonna do for the rest of my life.

Work out what your next step And then lean into it, and don't worry if it's the wrong step. Just take another one.

about the long, long term where you want to end up. And then just as long as you're heading in that

It'll be fine. And you'll, and you'll take a few, there'll be a few detours.

Quite a few.

some, a couple of holes. Pothole.

yeah,

The potholes are the best bits.

Yeah, yeah,

Oh, awesome. Well, Brandon, I don't even think we've halfway through, all this stuff we wanna talk to you about. So we, this is definitely by far the longest Blueprint Finance podcast.

We'll have you back on within the next couple months,

mate.

Whenever. We can do it tomorrow if you want,

Rory, thank you so much. This has been such an enjoyable chat and hopefully for the listeners, like some valuable lessons, aye?

To be continued, aye? Legend.

Thank you,

brother. Love you like a brother, man. Yeah,

yeah. You're like

a brother to me.

If you dollar cost averaged since the start of Bitcoin you'd be up 10000%

There's a few of the guys in the office that have been seriously orange pilled very bullish

very bullish

on the bitcoin

This is good. This is good. And so for the folks at home orange pill means that you've you fully swallowed the Bitcoin pill

any investment whether it's crypto or housing or whatever it takes conviction

and conviction should come from education

get educated so you actually believe in the product yourself rather than your mate telling you this is a great investment the proportion of high net worth families that are into crypto is different from the rest of world

they are embracing it

The best time to buy Bitcoin was five years ago the second best time is today

 

Paul, CCO from Easy Crypto. Thank you so much for joining us on the podcast. Thanks for having me, guys. Really looking forward to it. No, mate. It's a real treat to have you on. 'cause you'll be aware as financial advisers, our industry has come from your standard assets. Your shares obviously property for myself.

So Rory and I are so excited because, there's a few of the guys in the office that have been seriously orange pilled, very bullish, very bullish, on the bitcoin. This is good. This is good. And so for the folks at home, orange pill means that you've you fully, swallowed the Bitcoin pill you believe in cryptocurrency and you want to have it as your part of your holdings.

So that's what it means. But I wanna tell a quick story. 'cause we've met once before. Yes, we have. It was at a event in November, 2022. And it was with a group of people representing different asset classes. So you were there for crypto? We had a guy there for mortgages like myself, property.

Yeah. Then we had a guy there for precious means like gold. And then we had a guy there for shares. Yep. Each was talking about the challenges, you know, each asset class was facing at the time. 'cause I mean, to give some more context, it was a pretty turbulent time. Yeah. I mean, we were just coming out of COVID and

heading into or in the recession. It was pretty, pretty grim. It was very grim, and we had some, the news was just not looking good. No. And so there was a lot of gloom and doom in the room. The world was depressed. Massive. It actually was.

And it's interesting, because, Darcy Ungaro was there and he was talking about, you know, how sort of the recessions he'd been through and how you know, you know, people, especially with property, they wanna make people feel sick about property to sort of tame the market, which is the point that we were at with interest rates and all the negative things that were happening.

But out of that, you literally left your job and started a company. Yeah, that's right. Yeah. That was the message for you. It couldn't get any worse than this was the i'm already not making any money. But kudos to you, right. I'm a huge proponent of people who are adding value to our economy and creating jobs and work, and it's really brave.

Oh, cheers, Paul. So kudos to you for doing that. Really, really impressed. Nah, it's been an awesome journey and, you know, Rory's taken the leap with me and, yeah. I think, if you believe in something and, and you basically be brave and you put something out there.

Just like with your investing, over time it's, you know, you can't fail. Pretty much. I wanna talk about, you know, price charts and where things were at the time because, you know, you might be a bit smug right now. You said sitting here when Bitcoin had gone on a massive dump.

So we'll put the price charts up for people to see, but at the start, '22, we had a big pump. We had an all time high there at start of '22. Yeah. And then just the whole year was absolutely plummeting. Grinding down. Absolutely. We call that crypto winter, and yeah, it's not the best time to be in the industry,

but it kind of, it's that natural reckoning where all the over-leverage, all of the bad ideas just get crushed out. And we clean up, you know, it's like spring. And then we come through and ironically it happens in a really predictable way in our industry, and so, it's kind of almost pure capitalism in that way.

There's no bailouts, there's no, I'm gonna mint more money. It's just like grind it out

and you see businesses that didn't have their product market fit or their propositions or the ops model. They're just gone just get smoked and just kind of gets cleaned out.

And we start again and rejuvenate and so, it's painful, but you know, ultimately pretty healthy for the sector. We is kind of how we think about it. And if you've been doing it for a while, it probably becomes less painful. I'm now at a point where I'm like, bring on the next one, you know? Yeah. 'cause we're at all time highs.

So the asset's expensive. Correct. I'm waiting for the next winter and I wonder, I mean, no one knows if it's gonna be the same as past cycles because of what's happening now, but I tell you what, if it drops significantly below a hundred thousand dollars USD I'll be very happy.

It's a great question whether this cycle, given all the institutional flows and you know, now governments holding on their balance sheet will be different. So we, you know, we just dunno the answer to that question, but traditionally, people who have been through some cycles, you know, start their investment patterns, they kind of sell out at certain parts of the market and start buying back into a certain part of the market.

Kind of classic Warren Buffet stuff, you know? When there's blood in the streets, I'm buying. We have the analytics, the on chain analytics to see wealth transfer in action. Like you do see people who are unsophisticated, who are emotional selling when they shouldn't be selling and buying, when they shouldn't be buying, you know, transferring value to people with a plan.

if you've listened to most of my stuff, it is do your research, have a plan and try and be disciplined about that stuff. The emotion of the market can wipe you out at the same time. Yeah, for sure. It's a maturity thing. I think like, my guess is, and the theory would be that eventually there will be stability and you won't have the wild volatility.

Well, this will blow your heads off, but if you look at Bitcoin's volatility this year, well it might have changed, could've been ripping the last week, but up until about two weeks ago, Bitcoin was less volatile than S&P. Wow. So over its incredible life. This year. Oh, just this year.

So it, you know, as you're saying, it's starting to happen. Yeah. In terms of the band, the, the bands of its volatility are kind of compressing. It's starting to kind of play out the, the way you are thinking about it, I guess. Fantastic. Incredible. I mean, looking at these charts.

So I've got five year charts here and we'll go through three each asset classes to see what's changed. Obviously Bitcoin, I mean, you don't have to be a checking the prices every day to know what's happening. It's in the news. We've had a massive pump. There's been a huge, there, huge developments like you said.

Government adaptation, holding on the balance sheet, and so we've pumped. So I mean, easy crypto's very happy about that. I'm very happy about that. Rory's a bit stoked, you know, which is cool. We'll move on to the rest of them. So we've got the S&P500, like you said, a lot of volatility this year.

And more volatile than Bitcoin, but we've had some steady gains, so we did have that recovery you can expect from each market cycle, which is good. And then gold. I think interestingly enough, gold has absolutely pumped, and you mentioned that it's got a lot to do with, the big players like China and obviously Russia no longer holding US treasury bills.

Yeah, look it, it's you if you discount kind of the last 18 months 'cause it's been going since '24. Like gold was basically not even breaking even with inflation. Like it was probably a net investment. something changed and the articles I'm reading are government's home and buying US bonds.

And if you are, you know, sitting on the other side of a trade negotiation with Donald Trump, you're probably like, well, why would I keep buying you bonds when I can buy gold? And, and I think it's having a great year, like it's up 40% or something like that, which really surprised me.

For a commodity like that. But yeah, absolutely. it's having its moment and every asset kind of does. Because yeah, you're right. It had a sad since the two thousands, it had quite a sad little existence. Yeah. I've said on another podcast, I don't get, I didn't get gold bugs.

You take out inflation, your real returns were quite small, really bad. Yeah. Except for the last 18 months. Yeah, exactly. Mm. Yeah. No, everyone's laughing, aye. Yeah. And that's kind of the purpose of it essentially, isn't it? As, as a hedge against inflation. So if it holds its value, then it's kind of done it job, it was doing its job, but as an investment.

Like, no, no. So that was kind of my point, you know? the risk return was pretty negligible, I guess. Yeah. Yeah. Now this is a very sad, sad turn of the page for me, because I've gotta turn to New Zealand property. Okay.

Very disappointing news. Obviously, you know, as a mortgage adviser, deep in property myself, since we caught up in November 2022, we've had a drop of I think it's about a 10% price drop there. This is average New Zealand house prices and then it's been completely flat for the last four years. So out of all the assets that actually talked about, property's the only one that's down even further.

Yeah. Which is, a very sad state for me being a property investor and, a mortgage adviser. It's probably not a bad curve though, if you drew a straight line and ignore the big mountain top there just steadily gained in the last five years, you know? Yeah, that's right. That's compared to buyers.

I mean, first home buyers, if you look at 2020, 2019, we had all the gains up front, didn't we? And now we've gone flat, so instead of a straight line, we just experienced all the gains in that period. I think it goes to show, obviously as a property investor myself, mortgage broker, I definitely, I want kiwis to strive for home ownership.

I think it's really important to own the family home if you can. And if you've got the means to invest, I think that's really good as well, if you can invest in a second property. But I think, and why we want Paul on is because we are a big believer in diversifying. And at the end of the day, you've got the family home, but when you retire, you can't sell off a bedroom and live off that, right?

You still gotta live in the house. So we need other means of diversifying our investments to make sure that, we've got the means that we need when we retire. And that's why, you know, these other assets, especially, talking about today, Bitcoin is really, really important. And the one thing that, Paul, you mentioned at that chat when it was really doom and gloom about crypto, you said, look, if you dollar cost averaged since the start of Bitcoin, you'd be up 10000%.

Correct. And you and you just said, look, make it, you know, five to 10% of your holdings and dollar cost average. And that's the same advice you've had through this whole run, which is just awesome to see. Like, you know, if you, that that's the truth of it, you know? Yeah. the other part of that is, and I was talking to a guy last night at an event, like do have a dollar cost averaging out plan as well.

Yeah. So dollar cost average is and have a dollar cost averaging out plan. Yeah. Because trying to pick the market is just, you know, I'm in the industry and I'm too busy to do that. So do have a plan to make sure that you do have a de-risk, you do have that, that gain

at the end of it. Yeah. My advice is the same, right. And all the research is starting to show is still the same. Have a, a small portion of your portfolio in crypto, the class. Hang on to it for a long time. Yeah, absolutely. And because that's exactly what, Jono, our investment adviser talks about with dollar cost averaging out with your investments because yeah, if you, hit 65 and then your plan is to sell on that day, you know what if you're in a down market, you're absolutely buggered.

And all those projection calculators you look at actually aren't true. Yeah. You know, because you've, you've just missed out on all the averaged the average gains. So what's the moral story of these graphs? Is that Bitcoin's the best performing sell your properties and buy bitcoin.

That seriously, is it? Yeah. Bitcoin was the winner and I just wanted to share that with Paul. 'cause I remember meeting him on the day and it was really like negative news about crypto and, it's played out exactly like he said. It is the purest form of capitalism because there is no fakeness or government intervention or the things that you get in our modern, like massive bailouts. Yep. Or fake stimulation. It's the purest form of a cyclical, you know. Yeah. Capitalism. And I don't wanna believe the stuff I read all the time, but that's what happens in our industry.

And I guess the other thing, reflecting back on that is that it's just a time horizon. That's right. Like we were in a point in the cycle and housing is an a point in the cycle, and if you invest on enough of a horizon and good quality assets, then, you know, and that's the point. Yeah. Trying to be a day trader, you're gonna get sliced up. Sure. It's not fun. You're speaking from experience or

hey, hey, my wife might hear this. Just again if you're an investor, not a trader you have a horizon. Yeah. That sees past cycles like this.

Absolutely. Because in any sector you will have it. Yeah. And they just run on different timetables, like one of the traders I love watching online used to work for me. Well, he occasionally he'll put up the gold chart, and the gold chart is like the Bitcoin chart. It's just hundreds of years old.

Yeah. So it is just compressing timeframes. True. And S&P is a lot faster than gold, and crypto is a lot faster than S&P. Yeah. So it just, you know, that's kind of the cycles that we are, we're in. And so just understand where, what your industry is that you're investing in and what its cycles are, and have a plan that goes beyond those cycles.

'cause you, you're gonna have gain and pains and, you know, you gotta ride both. Absolutely. Yeah. And don't worry about being late. Like, you might look at charts now on S&P and Bitcoin and close to all time highs. Yeah. Just start and get involved. I asked ChatGPT, what were the earliest prices of Bitcoin?

And it told me 12 cents. Yeah. Oh, actually less than that. It said there were early, and I could be wrong, right? 2,300 Bitcoin for a USD, and then they went to an exchange at like 0.003, 3 cents. Right? Yeah. But it was nothing then, right. it was almost a gimmick, right?

The tech was there, but it was just the adoption's the key. and it needed network effect and as you say, adoption. And it needed a whole bunch of things to wrap around it, to get to where it's gotten to. And you know, I'm personally, in awe of the people who were so early because they made it what it is today with a whole bunch of belief.

And, you know, when everybody's screaming at you, it's a con, it's a scam, it's a whatever. And they've just held on and held on and, and just the vision, eh? Yeah, exactly. Right. Yeah. For some people, it's really affirming that the more people that say it's bad and it's, they're like, no, it's actually, it says to me, the people who are saying that to me are, are the ones I think got at wrong.

And they stayed with it, which is awesome. Yeah. It's still polarizing, you know, there's still some credible people calling Bitcoin a Ponzi scheme and all sorts of other things in it. It's gonna go to zero eventually. Can we just kind of ignore that for a second, but because that's out there, can you kind of just give us, like what is Bitcoin?

Like, what's the purpose of Bitcoin? What does it do? Well, it kind of evolves and it's different for different people. So it did start out as a money transfer service. That was the original white paper said that. But it was a generational one technology. So it hasn't really materialized as a widely adopted payment tech. Some people do that, but it, you know, in terms of widely adopted, you know, if you compare payments like Visa, or Stripe, it's not there, for other people it's a stored value. We live in a country that with political stability, despite what you see in the media, stable banking, you know, we know that if we have a hundred dollars in the bank, we can turn up just about any time we're gonna get it back.

If you live in Turkey, Argentina, right. That is not the case. Yeah. People don't put their money in the banks, and their value of their local currency is deflating away so quickly. Bitcoin is a better store of value for them. So it's a different use case. Stable coins are also playing a role in that.

and there are people who do treat it as an investment class. Like it is just a thing that I want to hold, an appreciating asset. Yeah. I can see that it's a long term channel that's going up into the right, which is a great news story for an investor. And yes, it will have volatile moments, but it's still going on the trajectory I want.

It has numerous kind of use cases, it's as material as the S&P 500, you know, the S&P 500 is an index, which is constructed of, you know, value numbers of 500 companies underneath. What is it? Yeah, it's a number. And ultimately Bitcoin is you know, a cryptographic number in that regard.

So it functions a lot like a share on equity in that regard. There's multiple use cases and you can obviously use it as a means of exchange. Yeah. And that, like, as you said, that was its original use case. Yeah. It seems to be morphing more into that store value aye that principally, and there's perhaps other

Cryptocurrencies that are gonna pop out and do that job. It often gets compared to gold. And a really interesting when analysis, I read just last week when, you know, a lot of the Trump tariff turmoil was coming in, Bitcoin kind of half responded like a share and half responded like a store of value.

And that just says to me that people believe in it in different things. That they're believing it's a different thing and that's cool. Like it's completely cool that they're doing that, but it's gold-like but not gold. It's share-like, but not shares, it's a slightly different thing in its own right.

And you know, my former employer often talked about cryptos as its own asset class. 'Cause it's got attributes of this. It's like a hybrid. I think that's kind of coming out to play. So it's an interesting, fascinating thing when you look at it and compare it.

Sometimes it's correlated, sometimes it's de-correlated, but in general, it's not particularly correlated with equities and shares and stuff like that. So it, it just does its own thing. I think, you know, back to your other bit, that's kind of what upsets people because it's like,

How do I categorize this? Yeah. Does it fit my mental model. Who's the issuer? Is a classic question. Yeah. It's like, it's who is Satoshi, who is, we'll get to that i'm sure. Is he Elon Musk? So it doesn't fit the established mental model for a lot of people and a lot of things, but that's part of the challenge of it as well.

A hundred percent. I think it's fud that it's going to zero. And someone made a point, recently I listened to, was there, there's never in history being something with a market cap of $2 trillion, which I think Bitcoin's surpassed that by a fair bit. Now that's gone to zero.

If we were talking like hundreds of billions that's happened, but in the two trillions that doesn't disappear. So if it did, it would be the first time in history. So it seems that arguments kind of losing a bit of traction. I agree. Like there are I don't know if they're still doing it, but there were people who were literally plotting on the Bitcoin price.

The amount of times it's been called, it's gonna go to zero and it's just, oh yeah. You know, it's forever. Forever. Yeah. In the early days it possibly could have, but it didn't. And it hasn't. And as you say, it's an economy that's bigger than many nations now.

It's a big, big asset. It's bigger than Google. It's bigger than silver. It's here to stay. That's great. My opinion.

Awesome Paul, we were just talking before a bit about how the government and the IRD specifically are reacting to this wave.

We're keen to get your thoughts. Obviously, I'm not gonna put you in any hot water, but we just wanna know, like, do you see it moving in the right direction? Do you see things with crypto going well, because my opinion on the tax laws, you know, compared to other asset classes, I've written the word draconian here, so yeah, we just, you said that?

That's a buzzword and a half mate. Set the tone because, you know, I've recently sold some Bitcoin to invest into a property. Bought new family home. As I was, you know, as that was happening, it wasn't a big amount, but I just thought, you know, the tax that's eligible in this.

For all of the pain I had to go through, you know what I mean, compared to another asset class, like if I had sold shares was pretty crazy. I was being taxed on my income tax, you know? And that's, I know that it's different in other countries, especially Europe. They look at it a lot differently.

But, you know, I mean, what are your thoughts? Like, do you see things developing in that space? Not just tax, but overall, government view? So the way I look at it is if you look at what President Trump's done and the leadership that's now coming outta the US compared to last year. I think that will force governments to rethink this at a regulatory level.

I should preface that we're saying that the regulators in New Zealand are incredible. Like I met two of them last night in the event. Mm, right. Cool. The access we have in New Zealand is incredible and we so in good, safe hands, the ability to get in and speak to them is unprecedented.

You just don't get that in other markets. And in my experience, they've always been willing to engage, really open to learning. You know, they have rules and all that sort of stuff that they have to adhere to. I think we are a little bit, laissez fair, I guess, in terms of

what other markets are. And what I mean by that is got some guidance sometimes we could do with some hard rules. There are countries who have, you know, gone deep down their taxonomy. So, you know, different coins do different things and are treated different ways. Oh wow. We we're not, we're not there.

Yeah. And I think we probably would benefit as a sector from being there. There is some work going on in, in a few of the departments around some of the emerging technologies. So tokenization, which is how you take a real world asset like a house and fractionalize it and have, you know, investors in that, whether it's commercial property, gold.

Oh, incredible. Whatever. Yeah. So that's a really big topic inside of crypto, and it's starting to be an emerging topic inside of the regulators. Yeah. And 'cause it looks a lot like a financial product and it should be. Yeah. They are certainly engaging in that and we've, we as a business have always tried to be acting like it's a regulated product.

We are on the FSPR, but it, we're licensed, but we're not regulated. And there's a distinction there. So we think it's good for the industry. It'll give, you know, investors certainty and all of the stuff that comes with it. We're also saying that along the way, why don't you fix up a few things like our custodial laws on that are just, you know, at odds with other nations and things like that as well.

Yeah. In terms of tax, like that's a really hard one. Having looked at stuff globally, it's clear that some nations view tax as a strategic tool. Yeah. And are open to using tax to attract talent, wealth into their nations. You know, Portugal's a classic example.

New Zealand doesn't seem to be on that bandwagon, and I think that's possibly a missed opportunity. Yeah. You know, we've got golden visas, but that's not a tax incentive. It's like a come in and invest thing. True. I do think that's possibly the area where if it lined up with where a visionary government wanted to be or could really be a good lever.

Yeah. I think having tax that treats this asset class the same as other asset classes would possibly be a good outcome. Yeah. Yeah, I agree. Reduce complexity and help understanding and all that sort of stuff, we've got a guy called Tim Doyle who looks after us as a company, but he also runs a business just helping crypto owners understand their tax because it's complicated.

Yeah. It is very complicated. Andhe's doing a stellar job of educating the market on that, but it's hard. Yeah. And it's possibly too hard. Yeah. I guess is the question, is it a challenge? No, it is really hard to do yourself. Because like you mentioned, you know, if your dollar cost averaging into an asset, you would have to, you know, just calculate your profit or the taxable amount on that.

You'd have to go back each point the amount records on every transaction. Yeah. It's a quite a big hefty obligation. Yeah. And look, there are softwares out there that can do that, and they can track your wallets and give you decent reports. Yeah. Some of those are better than others. Yeah. I think Inland Revenue will be clear that you can't rely on that stuff as well.

But again. It's just hard. Yeah. And I don't think it has to be. Yeah, I agree. And it might actually be a good thing for now 'cause people are more reluctant to sell, you know? So it's good for the price. It's good to see there's adoption though. There's obviously some you know, regulations around what's happening in KiwiSaver and kōura. Yeah. You know, allowing holdings. There's another, there's a way you can get a hundred percent holding as well in KiwiSaver with a minimum balance of $50,000 which, right.

Which, I can't recall the name of that one, but, do you see more of that happening in the KiwiSaver space? And, and what are your actual thoughts on ETFs and things? 'cause it kind of breaks some of the principles of self custody, and not your keys, not your crypto. Yeah. My personal view is if you come back to where I was talking about like if you can have some crypto in your portfolio

It's a great thing. So I'm really, really stoked that Rupert's been brave enough to do it. He was the first one, I believe. There are others out there, where you can, you know, they have some exposure to crypto now. And so, as an asset class, like I said, it's got a good sharp ratio that, which means risk return is good.

It's semi correlated to de correlated. So when other markets ying it doesn't yang, it's a good thing to have in your portfolio and you can just get outsized returns and little insight we're about to release a paper that looks at what ultra high net worth families are doing.

The key difference between them and everyone else is one time horizons. They think intergenerational wealth. Yeah. Like that's how long they think, which is get your head around that. Yeah. And two, their allocation to alternative assets is quite high versus the rest of the market.

So alternate assets are things like private equity. So they're you know, investing in companies and those are big checks. But they're investing in gold and they're investing in crypto and in relatively high numbers. Still in the 10% range. But they're into it. Yeah.

And when I say high numbers, like the proportion of high net worth families that are into crypto is different from the rest of the world. They are embracing it at a level that's higher than the rest of the world. Yeah. That tells you something. Yeah. Back to wealth generation, which is kinda what KiwiSaver is about, it's about, you know, us generating wealth so we can live happily in our retirement.

Like, I think it's a great thing to have into the portfolio. Again, I've gotta be responsible about it if you are bullish enough on crypto to do it, go a hundred percent. You can do it through us, right? You can have an entire portfolio and self custody in the wallet, or however you wanna do it.

My view on ETFs, I think it's opened the asset class up to a bunch of people who are never gonna buy it. The complexity of a wallet or signing up to an exchange and they just weren't gonna do it. Yeah. Yeah. Is it an artificial wrapper? Yes. Do the purists hate it?

Yes. But you know, it's good, it's good for everybody overall aye.

In the last two weeks, I think they've taken $8 billion, like $8 billion of Bitcoin has been taken out of the market. Just on the ETFs. For the ETFs? Yeah, for the ETFs. Like it's, wow. It's helping the native holders, and a price mechanism.

Yeah. You know, Back to favorable tax, there is a point in time on the fifth rules where it works and then there's a point where it won't work. Yeah. Because if you get paid on the 50K threshold, you need some serious tax advice. True. Exactly. Yeah.

I think, at a net level, it's just another way of getting exposure to it. I'm kind of pragmatic about that stuff. I know there's purists out there that hate it and good on them. You know, they're the ones who've got us to where we've gotten to. Yeah. But I just think if you can just sit back and say, is the next 50 million people coming into crypto gonna get exposure via an ETF?

Does that upset you? You might not think about it. The way they are, I guess. Yeah. Yeah, that's right. And there's just a large portion of the market that that's how they invest. Yeah. So, and it's the thing that I wish they understood more is it means if you are the Canadian Pension Fund, one of the biggest funds in the world or the Norway Pension Fund, they have rules.

And buying Bitcoin isn't on the rules, buying ETFs is on the rules. True. So suddenly, a whole bunch of investors who were kind of shoehorned out of it are now eligible to it. And so that's a good thing. And then if you look at, say, Michael Saylor's Strategy company, that's about to go into the S&P 500.

So you're gonna have exposure to crypto anyway if you have an S&P 500. Yeah. Coinbase is already in there. Yeah. Well, you've got some exposure to crypto already. It might be negligible, but you're getting there. And there'll be more and more companies like that. There will be, and they'll just have it on their balance sheet or, or have it like they're just becoming, circle, which is a stablecoin provider.

Like they're, going gangbuster, like there's a good chance they're gonna make it into the S&P500 as well. So more and more crypto companies will start getting in there anyway so, you know, even those index funds, you're getting a slight exposure. Yeah, I didn't even think about that.

Strategies are sort of a wild Bitcoin success story, eh? And they are going into the S&P aye? I read that they just had to have a couple of quarters of profitability, which based on their balance sheet should be happening. Yeah. Or has happened. Well, it's a fantastic business model.

So, you know, if you don't know them, they're a software developer. They went, oh, AI's coming. We're probably gonna lose that game. But they had a few billion dollars on their balance sheet, and they started buying Bitcoin and then they started issuing debt. Yeah. To buy more Bitcoin. And he's just been doing that and, debt and stock.

And stock. Right. Yeah. It's still fairly experimental. We should be very candid about that. it's a high risk strategy. Yeah. Yeah. To say the least. But they are now one of the bigger Bitcoin holders on the planet. Those guys. Yeah. And about 3% I think. Yeah.

Yeah. It's significant. But their performance has been rewarded. It's cool. Yeah. Yeah. And just hope, hopefully they're all set up for the next potential winter, if there is one. You know, they've got the right safety mechanisms in place. That's the biggest question. Can we stay liquid? Yeah.

What happens when price goes down? I wanna know who's gonna move in New Zealand? What public companies are going to bring this into treasury? You know? 'cause strategy was the first micro strategy when they started it. Yeah. And now, you know, over a hundred companies in the US and around the world.

I think a couple in Australia that I researched. I dunno about the big companies that are talking about, like, I really don't, but I do know that some small businesses have been doing it in New Zealand for years. You know, I was fortunate enough to talk to a client of ours who was in a really hands-on industry like painting and, you know, that sort of stuff.

Been accepting Bitcoin as payment since 2013. Wow. Brilliant. And I don't know if he, he or she has been hanging onto it, but it's like pretty cool if you were. Absolutely. So in a way, I think there are companies out there, well I know there are companies out there that have been doing that.

And so in a way they've been doing the sales strategy for a while and that's incredible. Almost like the retail market, which is the back bone aye, so it's, yeah interesting. I wanna take a second, Paul, to talk about, like self custody and how you see that evolving over time. 'cause for me, you know, as

a smaller portion of my portfolio holder. That's always a big concern of mine, you know, of how to actually self custody safely and what is the best method. So I got given a Trezor wallet from my, by my friend about five years ago. Yeah. Just use that since worked just fine. Yeah. So look, if it hardware wallets, which is what Trezor a more secure cold store wallet than a

than a hot wallet. So hot wallet's always kind of online. So think of the apps on your phone. They're always online. Yeah. And that just carries with a little bit more risk because you could be hacked. Could be hacked. Someone could take over your phone. Or the screen share. Get your passwords like it's possible.

Yeah. Whereas these encrypted, devices, they're offline. You only put them, they only liven up when you plug them into your computer or however you're doing it. Yeah. And they do the cryptography there. So, self custodial does come with responsibility. Absolutely. Yeah.

Great power, great responsibility. Yeah. And okay, uncle Ben. So, you know, you do need to have a think about, uh, your processes and how you store your c phrase, the passwords. All that sort of stuff. And, again, if you're thinking intergenerationally. Yeah. There's, there's quite a bit of thought that needs to go into that.

That's right. Yeah. What if, what if something happens to you? Correct. Yeah. How do you, how do you recover that? And, and, you know, there are some, some good advice online on how to do that. Mm-hmm. In terms of, you know, you can you got a 24 seed phrase ones you get six to this friend, six to that friend.

You don't tell 'em obviously. Yeah. And or you can use wills and trusts and all that's sort of stuff. That's right. Yeah. There's an interesting company in New Zealand called Everlasting Liquidity who, working on, estate planning for people. So how you can when you unfortunately part ways with the world.

How you can pass your crypto wealth on. Yeah. And so it's a, it's an active area at a lot of people are working on. That's really cool. Part of the answer sometimes is this thing called a multisig wallet. So that's having, having multiple people being able to sign a wallet. Yep. And you need say two or five, or sorry, two or three to be able to sign it and

one can be your lawyer, one can be an independent trustee, and one can be you or a family member or whatever it is. And so it's just another way of kind of reconstructing that sig, that password, the safety net. Yeah. So that, you know, should something happen to you, you can, your family can benefit from your toil, basically.

Absolutely. Yeah. And why, for that obligation, obviously you've got your, you've got your hot wallets, like you said, but are we gonna see, you know, any other custodians, third party custodians come into the market? Like, is that something you guys are gonna do potentially or?

Yeah, look, in April we got acquired by an Australian company called Swifty.

That's right. Yeah. And they operate a custodial model. Oh, brilliant. Yeah. And so.

And that's an offline one or just a, they're unprotected.

They're a custodian. Cool. When you trade on their platform, they're holding their asset for you. Yeah, yeah. I think, in the early days of crypto, that was a high risk strategy.

Yeah. But on the wallet, on the exchange. Yeah. But, but the, the hacks don't happen at anywhere near the frequency that they used to have. So that custodial model is becoming a much more, acceptable way of doing it. Yeah. And you know, businesses are getting better at it and all that sort of stuff.

So I think over time that the balance between security and ease of use will skew towards probably ease of use. Yeah. 'Cause the user experience is still I would argue that the hardest part of crypto, like, yeah, what is this? What is this seed phrase? And you know, do I need to keep it? Well, yes, you need to keep it.

Yeah. Just the fear, right? Yeah. I mean, there's a lot of fear behind, you know, if something happens, that's my whole you know, good chunk of my net worth gone. Correct. Versus, you know, you just feel like you're, obviously it's the safest it can be, but with your main banks throwing your cash there, you don't have to worry about it.

Correct. And so, you know that, that stuff's evolved incredibly in the last three to five years and yes, there are still hacks, but they're just like bank hacks. It's social engineering. They're not breaking our software. Yeah. It's

Give me your password.

Well, yeah, people are being fooled through, you know, LinkedIn ads or whatever it is that's going on. And that's no different from banking, right? Yeah, it's an important conversation. I like, I'm sort of newly into Bitcoin. So I've just moved my KiwiSaver to kōura. I've got my 10% allocation.

Rupert will be stoked.

Yeah. And I've got a ledger and, and it's, you know, we're talking about security. It's sitting in my laptop bag. There's not a lot of crypto on it. It's still on the box and the seed phrase is in the box. You're waiting to be robbed. Yeah, well if anybody's tries to pull me up after this, you know, I can defend myself.

It's so, it's important aye, and as you start building it and it becomes, a bigger allocation regardless of the allocation, you don't want lose this stuff, you know?

Well, you need to, again, you need to think about that stuff and separate the device and the pin phrases, from the c phrases and

I can't even be under, in the, under the same roof.

I was thinking about a fire. Yea fire's a big risk. Yeah. Yeah.

Sadly, this is a, a problem that has come up a lot and has been thought about, but you can get, I don't know what the name of it, but they can get these steel things, those little canister things. Yeah. We need canisters or steel things that are etched with the seed phrase in

So could survive a fire and they've tested it, you know, and

bury that six feet deep

Basically, and then, you know, there are people who are who use private boxes. What are those? Safe deposit boxes, you know, they put the seed phrase in like in a vault effectively to do that.

And yeah. But again, if you've got a few hundred dollars, not really a problem, but no. If you've got a few million, you need to think about that stuff and only you can. It's the answer for me is how much could you live with yourself losing. Yeah. Yeah. And if you get to that point, you probably need to have a plan around how you store that stuff.

A hundred percent. Yeah. And again, we live in a world of AI where like, you just ai, how do I, gimme a plan. True. Yeah. And it'll be able to do that for you. Personal security and how you store that stuff is a big part of what you need to do. Yeah.

Don't take that advice. David. One of the financier advisers here we call him a bit of a doomsday investor. Oh, good. And he bought a bunch of silver about five years ago and he buried it just cracked me up thinking about him digging a big hole. You know what I mean? Just, I love that idea, you know, for intergenerational and bury your seed phrase and a little treasure map.

Yeah. Yeah. Wouldn't that be exciting? Yeah. There are people who've done that, like it's a thing. Yeah. Yeah. Paul, I think one important thing I wanna talk about before we shut off is touching back to when we first met and our obligation as financial advisers. This is more about education, right? Mm-hmm. Than pushing a product. And Easy Crypto's really big on that. You guys have got a platform where you educate and you let people do their own research Yeah. Before they actually buy something. Yeah. So, you know, it's good to make a disclaimer here and a message to all our listeners or our clients or potential referral partners.

It's all about doing your own research because that's what's gonna help you, give you the confidence to hold long term. You know what I mean? Get educated so you actually believe in the product yourself rather than your mate telling you. This is a great investment. You know what I mean? Yeah. Look like that's a great way of saying it.

Like any investment, whether it's crypto or housing or whatever it takes conviction. And conviction should come from education. Hundred percent. So do research it up on Easy Crypto. We've got a place called the hub, hub.easycrypto.com. Which is kind of a knowledge base for, you know, what are wallets, how to do that, what's Bitcoin?

FAQs. Yeah. Basically. And you know, as much as we, can in a fast evolving space document, like we do that. Because we want our customers to be informed. And you know, it's not without risk. If you bought a house in, at the peak of 2021, you're probably a little upset now.

Yeah. a bit gutted. Similarly, you know, if parking the last sort of six months, if you bought Bitcoin in the same time, you were probably a bit upset. So do your own research. invest wisely, investwhat you can. And again, just have a plan.

And that's for me the one thing I would really wish New Zealand's financial literacy was better around just having a bit of a plan around this stuff. Yeah. and I'd love it to be crypto, but please don't, that's not an exclusive thing. You know, have a, don't sit in default KiwiSavers.

Yeah. Don't, you know, do some research. You have to be, as a nation, we're a little bit passive around some of that stuff, I think. Yeah. And we just need to be a little bit more active. Yeah. Do a little bit of a legwork and it's harder, but it's staying poor is really hard.

It's way hard. And I'm a father, I want this nation to be successful for my kids' sake. Yeah. And so that, this is the kind of stuff it's gonna take. Yeah. I remember us catching up how you were just getting your, I think it was your son into crypto. Yeah. He did pretty well.

Yeah. Awesome. Yeah. Has he sold, as he still surely. No, he, no, he did sell out. 'cause he's going to university, so he sold his bits and

he's investing in his education. Someone's investing in his education. So, you know, but that was part of it. And he'd done some research and, you know, he chose his coin and, you know, it was a big part of it.

That's fantastic that, you know, I think he was 17 at the time. He's experienced that now. Yeah. And so for him, he's already kind of made the first leap and the next the barrier to doing it again won't be as high. Exactly. You know, if the first time you do anything, whether it's buy an equity or buy a crypto or whatever, it's always a little bit freaky.

And then once you get comfortable with it, be responsible. You can buy for $50 on our platform. Yeah, yeah. It's not a high barrier to entry. It's not like having, you don't need thousands and you still get the same gains. Right.

Bitcoin goes up 10%, your 50 bucks goes up 10%. You'll experience that. So, start is the, you know, I guess that's the one thing, and I know as financial advisers, you guys are doing this as well because it's fantastic. People reach out to you. Yeah. But you've gotta start. Yeah, exactly.

Yeah. and so just start, do your research, have a plan, both in and outta the markets, and have a horizon that's appropriate. Yeah. And you know, the lessons from the ultra rich are really clear. The lessons from the analysis are really clear. If you've got enough horizons under your belt, you're gonna do well as long as you're buying quality assets.

Absolutely. Yeah. Yeah. And, you know, take it from there. Awesome. And, yeah, horizons are really cool if you believe in the Bitcoin, $1 million a coin.

Oh, Michael Saylor

Michael Saylor or more than that even on, on some talks. Yeah. Then although the market looks like an all time high right now.

Yeah. You're actually buying at the bottom if you can actually imagine. What's gonna happen over time. And if you believe in that concept, then you are buying at the bottom today. Yeah. Correct. And there's a, it's a really flippant statement, but, in crypto, and I'm sure it applies to other assets.

The best time to The best time to buy Bitcoin was five years ago. The second best time is today. Yeah. Because, again, it's in a channel that consists, that keeps moving in one way. Yeah. Over time. Over enough time. And that's the bit that, as someone who's in the, an investor, that's the bit that's matters to me.

And so that will it duck and weave? Yes, it will. But, it's part of it. Expand that horizon. Yeah. Volatility is actually a good thing. 'cause it means the asset is moving. Yeah. And it's got scope to go up and down. Correct. Yeah. Correct. As an investor you don't want an involatile asset 'cause it's not keeping up with inflation, stagnant.

Our psyche in New Zealand's a little bit scarred. I think, 1987 was probably a defining moment in terms of New Zealand investment history. Yeah. A lot of people got wiped out and all of those shares and equities and all that sort of stuff. Yeah. My mum was exactly the same.

She's like, I'm never touching that stuff again. Yeah. Just property. Just property. Right. Yeah. And good for people like you. But times are changing now. Times are changing. Yeah. Well, but again, like as a psyche, I just think we as a nation need to be better educated around investing.

If you go to places like Singapore, US, that's what they talk about. Yeah. And we don't. It's really noticeable. And so having people become more aware of what the opportunities are, alternate assets, how they can do it, funds, housing, even housing funds. Right. Yeah. You know, they get exposure to a sector.

Yeah. So, I think that's part of the, what we do on a daily basis and just try and make people aware of the opportunities that exist. Yeah. Awesome. Brilliant. Well, Paul, thank you so much for your time, mate. Your insights have been just really terrific and we look forward to hopefully having you on maybe next year and the year after that and just do an annual review aye, and just see how the business is ticking.

Pull up the, the receipts. Yeah. Nah, thanks again Paul. Really appreciate it. Alright. Thank you for having me along. Cheers, mate. Cheers. Cheers, cheer. Appreciate it man. Cheer. Thank you.

Rory: 40-year mortgages have become a bit more common. Now, they're not here in New Zealand, but I can almost guarantee that we will be seeing them in the mainstream in the next 10 years.

Dan: So right now in the States, you can get a 40-year mortgage. They've even got 50-year mortgages.

Rory: They just walk into the shop and get given a 40-year mortgage. That's where I find it really scary.

Dan: I turned 40 this year. So if I had been able to somehow muster up a property when I was born, I'd just be debt free.

Rory: You're paying more interest. Doesn't that make you want to throw up on the 40-year?

Dan: Not necessarily, Dan.

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Rory: Welcome to the next episode.

Dan: Thanks, mate. Blueprint Podcast.

Rory: Oh, thanks for having me, mate. Episode 10. We're chewing through it, aye?

Dan: Yeah, we are. It's a bit of a milestone, aye?

Rory: Yeah, absolutely. What was that statistic you mentioned about podcasts?

Dan: Oh, I think my numbers are slightly wrong, but I think it's about maybe one in five podcasts get to 20 episodes.

Rory: Yeah, I thought it was a lot lower than that. So less than 20%. So our goal is to be in the top 20%. Absolutely. This year.

Dan: Oh, that's brilliant, man. Well, look, it's the Blueprint Podcast. We talk about all things mortgages, insurance, and finance, and keeping our clients and referral partners informed.

Rory: We've got a really fun topic today. We had a lot of fun planning this episode because it's such an interesting topic and it's around your repayment term, your loan, and we're talking all about 40-year mortgages today. So why this is sort of more current—obviously, debt levels in countries like New Zealand, Australia, especially, and Canada as well, have reached a point where, to make options more affordable for people, 40-year mortgages have become a bit more common. Now, they're not here in New Zealand, but I can almost guarantee that we will be seeing them in the mainstream in the next 10 years. That's my opinion.

Dan: Why do you think that?

Rory: Just where things are going, the way that the financial industry is developing with all the different products that are available. It was a thing previously in New Zealand, back in the seventies and early eighties, you could get a 40-year mortgage, and for responsible lending purposes, they made it exclusively 30 years, but things have changed so much. We'll get into that in the podcast, but things have changed so much over the years and it's made it a bit more, I suppose, justifiable as a product.

Dan: Now we're also going to be sharing our opinion on the 40-year mortgage. We're looking at it from every angle. We're not just going to shoot it down and say it's a horrible idea, are we?

Rory: Absolutely not, you know? We can make an argument for or against it, you know? I mean, perhaps I'll be more on the "for" end and you'll be on the "pay your mortgage off faster" end.

Dan: Should we do that? Should we do it? Because that's very on brand for me, isn't it? Pay off your mortgage.

Rory: It is. So we'll play that game. And we'll do the pros and cons and have a bit of a conversation, because it's a very thought-provoking exercise, what we're going to undertake.

Dan: The 40-year mortgage. There's a couple of perspectives as well, aye. There's for home ownership, and then there's for investment. You can make an argument for both, but you can very clearly define when it's good and when it's bad, and we'll do that as well.

Rory: I suppose getting into it, 40-year mortgage—obviously, we've already got your 30-year mortgage. That's the staple here in New Zealand. Which countries are looking at 40 years or providing 40 years?

Dan: So right now in the States, you can get a 40-year mortgage. They've also even got 50-year mortgages.

Rory: Which feels a bit sickening to say that, you know, it's wild, aye. California, 50-year mortgages, and the UK, the mainstream banks provide it, very long terms in Japan.

Dan: What sort of terms are we talking in Japan?

Rory: I think you can get really long-term mortgages, like 50, 60 years, but the property industry in Japan's very unique. It's very low price. Big cultural differences as well. Massive around home ownership, massive cultural differences. So real estate, it's not even comparable. Like it's such a unique economy, Japan, you almost can't compare it to the rest of the western world, you know, with the ageing population, like how they actually manage their workforce. All that sort of stuff. Fascinating though, aye.

Dan: Yeah, but I suppose the good comparisons for us, because we're—it's always Australia. Like I like to think that we're 10, 15 years behind them and the main banks have started to introduce the 40-year there, Canada and obviously, yeah, there's some in Singapore as well with restrictions on LVR. So it's a thing. It's only a matter of time until they're not commonplace, but they're a piece of the puzzle here in New Zealand.

Rory: How new are they in Australia?

Dan: I think they've been around for a while, but they're becoming very mainstream now.

Rory: Right, okay. With the size of the loans there and the repayment plan. So, I mean, you can play it any way. You can say, look, if we've got another asset base, if we've got a big super, you might want to allow a 40-year term because you're always going to be able to pay off the debt when you retire. But I think the big thing to focus on is like this concept of paying so much more interest to the bank.

Dan: Right. Yeah, like, I think we did the numbers. If you have a $800K loan and you pay over a 40-year instead of a 30-year, it's something—it's almost $400,000. We've got the number here. Right. It's almost $400K extra interest that you're paying.

Rory: It was $386K.

Dan: Okay. But we also talked about opportunity costs.

Rory: Right. We'll get into that. Okay. I think touching on that, like the big reason why the handbrake's been put on for 40 years here is because of the responsible lending code.

Dan: I believe I'm very proud of the responsible lending code we've got in New Zealand. I think it's very appropriate and, you know, some could even say it's relatively strict, right? If you have just an owner-occupied home, every time you're applying for a loan, you have to get approved on, say, what they refer to as an exit strategy. So like, if you have a mortgage, how are you going to be debt free for retirement? That's essentially the question the bank is asking. You're not going to get approved for a loan in the main bank if you're going to be into retirement with a big mortgage and no way to pay it off.

Rory: So first home buyers in their forties. Can we do that in New Zealand?

Dan: Yeah, absolutely. Bread and butter.

Rory: So what, late forties?

Dan: Yeah, late forties. So what they'll do if you don't have any other assets, so like, when they talk about exit strategy, you could say, look, I've got a super, I've got $400K or $300K in KiwiSaver. When I retire I'm going to sell my house, or I'm going to withdraw my super and pay it off. That's an exit strategy, right? I've got a second property. When I retire, I'm going to sell the investment property and pay off my home mortgage. That's an exit strategy. What's not an exit strategy is, oh, I've got these forecasted gains for my KiwiSaver. I'm going to use that to pay it off. That's not an exit strategy. Unrealised gains, you know?

Rory: Okay.

Dan: Another one is, oh, I'm going to inherit my family's estate. That's not an exit strategy to the bank. Because it's not confirmed that you're going to inherit, you know what I mean? So there are different ways to skin it. But going back to your point, you know, for people in their forties, fifties, we help all the time with first home buyers, but you would just have a reduced loan term. The loan term that they work towards is a retirement age of 65 or 72. So 72 is like the top end as a retirement age. So let's say if you were 50. You could still buy your first home, but you'd have to pay it on a 22-year loan term.

Rory: Okay.

Dan: Do you know what I mean? So that would be the restriction there rather than getting a 30-year mortgage and just saying, oh, I'm going to make lump sum repayments. No, the bank says, we're actually only going to approve it on a 72. 72 is sort of like the maximum as well. Loan term you can get.

Rory: Okay.

Dan: So that's a really big reason why they're not commonplace here is because we've got a really, you know, good, stable, maturity risk, responsible lending in New Zealand. It's a really big part why it's not a big part of it.

Rory: It's interesting though because on that basis, you can pull that age back because we're talking about client age, maturity risk, a 50-year-old buying a first home. Why then can't a 30-year-old buying a first home on a 40-year term? Do you know what I mean? They've got the runway. There's no maturity risk. By the same argument.

Dan: No, you're exactly right. Like if you were to have the exact same market, it would fit within the responsible lending code. If you are in your thirties and you were going to retire at 72, it would fit within the responsible lending code.

Rory: Right. And that's why it's in Australia now and that's why it's coming to New Zealand. That's why we're talking about it.

Dan: Yeah, exactly. I mean, you know, responsible lending code or not, you can't penalise someone if they want to pay more interest.

Rory: Yeah, that's right.

Dan: Yeah, exactly. The banks won't object.

Rory: Yeah, I feel like the 40, it's such a taboo topic. Because obviously we were talking to some of our colleagues about what our topic was today, and they said, look, even 30 years is a stretch. You know what I mean? And so this idea of now having 40 years, especially for those who are very focused on, you know, paying off your mortgage faster, get debt free as quickly as you can, and also those who are against property ownership at all—just living in your own home, you know, invest in property, but rentvest, you know? Rent where you live and own rental properties, right?

Dan: Yep.

Rory: So there's that. I mean, they would be hating this idea.

Dan: Yeah, absolutely. Rolling around filthy about it. When the day, when 40-year mortgages come to New Zealand, you know?

Rory: It's contrary to a lot of what we preach, aye, you know?

Dan: It seems the goal is to pay it off faster.

Rory: Yeah, absolutely. That's what we like to help our clients achieve, right?

Dan: Yeah, yeah, for sure. I'm a big pay-it-off-quicker guy. I'm going to preface this and we're going to get into it in a second, but I'm a hundred percent—any opportunity to pay off your owner-occupied mortgage quicker, you should do it. But I'm also open to investing alongside that. Having investment properties, putting cash towards investment properties. But if you have an opportunity to pay off your owner-occupied mortgage faster, you should do that. Why not? Doesn't have to be a five-year term, 10-year term, but even a 20-year term, buy a property where that's affordable or will become affordable as your income increases.

Rory: Before we do some numbers, we'll get into some pros and cons of it. So yeah, I guess the biggest one is just affordability versus cost. Like that repayment is going to be much more affordable. Like we said, we'll work on the figure of the $800K mortgage. We did the numbers. It's $400 a month cheaper.

Dan: Right. So on a $800K loan, on a 30-year term, you're looking at about $4,800 a month. And on a 40-year term, about $4,400. It's not a huge discount for another decade of repayments.

Rory: Right. It's actually not, it's just over 8%. For the folks at home, we're going to work off a 6% interest rate for our example. And that's just assuming that's your average rate. So I feel that's quite conservative as well in terms of being quite a higher rate. That's, in recent years, probably a good middle rate.

Dan: It doesn't feel like that much savings. Cashflow savings, you know, $400 a month.

Rory: That's right. Depends on what we do with it though, aye. Foreshadowing where this conversation's going. I like it. Depends, depends on what we do with it. But for some people that's, that's a lot, you know?

Dan: Absolutely. And it may be $4,400 is an affordable figure and $4,800 not.

Rory: But where I really don't like the 40-year mortgage is like when you can't afford a 30-year mortgage. So you get the 40-year, like with your actual cash flow. I really don't like that because it just means, look, this isn't affordable. This option isn't affordable for me. It just will be putting you in a position where we know we are not going to be able to reduce that debt. You know what I mean? So that's something to think about.

Dan: Some stats in New Zealand and from what we see from our clients—the cost of housing in New Zealand, which traditionally we spend a lot on the cost of housing, a lot of our income compared to other countries, more so the States. I mean, Australia's the same, Canada's the same. 50 to 60% of your net household income goes towards housing.

Rory: That's crazy.

Dan: That's like standard in New Zealand. The clients that we deal with, it's pretty standard, especially in Auckland. 50, 60% of your income's going towards your housing. That's all costs included—your net income after tax. That's all costs included. You know, your rates, insurance, maintenance, that stuff's going to go towards your housing. It's a massive part of your expenditure.

Rory: It's quite a wild figure. Is that recommended to us?

Dan: Yes. You know, that's what you spend to pay off your mortgage, get ahead and build your base, your asset base, which is the most important asset, which is your family home.

Rory: What would the numbers be if you are a renter living a similar lifestyle? Any idea on that?

Dan: So, because I've thought about—we spoke about this, about my place. If you rented yours out. I think at the peak of interest rates and what we think we would rent our house for, it was about a 33% premium. So we're probably sitting in that 50, 60% with the mortgage. Versus if you're renting, you're probably down at like 40%.

Rory: Yeah, 30 to 40%. I'd say, yeah, probably in that middle 35%, aye. Let's just say that because you take away some of those costs, you're not paying rates, you're not paying maintenance as well.

Dan: Absolutely. Just paying your utilities. It's a fixed cost.

Rory: Yeah, you're just paying your utilities. So, I mean, there's no question about it that it's going to be much cheaper if you are renting, you know? In the short term.

Dan: Right. But if you're owning, obviously you've neutralised, you've set the lid on your expenses of your household. You know, you said, look, this is what I pay for the property and one day the house can be paid off. You know, you neutralise your cost to live.

Rory: And then you can't do DIY on a rental, you know?

Dan: Oh, so what sort of life are you going to be living?

Rory: Depends if the landlord's your mate. I had a client who had a rental property, had the tenants in there for 20 years and they said, look, I'm going to rent forever and they were a bit handy. They said, can I just make the place a home? They said, yeah, no problem. And so they let them fully renovate the bathroom. It's like if you want to spend your money on that, go for it.

Dan: That's crazy. Like the landlord's living the dream here, right? I mean, how good does it get?

Rory: Next minute the valuation's gone up and he decides he wants to flick it.

Dan: Flips it, aye.

Rory: Do you want to do the laundry before we move on?

Dan: Oh my God, that would be naughty.

Rory: That's what people are spending on housing and I feel like if that was stretched out to 40 years, then yeah, it's not making financial sense long term, but we'll have a chat about that when we do our numbers in a bit.

Dan: What about Dave Ramsey's numbers? You've written something down here just so we can have a little bit of a boo-hoo moment. A lot of people might know him—he's big online. He is a financial influencer in the States. He's an old American guy. He is like, pay your debt.

Rory: I know who you're talking about. I really like some of his teachings, but he's a bit hardcore, you know? And so obviously housing's a complete different kettle of fish in the US. It's a lot cheaper. And so he recommends to people who follow his teachings, if you're going to buy a house, get it on a 15-year loan term, and the repayment can only be 25% of your take-home pay.

Dan: Yeah, you need a bloody good mortgage adviser in New Zealand to pull that off.

Rory: Or you need a massive income.

Dan: You need a massive income to pull that off in New Zealand. So that's not applicable even in America now. The people who follow him are saying, look, Dave, like, well, we get what you're saying. You know, pay all your consumer debt off, live frugally, invest 15% of your income. But this number doesn't make any sense. We can't buy family homes anymore. You know, the cost of housing has gone up and we have to accept that's going to be part of our life now, you know?

Rory: Gee, that would be lovely, aye?

Dan: It's a bit out of touch and I mean, where it sits is when you're doing your own budget, 50 or 60% of your net income going towards housing is pretty normal.

Rory: Okay.

Dan: Borrower suitability, I mean, this is the big thing like you touched on at the start. If someone's in their forties, is a 40-year term, is that going to be feasible? What do you think?

Rory: Well, not if the goal is to have a freehold home to retirement, because you won't get there.

Dan: You're not going to get there. And that's the responsible lending code—we have to have a plan to be debt free with a retirement age, and we have to present that to the bank and the bank needs to sign that off. Right? So it wouldn't be approved.

Rory: Scenarios where maybe it could work—you're a business owner and you had the belief that you would have a sellable business at some point in time, maybe. So then there's a lump sum that you could trim off the rest of the mortgage, you know?

Dan: A hundred percent. So you could probably make arguments where it could work, but generally speaking...

Rory: Yeah, generally speaking. I mean, that's the thing, exactly what we were saying before the show. If you are an entrepreneur, if you have ways to utilise your capital outside of paying off your mortgage—because paying off your mortgage is a guaranteed return. But if you have ways to leverage your capital and get a higher return, then that's where a 40-year mortgage could come in handy. But where I find it so scary is for people who aren't being explained the risks, they just walk into the shop and they get given a 40-year mortgage. Like that's where I find it really scary because they didn't even know that, you know, 30 years used to be the standard. If that becomes the new future, that's where I find it really concerning—it is those who, the less financially literate who aren't getting the right advice and are just paying more interest than they have to and not being debt free sooner.

Dan: Yeah, absolutely. And we looked at like the first 10 years of repayments and a few differences there. Obviously on a 30-year term, you eat into more of that debt. So if you end up having like dips in the market, like these recent COVID boom and then bust peaks and troughs in the market and you were looking to move and things like that. So you want to have a certain amount of stability, I think, if you're locking in a 40-year term.

Rory: A hundred percent. I mean, are we just completely changing the way we view housing? You know, like it's just going to be a payment. Like you pay, you are always going to be paying. I think that's kind of what the 40-year makes me feel like. And it's not good. That viewpoint, you've got to be looking at your mortgage as a thing, it's like, how can I reduce this as quickly as possible? How can I? It seems like a long time.

Dan: I turned 40 this year. So if I had been able to somehow muster up a property when I was born, I'd just be debt free. And I feel like there's a lot of water under the bridge. 40 years. A lot of times, a lot of stuff's gone down.

Rory: Yeah, absolutely. And a lot of the years, I can't remember it very well either.

Dan: I don't know. It seems like a long time to me.

Rory: This is a really good segue into our case study, which is a comparison between, I suppose, two sets of people—one who chooses to take a 30-year mortgage, one who chooses to take a 40-year mortgage. So if we actually do some role play now, because you...

Dan: Okay.

Rory: There's a ten-year age gap between you and me. I'm going to be the bloke on the 30-year mortgage, and you are going to be the bloke on the 40-year mortgage.

Dan: I'm going to play the long game.

Rory: You're going to play the long game. So do you want to explain to the folks at home what we're going to be doing? What opportunity costs are we comparing here?

Dan: What we've worked out in this example is if you took that $400 a month saving and invested it. So a big assumption to make because we know that Kiwis generally aren't very good at saving or investing.

Rory: No, they're not. They're not. Horrible.

Dan: So, except if it's KiwiSaver.

Rory: Yeah, compulsory.

Dan: It is compulsory and no discipline required. In this example, we're making it compulsory. We're saying that $400 difference between the 30-year mortgage and 40-year mortgage is getting stowed away. It's getting invested. 40 years.

Rory: Yeah, absolutely. It's an example, right? And this is still showing what is possible. It can be done. And I think at the end of it, we'll get to the end of it when we get to the end of it. We'll start at the beginning.

Dan: So let's crunch the numbers out then, Dan.

Rory: Yeah, a hundred percent. But let's start off with obviously the two different mortgages.

Dan: So, we're doing an $800K loan over 40 years option, over 30 years option.

Rory: Okay.

Dan: At a 6% interest rate. So we're assuming the rate's 6% the whole time. Obviously, it's going to be fluctuating, so we just use an average rate of 6%, which I think is relatively conservative. One has a repayment of $4,401. That's the 40-year mortgage, and the other one has a repayment of $4,796. So that's where we're getting the $400 difference. Biggest thing to highlight that would make people cringe: you are paying a difference of $386,000.

Rory: Correct.

Dan: Interest more. You're paying more interest. Doesn't that make you want to throw up on the 40-year?

Rory: Not necessarily, Dan. So the whole point of this is actually same people, same house, and we're at point A now deciding on a 30-year or 40-year term. In 40 years' time, both scenarios are the same in terms of the house as mortgage free. And the difference is what have we done with that $400 a month? That could impact us in 40 years' time, which is invest it. So if you invested that $400 every month, so monthly you've got an automatic payment going to Sharesies, the growth fund, straight into the S&P500, or wherever you want to put it. And we've assumed an 8% interest rate, which again, I think is, that's very conservative.

Rory: It's conservative enough.

Dan: So accounts, you know, fluctuation, tax, 8% is very conservative.

Rory: Yeah, absolutely.

Dan: And as an average rate over time, because you could, obviously at the beginning you could afford to be a lot more aggressive and take risk, but over time you might reduce your risk. So 8% is a good average. That $400 monthly over 40 years comes out at just shy of $1.3 million.

Rory: Oh my God.

Dan: So in 40 years' time, you've got a mortgage-free home and $1.3 million in the bank in your KiwiSaver. So that's not a bad, that is not a bad nest egg.

Rory: Hang on, hang on, hang on. So you've put $400 in and you're exiting with $1,296,000, almost $1.3 million.

Dan: That's right. And your total inputs, $192,000. That's just what you put in for your monthly payment for this annuity.

Rory: That's insane.

Dan: That's wild, aye? That's the power of investing and that's compound growth. And we always talk about on this podcast, like the power of compound growth. Once you're getting above that 30-year mark in investing, it's like insane.

Rory: I mean, it's not even possible for me now because it would take me through to 80 and I'm not going to be investing $400 a month.

Dan: This is what a 40-year mortgage is all about, people are living longer now. You can do it. We're going to, you can do it. Come on. We're going to be clocking here at Blueprint in your seventies.

Rory: I'll still be here servicing the book. The legacy clients.

Dan: That's right. So don't worry about that. So you are paying yours on a 30-year term.

Rory: Okay, but I paid mine off early though.

Dan: You're paying it off early. 10 years quicker, I'm debt free.

Rory: And then now I'm debt free. I can take my monthly payment and invest it.

Dan: Okie dokie. So $4,800 and compared to $400 a month, surely I'm going to outpace you, isn't it? Because now I'm putting in $4,800 a month straight into my savings and I got no debt. So it's the same repayment.

Rory: Your investment.

Dan: Yeah, my investment. So you've got a 10-year time horizon now, and you're going to go max out your $4,800 a month? What's your nest egg? Okay. I've got the number here. So I'm doing, for 10 years, I'm doing $4,800 at 8% return. I'm only ending up with $870K.

Rory: It's wild, isn't it?

Dan: That's crazy. And like logically as a financial adviser, it's quite upsetting because you're like, pay off your mortgage quicker. But here we are, it speaks for itself. I've got less money in retirement.

Rory: You are over $400K better off, isn't it? But you paid way more interest than me.

Dan: You paid $400K more interest to the bank.

Rory: Yeah, but the investment, that long-term investment.

Dan: And you actually got, and you end up $400K better off, is it? What's the actual figure? We've got it here.

Rory: $426,000. You've got more in cash. We both live in the same house. It's 40 years down the track.

Dan: But you paid more interest than me.

Rory: I paid more interest, but I invested earlier. It's crazy.

Dan: So what's wrong with debt? It's not necessarily that bad and interest is not necessarily that bad, but investing is the key here, aye?

Rory: A hundred percent. I think the takeaway here is that you've got to, you've got to be investing. Even if you are paying off your mortgage, like where I would have beat you is if I paid my mortgage off in 20 years. I definitely would have beat you then, you know?

Dan: I beg to differ.

Rory: No, of course. I would have beat you if I paid off my mortgage and because now I've got 20 years of investing. But then if we take the difference in the repayments that you would be paying in those first 20 years and I invested that early.

Dan: Okay. Now we're investing a thousand dollars a month.

Rory: Okay. So we'd have to crunch those numbers.

Dan: I get what you're saying. The jury's out on that one, Dan.

Rory: Okay.

Dan: In that example, we would have to take into account how much you are investing on top, because you'd be matching me, right, with a monthly repayment, but...

Rory: Okay. I get that. I get that. So I'll give it to you, man. Hey, look, but I think there's so many variables we're not considering here, right? All we're assuming is we've got a term, a debt sum, repayments and investment. And there's a risk in terms of not actually making those investments. You're not going to not make your mortgage repayment because you're going to be out on your butt. That requires a lot of discipline to be putting for 40 years.

Dan: Exactly. And it's something that we know that Kiwis aren't very good at, but it's worth highlighting that but we, first of all, we should be investing. And secondly, a 40-year term's not such a crazy idea. If you have the discipline, if you have the big if, I'll a hundred percent give you that. But for the everyday Kiwi who doesn't have the discipline to put away on top of their mortgage payment, it's not.

Rory: Let's draw the line in the sand. You know what I mean?

Dan: Absolutely not. So let's agree on that. If you are diversifying and investing, with that extra money, that $400 a month, it's worth it. But if you don't have that discipline, then it's not going to work. Even if you take those first couple years off, these numbers are way out because of the compound growth, you know? Because of how important it is to invest early.

Rory: Absolutely. And I think, diversify your investment. So like one for Kiwis, so often the vehicle to wealth is the house. And it becomes the home. And we've spoken about off air that the home is not an investment. A family home is not investment. It's just a roof over your head. It's the most important asset. It's the least important investment. Because when you come to retire, you stop earning. You can't sell a bedroom and live off that, right?

Dan: That's right. You can't, so you can't realise the capital in your home unless you do a reverse mortgage. But that's in no way endorsing the reverse mortgage.

Rory: No, that's right. I mean, like we're talking about $800K loan and it's $4,800 on a 30-year term, let's not be too quick to get to that $1.2 million loan and that $6,000 payment. Invest that money. Diversify. Because we know that early investments over time are going to increase that nest egg and you need that cash, right?

Dan: You've hit the nail on the head, like the family home. We can't realise that income unless you're downsizing.

Rory: Right. We can't realise that asset until you retire, assuming that you can't, because you want to stay in the same home when you retire. So we need to invest, we have to invest. These options like this, options like interest only if you're a property investor, they make sense. But they have to be used with sound financial advice and sound strategy, and they require discipline.

Dan: Absolutely. Discipline's the key to everything, aye. In summary, get the right financial advice. Don't just go in and sign up a 40 when they come.

Rory: Yeah, don't just go and say, oh, 40 years sounds good. You know what I mean? Don't go sign it up. Get your annuity calculator out first. Plug the numbers, have a chat to your adviser and make a plan that makes sense, rather than just saying, oh, 40 years sounds good. Because it's no good just paying extra interest. But it can make sense like this option here. It can make sense.

Dan: Yeah, that was a fun episode, Dan.

Rory: Awesome. Cheers guys. Thanks.

We were told a few years ago that our lending power was so weak that we couldn't afford a home for our small family.

We find a lot of people who compare themselves to others they know, maybe those who got a big gift to help with a deposit. As soon as you label something as impossible or too hard, it becomes a self-fulfilling prophecy. Don’t make it a thing where it has to happen before you’re 30, or before you’re 35. Everyone’s on their own journey. He’s got three or four properties, works as a mortgage adviser during the day, and after work, he goes and works at BP. So, just writing loans and pumping gas. I suppose, rounding up on side hustles—Is sports betting a legitimate side hustle?

Guys, welcome back to this week’s Blueprint Podcast. I’m joined by my co-host, Rory. We’re really excited about this episode because we’re going to crack into some serious deposit-building maths, aren’t we?

Absolutely. And we’re going to talk all about the process of buying your first home. We’re going to talk about some myths, like people saying, “You’re never going to be able to afford your first home,” and really break down the numbers of how we guide our clients through goal setting and actually achieving the goal of buying a house. I think a lot of people, when they first think about buying a property, can get overburdened by all the requirements—the deposit requirement, and alongside that, maybe comparing yourself to others. That’s probably the biggest issue we have in personal finance today: people compare themselves to others. “Oh, this person’s got these benefits, that’s why they can get into a home earlier.” You know what I mean?

That’s right. So, we’re going to break it down and, as you said, bust some myths and shine a light on how we can make the seemingly impossible possible.

Yeah, absolutely. We want to start, because we love what we do and we’re super proud of our team as well. And we got a bit of mail, Rory. We’re going to start off with mail, alright? Hit us with the mail.

It’s a message from one of our clients, so it’s very relevant to what we’re discussing today—building up your deposit, working towards what can seem impossible, buying your first home. That journey can often feel discouraging. We’ve got a message from one of our clients who has just gone unconditional.

Nice.

And you wouldn’t believe it, but our adviser Jack—Jack, yeah, you know Jack?—was the one to sort them out. So, we’re just going to read the correspondence he’s got.

Enough suspense, mate. Read it out.

Hi Jack, thank you for all your hard work. We got a confirmation from our solicitor that it’s all confirmed now. It feels weird as our life hasn’t changed at all, just less dollars in the bank account after we pay the deposit. However, it’s so humbling to be able to own our first home in New Zealand, which has been our dream come true. We migrated to New Zealand 10 years ago, started from scratch and built our life in this beautiful country. Without your follow-up call, we wouldn’t have considered buying a home this year, as we were told a few years ago that our lending power was so weak that we couldn’t afford a home for our small family. Thank you for being our guiding light and being there every step of the way. Your genuine, kind, and down-to-earth approach really made us feel assured that it’s going to be okay. Thank you again and stay in touch.

Oh wow, Jackie boy, what a glowing review, aye? If that doesn’t get the blood pumping, you know what I mean?

Yeah. It’s inspiring in a lot of ways, aye. Firstly, the couple and family migrated to New Zealand to start a fresh life, so on the back foot, being told not so long ago that it wasn’t possible for them.

Yes. And then they got in contact with the man, the myth, the legend, Jack Hammond from Blueprint Finance, and they’re now homeowners.

Yeah. I mean, it’s such a good feeling, obviously for Jack as the adviser, but for us too, to be a part of that and share that in the office, you know, when you get news like that. Makes it all worthwhile, really.

This is a really good starting point for our conversation today. A lot of people get overwhelmed when they have those initial conversations and are told, “Hey, you’re so far away.” But it’s all about making a plan. Where do you even start, right? You’ve figured out you want to buy a property, you feel like you’re not close to where you need to be. Where do you even start?

I mean, this is going to sound like a bit of self-promotion, but—

It does a little bit, but in saying that, you hit the nail on the head. I don’t think our mortgage advisers here refer to themselves as guiding lights, but in a way, you could say that we are. For some people, we’re talking about people that it seems out of reach, 100%, and talking to the right person at the right time can make it possible. Perhaps it’s not as soon as you think, but you need to establish where the goalposts are so you can take aim.

Yeah, and I think that’s what Jack’s done here, and that’s the key first step for anyone looking to get on the ladder and own their first home: understand what they need to do, how they’re going to get there, so they can then start taking the practical steps.

Absolutely. And I think it’s about having that first conversation, no matter how far off you think you are. When we have our first-term strategy session, sometimes clients are ready to go for the pre-approval and they sort of know that they’re there, but sometimes it’s a couple of years away, and hey, that’s fine. Don’t be shy to reach out even if you feel like you’re miles away or just having a look online. You’ve gone to the ANZ or Westpac website, used the calculators—how much can I borrow? You need to have that conversation and really reinforce where you’re at, and understand where the finish line is so you can actually set a goal and move on from there.

Yeah, absolutely. The sooner you do that, the sooner you’ll own your first home.

Absolutely. And I feel like the biggest myth that we deal with, with first home buyers who are beginning their journey, is that you need help from your family to purchase, or that most people get help from their families.

Yeah, and that can be a very discouraging thought. We find a lot of people who compare themselves to others they know who maybe got a big gift to help with a deposit. In reality, most people that we deal with actually don’t get financial help from their families in terms of a cash gift. Many do, but most don’t. Advisers at Blueprint didn’t get those to get their first property, so yes, that’s very helpful, it gets you there quicker, but you can do it on your own. It’s just going to take some time. If you begin the process and set a plan, it’s just a mathematical certainty that you’re going to get to the deposit you need for your first home.

Absolutely. Family gifts, as you say, they’re a leg up and they’re fantastic. It’s great when you’ve got that support network around you that can give you a financial kickstart. But as you said, it’s the minority of people that do that, but it’s easy to look at friends or colleagues or anybody around you in your circle that have received those helping hands along the way and think, “That’s the path, which I don’t have, and I can’t do it because I don’t.”

Yeah, precisely. It’s sort of a psychological paradigm, and a lot of the stuff we’re touching on is, as soon as you label something as impossible or too hard, it’s a self-fulfilling prophecy. That’s what we’re trying to break down, because a lot of people are in the same boat. There are a lot of variables—people have different earning capacities—but in essence, we’re in the same boat. There’s equal opportunity here.

Absolutely. Help from your family—I think we’ll touch on this further on in the chat—but it doesn’t have to be a $50,000 gift. It could be being able to stay rent-free, or opportunities to earn additional income to save more. That really is help as well. That is, in form, a gift, right? Because you’re able to get some advantages, so take note of what you have, what resources you have that could help you get to the goal, and write that all down and include that in your plan to get to your deposit.

That’s right. And maybe it’s not even free rent, it’s just tough love. If you want to go and get it, you know? Like Rocky Balboa, you know what you’re worth. Go and get what you’re worth. It’s time to lock in and don’t make it a thing where it has to happen before you’re 30, or before you’re 35. Everyone’s on their own journey.

Correct. Everyone’s on their own journey, and we’ve got so many people that we’ve helped who are buying their first home in their fifties. It’s true. But don’t let other people’s journey interfere with your own, right? Everyone’s on their own. Just because someone is ahead of you doesn’t mean that you can’t have your own financial success, and guaranteed, when you do it yourself, it’s going to be that much sweeter when you get the keys on settlement day and now you’re not paying rent, you’re building your own equity. It’s going to be that much sweeter. That’s the kind of nectar you want to be sipping on.

So, we’re going to break our analysis into three parts. Part one will be looking at the saving side of things. Part two is going to be the earning side of things, and part three is going to be our investments.

Okay. Now with part one, we’re really talking about the basics: saving, budgeting, what’s important, how can we save more, and how can we actually break down a budget? We were talking about this a bit off-air—budgeting is a bit of a taboo word, right? Because as many people as you talk to, I feel like most people, if you ask, “Do you actually have a budget?” most would say no.

That’s right. It’s just not very sexy, and it feels restrictive.

Yeah. I feel like, you know, I want to do what I want with my money.

Why do you think that is, though? Why do you think personal budgeting is so unsexy?

I think the lack of a future financial goal impacts on saving and budgeting today. Because without that target, what’s the point? So people who are budgeting without a financial goal, that would feel very restrictive. That would feel like you’re not going anywhere, or you’re holding back for no reason. You’re sacrificing lifestyle today—for what? If you don’t have that purpose. Obviously, owning a home is a big goal, or otherwise it could be a holiday, or it could just be your future self not having to work for a living.

Absolutely. I totally agree, and I think another thing is with expenses, your annual expenses, your personal expenses, they go like this—it’s not a straight line. If you’re earning a salary or a wage, your income is a pretty straight line, but your expenses go up and down. Some months you have massive expenses—you’ve got the car payment, you’ve got to fix your car, you book flights, you go see family at the end of the year—and it always seems like it all comes at once. Those sorts of events and the way that expenses occur, I think, throw people off budgeting because they blow out one month and they say, “Crap, it’s not even worth it.” But the key is obviously factoring all those sorts of things in.

So, when we talk about budgeting and how we look at budgeting up here at Blueprint, it’s about understanding your base fixed expenses and then understanding your variable expenses and setting parameters around the variables. We can’t change our fixed expenses—we can’t change our bills, our electricity bill, insurance bills—but we can change our discretionary spending. So, analysing what you spent in the past and then setting parameters around that.

We were talking about how you and Sammy are using PocketSmith at the moment.

Yeah, we are very new, but it’s a great tool. I think what you’re saying there is the first step is to understand the lay of the land—what is your saving capacity? What am I earning? Get that written down. What must I pay? Get it written down.

Exactly. And then you can start looking at forecasting—what type of deposit we can be looking at and when, based on our current situation.

Yeah, exactly. For the folks at home, PocketSmith is an online app that plugs into your banking, and it’s a budgeting app, so it allows you to track your expenses, analyse your expenses, and it would be perfect for this scenario because it allows you to get real data on what you’re actually spending and where you’re spending. It categorises everything, breaks it down into food expense, bills, insurance, all that sort of stuff.

Absolutely. Get the lay of the land. It’s a live stream. You can have multiple accounts—so me and Sammy, it’s great for couples. We’ve got multiple different accounts and they all feed in, and then you can categorise your spending. You can set, say, $1,000 a month for food, and there’ll be a running total. If there’s a week to go in the month and you’ve got $200 left or $20 left, you’re constantly live.

Family of three on $20, aye? Make it work. You’re going to have to rob Peter then, you know? So it’s very cool, and it’s got forecasting as well—30-year forecasting so you can actually make some long-term goals and see exactly where you’re at at any point in time. That’s really cool technology now, because the spreadsheet is fantastic, it’ll do its job, but it doesn’t track where you are at during the month or week or however you do it. And the personal spreadsheet takes a lot of effort to make it look appealing and spend a lot of time in the spreadsheet.

We’re talking as well about your banking app—when you’re setting savings goals with certain banks, they’ve actually got a goal-setting feature where you can say, “I want to save $100,000.” It tracks it and shows you how much you’ve got left and where your date is. It’s got a little progress bar, and that’s the sort of stuff that gets your dopamine going. Forget doom scrolling.

Oh, absolutely. It gets the dopamine going, and that’s why PocketSmith’s so good, because it allows you to visualise the tangible goal of your savings, whereas the spreadsheet’s not as sexy.

There’s a reward mechanism built in there to see that progress.

Yeah, you’re totally right. So, we start off understanding the expenses, and then we want to set a savings goal. Based on expenses versus income, we want to set a realistic savings goal, and we want to treat that like a bill. We want to treat it just like your insurance, just like an AP—an automatic payment. And you do everything you possibly can to protect that, and that is the foundation of your savings. Obviously, any extras you can get on top is great, but there has to be a monthly outgoing, even if it’s the bottom—even if it’s $500 a month, that’s all you can currently save right now. There has to be a baseline that’s just going out no matter what towards your future home, towards your savings. That is the foundation of your budget.

Absolutely. That’s the first thing we pay when that cheque comes in, right? You pay yourself.

We take pride in that. You pay yourself, 100%, because if you don’t do that, you’re going to spend the rest of your life paying rent and someone else’s mortgage.

It’s true, isn’t it?

Yeah, sorry mate. Sorry to bring the bad news.

It’s a tough message, isn’t it?

It’s a tough one to swallow, but the exciting thing is that we have free will and we can set something like that up, and it doesn’t have to be $1,000 a month. It can start off at the baseline and you can slowly increase that over time.

So, what happens next?

Dan, we’ve sorted out our savings and perhaps it’s looking great, but we want to get there faster, or maybe it’s looking tight and we’re still feeling like it’s never going to happen for me. What other steps can we take?

Yeah, I feel like this next topic is quite trendy with personal finance, or has been—the concept that, look, it’s really good to budget, that is the foundation like we just discussed, but what’s almost equally as important, or more important in this game, is increasing your income or finding ways to increase your income. It’s not the most direct, but any way that you look at it, the number one way to increase your savings is by increasing your income. Once you’ve set your baseline budget, you know that’s what you’ve got, now pull that lever, that income lever, to actually get towards that house deposit. It’s also this concept that you can only decrease your expenses so far.

Yeah, you’re going to get to a point where it’s easier to earn another $50 than it is to save another $50.

100%, yeah. You’ll get to that threshold where you can’t give—Is it beans and rice, or is it just beans or just rice? You know what I mean? It’s not going to get you any further, is it? So you have to find a way to use your time or leverage your time more effectively to increase your savings.

So, where do we start? The number one place is always your main job, right? Understanding the scope of your income, earning ability at your main job. If you are on a salary plan—a lot of our public sector workers, teachers, nurses—they understand how their income’s going to increase over time.

Yeah, it’s fixed, isn’t it?

It’s fixed, yeah. So, forecasting that out and saying, “Okay, when am I going to hit these milestones? Is there anything extra I could do to hit those milestones?” And then obviously in private, we’re talking salary negotiations. So, everyone go to your boss, demand a 15% pay rise because you need to purchase a home.

Is that the plan?

Well, look for opportunities where you’re working, right? If you’ve been at a company for a few years and you haven’t had a pay increase, and you’ve been taking on more responsibility, maybe it’s warranted.

Yeah, maybe it’s warranted, and I mean, obviously everyone’s got their own unique working and employment situation. We don’t know everyone’s situation with their employer, but I think it’s good to share these goals with your employers and say, “Hey, this is where I’m heading. This is what I need to earn to reach that goal. Am I in the right place, or is there anything else I can do to increase my income?”

That’s right. There could be another position coming up, and maybe there’s some extra training that you can do to upskill that’ll increase your earning capacity.

Absolutely. So that’s a big one. And then, we talk about the infamous side hustle.

The side hustle.

What do you think about the side hustle?

Oh, it’s pretty topical at the moment, isn’t it? But I mean, what is a side hustle? It’s just anything to make extra money, right? So, let’s say there are no extra shifts to be picked up at work, and there’s no extra or additional way of making money at your job. There’s getting a second job—drive an Uber, mow some lawns, clean some windows, do some landscaping. Do something to make extra money.

100%, yeah. Roll the sleeves up, for Pete’s sake.

Yeah, have a garage sale.

Yeah, that’s right. And when you start thinking like that, you’ll discover opportunities. It’s when you are laying low and not really thinking about it or putting yourself out there that the opportunities don’t come knocking. You’ve got to go knocking for the opportunity.

That’s right. Absolutely you do. Go out and seek it. Understand what you can earn, make a plan, and see how you can increase your savings.

Absolutely. Because if you can do that, obviously it just speeds everything up, doesn’t it?

Yeah. There’s a property influencer in Australia—Property with Harley. Jack’s a big fan of him, and he’s a very young guy. He’s got three or four properties, works as a mortgage adviser during the day—I think he’s a mortgage adviser associate, or he was—and after his work, he goes and works at BP. There you go. Works at BP five hours and gets 20 hours a week doing that, and that’s the extra income that he needed to get his next property. So, just writing loans and pumping gas.

Yeah, and doing what it takes, aye, just doing what it takes.

Isn’t that brilliant? If you’ve got time and you’ve got ability and capacity to work and you want to earn more, go get it.

Yeah, yeah. I suppose rounding up on side hustles—Is sports betting a legitimate side hustle?

It could be… No, I don’t think so. Unless—

Unless you’re really good.

No, no, it’s not. And gambling causes a lot of issues on your mortgage application if they can see lots of gambling going out, even if you’re making a profit, it can deter the banks.

Yeah, touch on that—account conduct. What are the red flags? So, gambling is a red flag because we’re talking about budgeting and this sort of ties in as well. If you’ve got a good budget and good plan and are a good saver, your conduct should be good.

100%. Big red flags: gambling, unarranged overdraft—if you’re letting your checking account go into the negatives—late payments on your credit cards or your debts or your bills as well. Also, erratic ATM withdrawals—it’s kind of common, we actually see it a lot, but if you’ve got big ATM withdrawals coming out frequently, the banks can ask questions about that. It’s $350 every Friday sort of thing. You see some crazy stuff, but those sorts of things—so make sure you tidy up your accounts when you’re going for a loan. Big one. But the thing the banks love to see is consistent savings. If you can show consistent savings, the banks love to see that. That’s why the automatic payment for savings is like the golden ticket when you go for your mortgage application.

What about if you’ve got those transactions coming back from the TAB or the sportsbook? In the green, coming in?

Yeah, yeah, yeah. Still a red flag?

Yeah. Massively. So, obviously, if you need to gamble, gamble responsibly and within your means. If they can see it’s $50 a month or $200 a month, they’ll just put that as a fixed expense on your application, assuming that money’s not coming back, even if it is, and they’ll put that as a fixed expense on your expenses.

Yeah, okay. Alright. Stay away from gambling. We gave it a chance. It failed the Blueprint baseline test. Didn’t make the threshold.

So, that’s sort of touching on the income. You’ve nailed the savings, you’re earning some extra income where you can, and now you’re seeing this nest egg really starting to snowball. What’s the other means of savings? The big one is KiwiSaver, isn’t it?

100%, the one that I’m super passionate about. We’ve had some recent changes to KiwiSaver, but it’s still a great resource, isn’t it? There are probably pros and cons and two sides of the KiwiSaver chat around contributions and how much we should be putting towards it.

Yeah, we chatted about maxing it out, putting the 10% contribution in if you are really serious about buying a house and you want to lock that money down. Others would say do the minimum and save and invest that 7% elsewhere if there’s no real advantage to the KiwiSaver, but whichever way you do it, KiwiSaver is a great resource to help accelerate our purchase of our first home.

100%. I think you and I, when we often talk, Rory, I’m always saying to you—and I sound like a broken record—but so many of the first home buyers that we help, over 80% of the deposit is coming from KiwiSaver. People in their thirties who have started contributing in their early twenties and have just had this thing snowballing over time. Not the best savers, but KiwiSaver is a form of savings, right?

Correct.

So, all the deposits come from KiwiSaver. That’s super, super standard. It’s undeniably a massive part of your toolbox when you’re looking to purchase your first home. Making sure you’re utilising that correctly is super important. When we talk about the things to focus on, obviously just starting off with the free money—government contributions, employer contributions—make sure those are coming through. Very sad news that the government cut the free contributions.

Yeah, they’ve cut that in half, down to $260, which is a bit gutting.

It is what it is, aye.

It is what it is. And they’ve made some other changes, which will still mean it grows. Obviously, mandatory contributions in the future are going to increase, which I think is really good. But yeah, that free money, that compounds, man, that really compounds.

Absolutely. And I think just hearing you talk about your first home buyers and the amount of money coming from KiwiSaver, that’s a big tick in the argument to maximise your contribution to KiwiSaver. Making sure that it’s allocated in the right fund, of course, and that’s where having that chat with a mortgage adviser early and then potentially someone like Jono, who we’ve got in-house—KiwiSaver adviser. Making sure the risk of the fund is correct and relative to your time horizon of when you want to use those funds.

Yeah, that’s really, really important. And then, it’s just making sure your timeline towards the purchase is in line with your investment horizon. So, if you thought you were 10 years away from purchasing your first home, it might make sense to be in a growth or aggressive fund after chatting with your KiwiSaver adviser. But if you are a couple of years away, you don’t want to be in aggressive or growth. Then another COVID event or financial crisis and we see a 30% or 40% drop in the market and there goes $30,000 of your deposit, whatever it may be.

Absolutely. Jono is always talking about it—the risk tolerance and the investment horizon. It’s really important to analyse that with your personal situation, because most people who are talking about purchasing their first home are probably less than five years away. So, you should be considering a balanced at the very highest risk, or even a cash fund, to just make sure that money’s growing steadily and you’re not putting your capital at risk, because you need to draw that out.

100%. So, from the top, Dan, what are our top tips to getting this deposit?

The wrap up—obviously your starting point is chatting to your adviser. Sitting down with your adviser, even if you think you’re a couple of years away or four years away, chatting to your adviser, figuring out what needs to be done. Is my income at the right level? Where does my deposit need to be at? Setting those targets for yourself. That’s number one, because like we said, failing to plan is planning to fail. There are a few things that we talked about that we didn’t touch on today, but who’s on this journey? Is it a couple? Is it an individual? Are you just a couple of years out of uni and a few of your mates want to buy a house together? There are a lot of different ways to skin this cat. So, have that chat. Define the parameters for sure—how it’s going to go down. Visualise it and set up the framework—the blueprint, if you will.

If you will, yeah.

And that’s your foundation. Then from there, make a budget. Get those fixed expenses written down, get the variable expenses written down, and understand your income, and set the automatic payment for your savings as your next foundation.

Crucial step.

100%. Next step: income. How can we increase the income? How can we increase our savings—side hustle, increase of income in your salary, all those sorts of things. What do you have available?

Yep. It might hurt a little bit, aye, that hustle.

Yeah, but short-term pain, long-term gain.

It’s going to hurt, and it should hurt a little bit.

It should, and that’s life, right? You work hard and then you get that juicy reward.

Yeah, that’s right, isn’t it? Success is painful, as much as failure as well. You’ve got to pay the price. Pick your pain.

Yeah, absolutely. And then we are going to analyse the KiwiSaver. What are our contributions? Are we maximising it? Are we getting the minimum? Are we putting in the minimum contributions to get the free money? And are we in the right fund?

It’s a mathematical certainty—God forbid, unless you get hit by a bus or something horrible happens, which you can have insurance for that—but you’re going to get there. You will get there.

Yeah, 100%. And we’re here to help. But, at the end of the day, it’s you who’s got to save the deposit. So, use all the resources you’ve got. Make a plan. You’ve got this.

And hit the link below to book a call with Dan.

Yeah, or Jack. Book it with Jack. You’ve got this, man. Seriously, man and woman. You’ve got this.

Welcome back to the next episode of the Blueprint Podcast. I'm very stoked to be joined by my co-host Rory, and very lucky to have Alex Martelli here on the podcast as well.

Alex: Thank you very much. I've had such a long day—my throat is just done after so many phone calls with clients.

Host: Of course. I'm just going to get you to read your own intro, if that's all right. Sorry, we pre-recorded that. I feel like I'm being framed.

Alex: Oh.

Host: Today we're joined by someone who knows the buying game inside and out: Alex Martelli from Martelli Buyer’s Agents. Alex has built a reputation for going beyond the brief to secure dream properties, negotiate sharp deals, and advocate fiercely for her clients. Whether they're first-timers or seasoned investors, we'll be diving into what buyer’s agents really do, how they can save you money, and some real-world stories from Alex’s time in the trenches of the property market.

Alex: I like it. That is good.

Host: Thanks, Alex. Well, that was a hell of an introduction and I’m excited to converse now.

Alex: Excellent.

Host: We’ve done a little bit of research on you and you’re a bit of a globetrotter, you could say, or a woman of the world. You’ve done real estate in London, Hong Kong, Sydney, and you’ve come back to your roots—small town Auckland, New Zealand. What inspired you to move from the big smokes back to New Zealand and Auckland?

Alex: Good question. I had been debating what to do towards the end of 2021. I was living in the UK, and we were coming out of Covid by that point. I wanted to spend some time back in New Zealand with family because I’d been away for 11 years, and I sort of got stuck slightly because you couldn’t leave the country, right? Once you were out, it was hard to get back in, and I was just down visiting. But I also thought, it is about time I came back to New Zealand. I wanted to spend time with family, as many New Zealanders do, and I thought, for all the years I’d been abroad, I’d always returned to New Zealand every year for holidays and I’d always thought there’s a market for a buyer’s agency. So I actually decided I am going to move back to New Zealand and set up this buyer’s agency.

I did a bit of work for Colliers when I got back, which was really good. It got my feet back under a desk and made me familiar with the lay of the land again, doing some consulting work. But I’d always thought, I’m going to set up the buyer’s agency. It was tough leaving those cities—they’re fantastic places—but Auckland has also been a wonderful place to return to. If you can balance the lifestyle, it gives you such a good environment to grow and build a business from. Once you get through a bit of regulation and what you need to do, it’s actually a really supportive, nurturing place for a business startup. So the environment was also a big factor in my decision to come back.

Host: Absolutely. That’s brilliant. And I suppose, leaning into that, what you’ve done starting up on the buyer side—we’ve always discussed your positioning as so unique to our country, but overseas you’d seen it done quite successfully. So, breaking the mould here and leaning into the buyer side, what were the initial challenges you faced? Because it’s not as prolific yet. We were telling our producer Jackie, and she’s like, “I didn’t even know there were buyer’s agents in New Zealand.”

Alex: The first challenge was culture. It was overcoming and educating the market. If you are the first person truly educating the market on a service, it’s tough. You have to get out and I went out and spoke to the heads of all the big agencies and told them what I wanted to do, and I got all sorts of feedback—“That won’t work” or “That will work really well.” Some people were familiar with it, as you say, from overseas. They actually knew the concept from having worked and lived overseas, or they had seen TV shows and had a bit of an idea of the glamorous side of it. It’s more like Location, Location than Selling Sunset. You are grinding out deals. You have to learn the market and learn the agents to know how to negotiate. It’s not just looking at beautiful houses.

So there was the culture—overcoming that psyche of “we don’t do it that way” and trying to instead encourage the culture that New Zealand should be and has been famous for, which is, you know, get out there, try something new, entrepreneurship, enterprise. And a lot of people will support you when you’re setting up a new business as well.

The second challenge was regulatory, because our laws are set up in the way that the Real Estate Agents Act works, which I have to fall under because we are involved in real estate work. It’s very much around the selling process. So there is a fiduciary responsibility to the vendor and a duty of care to the buyer, and I’m of course looking to reverse that. Typically we’re dealing with a sales agent who’s representing the interests of the vendor. So we have the fiduciary responsibility to the buyer. Being able to speak to the Real Estate Authority and go, “Well, what does that actually look like?”—they said, “Well, you know, currently real estate agents will work as a buyer’s agent.” I said, “No, they don’t. Currently, there are sales agents who act as a buyer’s agent, but they’re ultimately still rewarded by the sales agent through a fee split.” And there are all sorts of requirements back to the vendor’s representative when you are doing that. I think a lot of people don’t actually understand that.

So we are purely representing, rewarded by, and working in the best interest of our buyer client. Speaking to the Real Estate Authority and being able to say, “Look, how are we going to switch it?”—even things like, under the rules it says, in your agreement, you must state how you’re going to market the property. Well, we don’t market property. So I can’t follow that rule; it doesn’t apply. As a result, I ended up having to spend quite a lot of money getting my own legal documents drafted that we could then use and make sure the Real Estate Authority was happy with them, and say, “Okay, well this is how we are going to represent the best interests of buyers.”

You’re having to create some framework for that. I thought it was more robust than what a lot of agents were doing, because there are a lot of sales agents who I know will charge a buyer a small fee and they’ve kind of got a one-page form that you fill in. For me, that’s not a robust agency agreement. I don’t think it actually represents the best interest of the buyers either.

Host: Absolutely. So if there is an agent who’s doing some buyer work, not formally as a buyer’s agent, you’re exactly right—they are indirectly representing the vendor.

Alex: Yeah, because that’s who’s remunerating them, right?

Host: Yeah. Whereas, working with someone like yourself, you completely remove that conflict of interest, which is super important. People need to understand that, because often they think, “Oh, this agent’s working with me, he’s on my team.” But it’s not really like that.

Alex: A hundred percent. And it’s interesting here in New Zealand, the agents can actually promote themselves as a buyer’s agent. They’re not, but I’ll even see adverts on Seek where they say, “Successful real estate team is seeking a buyer’s agent.” It’s misleading the way that they’re marketing it.

Host: Very concerning, that.

Alex: Mm-hmm.

Host: Interesting. We’re already kind of getting into it and breaking down some of what you do, because when we’re thinking about buying property in New Zealand, the status quo, as we’ve spoken about, is agents are real estate agents or listing agents or selling agents. You’re on the complete other side of it. Some people listening will be a bit like, “WTF is a buyer’s agent?” So what are some of the key differences? How do your roles differ?

Alex: I think with a sales agent, their role is obviously representing the vendor and representing the property. So a huge amount of their work is marketing. They are telling you, “This is a beautiful home, it’s just had a renovation, it’s in a great school zone.” It’s all about marketing the home. We don’t do any marketing. Our job is we work with a buyer and we will say, “Okay, what is your brief? Is it attainable? What’s important to you? What’s really important in this property?” And then we go out and find those properties. We look at everything—pre-market, off-market, on the market. The biggest thing is saying to someone, “We’ve studied this home, we’ve looked into it, we believe it to be a good home.” We’re bringing in all the consultants that we can to give advice on that as well, and then understanding what’s the accurate value for the property as well.

Because the sales agent is obviously trying to get the best outcome for their vendor. We are trying to get the best outcome for our buyer, and a lot of that’s based on data. Being able to go and look at a property and go, “Well, I know what that one sold for, and I went through that one, and actually that one’s got mould downstairs.” There’s a lot of power in having quite a lot of market knowledge and also being able to say, “Okay, well, I understand what the agent’s promoting and telling you, but actually the property’s already been listed three times in the last year. So in fact, we know that the vendor’s expectations are too high.” So trying to get a lot of information to help support your negotiation strategy or your purchasing strategy.

And then seeing that process right through from initial brief, sourcing the home, due diligence on the home, securing the home—are we going to bring the auction forward or actually should we let it run? If it’s a tender process, how do we make the terms as appealing as possible without having to expose all of our financial position? Through to bringing in your consultants and then the pre-settlement and the settlement process as well. So it’s holding the hand of the buyer through that entire journey.

A lot of people have assumed, “Oh, it must be for the uber-wealthy,” or “It must only be first-time buyers.” It covers the full spectrum of buyers, which is what always surprises people as well.

Host: Yeah, absolutely. Well, that’s exactly my next point. When I first became aware of your services, I was assuming that it was reserved for the ultra-wealthy, and the buyer’s agent is a nice-to-have, rather than something that should be part of your real estate journey. You’ve touched on some really good points, which I’d like you to speak to, which is, it’s not just for high-net-worth individuals.

Alex: No. It’s for your standard first-time buyers, because even things like that point you just made—exposing your full financial position. I’ve been involved, even myself when I was a first-time buyer, as soon as you get a whiff of competition, you’re so quick to let them know exactly what your true budget is, which the vendor agent, listing agent, can take advantage of.

Host: Oh yeah.

Alex: FOMO is real. FOMO is so intense. Speaking from someone who’s been going through property negotiations right now, the minute you can show there’s competition, as a buyer, you react emotionally. Someone like yourself—that’s such an important piece to have, to actually cool it down.

We’ve had a few inquiries where people have said, “Look, can you please represent me?” because confidentiality and privacy is very important to a number of our clients. But they said, “We’ve been looking and looking, and because we were naive at the start, we told all the agents what our maximum budget was, and now we feel like they know that information and they’re holding onto it and we don’t want it used against us.” Which I can understand, because also if you don’t feel confident that you really know the value of a property, especially depending on what’s happening in the market at that point in time, you can feel like the agent’s just going to go, “Well, go to your maximum budget,” but the property may not be worth the maximum budget.

Often people come to us, they go, “That’s our maximum.” Very rarely do we end up going to the maximum. Often you can find something that’s below the budget. So people worry that they’ve exposed themselves too much and given away too much information. I think most buyers are scared they’re going to make a mistake. They’re scared they’re going to make a really expensive mistake, whether it’s that they overpay for the property, or they’re so busy, they’ve got other things going on, they miss something in their due diligence.

The majority of our clients are—well, in fact, all of our clients are—people who are, I want to say, time-efficient. They’re time-poor, but they’re people who say, “Look, my time is better spent doing other things, and finding a home is a full-time job.” It’s a huge amount of work, hence why we have a business that looks for homes seven days a week. We keep a very small number of clients because we have to.

It’s not—I remember when I started the business, people would go, “Oh, it’s like a property concierge.” I said, “No, it’s not a property concierge. We don’t go to a client and go, ‘Ooh, look at this one or this one.’ We’ve already gone out and looked at them and said, ‘Hey, look at that one, we really like that, and get rid of all of these because we’ve dismissed them for x, y, z reason.’”

In terms of the buyers, last year, 50% of our transactions were first-time buyers.

Host: Wow, that’s incredible.

Alex: So a huge number of first-time buyers, and they say, “Look, I’m unfamiliar with the process. I don’t understand the paperwork. I don’t want to get ripped off. The two of us, or one of us, whoever it is, we’re working really, really hard.” We have such a cross-section of buyers, and when you say first-time buyer, we’ve had first-time buyers who are in their sixties because they’ve been overseas, they’ve come back to New Zealand, and this is the first time they’ve bought in New Zealand. We’ve had singles, we’ve had couples. We’ve seen a real increase in women buying on their own—really good decision-makers, really sharp, very quick to say, “I take your advice, let’s get on with it.” They’re really, really good.

And then a lot of Kiwis who are based overseas wanting to buy in, so we would term them an investor, but really they’re young New Zealanders doing really well up in the US or the UK or Australia, and they say, “Look, I’ve worked really hard, I’ve got this deposit, can you please help me find a nice little unit and set me up when I come home?”

Host: Alex, working for buyers, you’ve probably got a large network of real estate agents, or at least you certainly have to go into plenty of negotiations. Do you ever get in situations where you are almost locking horns or you have to fight hard, and do you have any negotiation tactics or methods that you use to win for your clients?

Alex: Good question. Silence is a wonderful thing. I often find if you just go really quiet, people will tend to talk. You fill the room with silence, people will tell you quite a lot. You do end up locking horns with some agents, but for the most part—and I think what’s been lovely over the last couple of years is we’ve got to know the agents really well and they understand we are bringing them qualified buyers, which tends to make the deal a lot more efficient. And because we’re coming generally with market knowledge, and I feel sorry for agents—buyers can waste a huge amount of time for them.

The upside for us is that they know, “Okay, Alex and Karen have got qualified buyers. They’ve reviewed this property, they’ve done their research on it. So if they come to us with an offer, chances are they’ve already researched it, they’ve got the data, and this is why they believe it’s a good offer in good terms.” So I find increasingly it’s almost like a commercial transaction: you’ve got a representative for the seller, a representative for the buyer, and you can come to a middle ground on terms a lot faster. And again, a lot of that’s just market knowledge and building relationships with the agents, but there have been a few battles, prickly situations.

Host: And when you say silence, do you mean just not responding sometimes?

Alex: Sometimes, yep. You just leave it, let the emails sit there for a bit. Exactly. And just sitting, listening to what people are really saying. People will tell you a lot in what they’re saying, and then you read into it accordingly. There’s a few tricks to the trade, certainly on the sales agent side, but a lot of them also just want to get the deal done. If you’ve got a good buyer, they want to close the deal. They want to do the best thing by their vendor as well.

Host: Absolutely. And those extra bits and pieces that you’d pick up from reading into those comments—as a first-time buyer, you’ll just never be able to read that because you’re thinking about so much.

Just for context, for any listeners who are listening to this in the future, we’re in May 2025. In this last quarter, we’ve had a record amount of stock in Auckland. There’s an incredible amount of properties on the market. But with our pre-approved buyers, a lot of them are actually saying to us, “Look, we know there’s heaps on, but we’re still not finding opportunities that are suitable for what we need.” So, want to get your thoughts on that, but also want to talk about off-market opportunities. Is that something that sometimes comes across your desk, like someone in your network says, “Hey, I’m looking to sell, but don’t want to go through the process”?

Alex: I’ll cover the first one. In terms of the current market, there is a huge amount of stock on the market—record levels. Part of that we’ve seen is obviously so much new-build stock now coming to market, and that’s a mixed bag. We see some good quality new-build homes and we see some really poorly built stuff as well, and that’s sitting. It’s sitting and sitting and sitting.

Host: Are we going to name and shame developers?

Alex: Not on this podcast. To be fair, some of the really reputable developers—there’s a reason they’ve got a good reputation, and they have the warranties in place, the 10-year Master Build.

Host: Precisely.

Alex: What I find scary with the new builds is how many people just assume there’s a 10-year warranty in place. A lot of them don’t. You need to do your due diligence on these new builds. What’s happening with the drainage? How many new—if you think about some of those sites that have been taken and say you had a thousand square metres and now there’s six little townhouses on it. All that pressure on the infrastructure—not only have you covered a lot of the land with concrete and put little patches of grass and they always put griselinia, you know, those little bushes at the end of it—they’re all the same. But there’s a lot of pressure now on the services under that site. I’ve been to properties where I look at it and they’ve just finished it and after a heavy downpour you go, the water is just sitting. What’s actually going to happen there?

Host: And that’s a risk for the neighbours as well, isn’t it?

Alex: Spot on. It’s a real risk. And it’s not to put people off new builds—we’ve bought new builds—but funnily enough, I find that they can take just as much, if not more, due diligence than buying an existing property.

Host: Absolutely.

Alex: So you’ve got a lot of new-build stock. A lot of people—it’s the Kiwi thing—they all go, “We’re going to sell in the summer.” Everyone wants to do the work on the house over Christmas, summer, and then they want to launch in February and March. But you’ve just seen this huge push into selling. I think one of the other things, the Healthy Homes regulations coming through July 1st—a lot of people are going, “Hmm, I’d actually rather shift it.” And the other one is a lot of people are still moving—a lot of people leaving Auckland, whether it’s to move across the country or move out of the country as well. I deal with a lot of agents who are going, “Oh, the vendor’s moving down south, or the vendor’s moving down.”

Host: Yeah, precisely.

Alex: So it seems to be a combination of factors. To your point where the buyers say, “We still can’t find anything,” you have to do a lot of filtering. Having that many options—if you think about how much due diligence we have to do on every property, there’s so much filtering to go through all of that stock to find a real gem. So yes, it’s a good time to buy if you can find the property.

Host: Absolutely.

Alex: On your second point about off-markets—they’re an interesting proposition.

Host: I’m intrigued.

Alex: I said to Dan, “How do you find properties off-market? It sounds like almost mafia, sort of black market type.”

Host: Yeah.

Alex: An interesting stat: in November, 80% of the properties we bought were off-market. Now, that was an unusual month—it’s not usually that high. And, well, this is the beautiful thing of statistics. To clarify, four of the five homes we bought in November were off-market, so it’s 80%. And they were all unique in that one, the wife was ill—they just weren’t ready to have open homes, that wasn’t what they wanted. Another one was a divorce, another one was a divorce, another one was a very high-end property—they just didn’t want people coming through their home.

Host: They were for a nosy.

Alex: Yeah, they just said, “Look, we’re very happy to do a quiet deal.” Interestingly, in that case, my buyers had sold their home off-market, we purchased this home off-market, and the vendors of that property purchased another home off-market. So you had three off-market transactions.

Host: So how do you find these deals?

Alex: Speaking to a lot of real estate agents—lots and lots and lots of agents. We are contacted from time to time by vendors who say, “Would you buy my home direct?” It’s something we try to discourage. We prefer that vendors do go through a sales agent, because while I’m saying buyers, you should have a buyer’s agent in your best interests, I’d like the vendors to have someone representing their best interest as well. There are a lot of really good agents out there, so we’ll just say, “Go and find your own agent, we can give you a few recommendations. We’re not getting involved. We don’t take any referral fees, we’re not going to do any of that, but have your own representation and we can have ours.” But on occasion a vendor will go, “Nope, I’ve gone out, I understand the value.” We’ve always got a private valuation in those cases as well—really important that everyone knows the value of the property.

Off-market deals—once upon a time it was, “Yes, you can buy my home, but you have to pay me triple what I think it’s worth.” What we tend to see from the off-markets now is the privacy, confidentiality, change of personal circumstances, and then also people who just go, “Okay, I’ve watched the market, I can see what’s happening, I’ve got a pretty good feel for what it’s worth, I don’t need to test it because yes, I could go to the market and I could test it and I might end up $10,000 off and I’m better off, I might be $10,000 down for the sake of doing this deal now. I’d rather just sell quietly.”

Host: And all those examples you had are personal circumstances, right?

Alex: Yeah, and in every market, up or down, or whatever time of year, things change, right?

Host: Precisely.

Alex: People need to take action, so it’s good that you’re there for that.

Host: For sure. I’ve got a question—perhaps it’s a little bit more general—but you certainly sound like you really know your stuff, which is great. And I love your entrepreneurial spirit, coming back to New Zealand, seeing this market work overseas, making it now work in New Zealand. Do you see the space evolving and growing? Is it becoming accepted and could this be quite normal as we move forward?

Alex: I think it will. I think it will grow. What it will be is that a group of people like myself will come together and say, “We want to represent buyers. We really enjoy that side of the transaction.” I saw it grow in Australia. It’s a truly well-established model up in the UK and over in the US. I think more people will enter the market and want to set up a buyer’s agency. There are a few hurdles to overcome at the start, as we’ve all been through. It’s quite a different process and way of thinking to being a sales agent. Just seeing my colleague Karen, who had been in sales, and I pursued her because I knew she’d be perfect for the role. I remember a few months into it, she goes, “Gosh, it’s so different to selling real estate.” I said, “I know. It’s a very different way of looking at it.” It involves a lot of empathy, understanding the buyer, and again, it’s that due diligence piece and studying properties and finding opportunities, but it’s not marketing—it’s completely different to that.

So yes, I think more people will enter the market and I think it will become the norm, and I embrace it—the more people who enter into it, so long as they keep really high standards. That’s probably the thing that worries me a bit. But so long as people keep high standards and they’re giving a really good level of service, then it’s something that more people will get familiar with and say, “I want a buyer’s agent representing my best interest and being in my corner.”

Host: It’ll be interesting now—I wonder if it’ll be initially more people doing what you’ve done, people that have seen it, been exposed to it overseas, as opposed to it coming organically?

Alex: Naturally, I think what needed to happen—because there have been a few people who had tried to set up buyers’ agencies previously, but again, it was more the Selling Sunset approach. I think it was just, you get some experience overseas, you learn the processes, you overcome the hurdles here in New Zealand, and then you can get started and get moving. There’s a couple of buyer agents down in Queenstown, Arrowtown. I was recently contacted by a group in the Hawke’s Bay, who have set up a buyer’s agency. So you’re starting to see more of these little individual agencies pick up and go, “You know what? We’re going to really get to know the market.” I look at something like the Hawke’s Bay and credit to the ladies who are setting up there—that’s a perfect market to have a buyer’s agency, because if I was looking to buy in the Hawke’s Bay, I’d go, “Well, we know about the flooding and we know there’s been a couple of issues, but we also know it’s a tourism hotspot and there’s beautiful wine down there.” It would be great to have someone on the ground who goes, “Yep, we’ve studied this property and this is a good one, and we’re going to help you secure it,” because I don’t know that landscape at all. I don’t know the values down there. So, yeah, absolutely. Good on you girls.

Host: And I think just seeing an industry grow is so important. Like you mentioned, just the high standards staying there, which I’m sure they will. Like in the advisor industry—one of my favourite pastimes is this Facebook group, Kiwi First Home Buyers.

Alex: Oh God, I follow that.

Host: You’ve probably been in there. Amazing place to hang out.

Alex: There’s some scary stuff in there.

Host: There’s some scary stuff. But it’s a very pro-mortgage advisor group, which I’m very, very happy to see because you don’t see fellow mortgage advisors as competition in that sense, because there’s 40,000 people in the audience who are now seeing the true benefits of having an advisor—not even that specific person, but just one in general to guide you through the process. So the same way you’re a property advisor, guiding people through the process.

I’m going to steal Rory’s question. It’s about something maybe a bit controversial—auctions.

Alex: Oh yeah, the A word.

Host: I was hoping for something more controversial.

Alex: No, yeah. This is controversial for us.

Host: It’s a very vanilla show, but this is something I love talking about because I love the auction environment—but not if I’m a registered bidder.

Alex: Oh yeah.

Host: Sometimes that’s heart palpitations stuff, isn’t it?

Alex: Heart palpitations. I know sometimes I’ve seen clients get very good deals at auctions, but I suppose it’s a case-by-case thing and how you navigate this if a property is being sold by auction and your client is interested. How do you navigate that?

Alex: You’ve got to know the value of the property. Going in and saying, “That’s what the property’s worth.” We always say to our buyers—and this applies not just to our clients—we are increasingly getting people just ring us, saying, “Look, I found a home, I’ve done all my due diligence, but I’m terrified of bidding. Can you just go and bid for me?” We sit down with them and go, “Okay, you’ve got three figures. What’s your idea of the dream price? That would be lovely. What’s the maximum price?” And they give you a number and you go, “Yeah, okay, okay. And what’s the figure, if it sold for a dollar more, you’d let it go?” And that’s always different to what their maximum budget was going to be, because when people are really pushed, they go, “Actually, that’s what’s important to me.”

For our clients who we’ve been working with, we say, “Look, we’ve been out and studied the property. This is the range in which we think you should buy it, because if it gets up at this point, we’ll walk away. We’ll go out and buy something else.” Because auctions are all about emotion. People go in—I’m amazed by how many people go into an auction with no strategy. They go in, or they just go way past their budget. I was in an auction recently—it was really sad. There was a couple sitting behind me and she was crying as they reached a point, and the husband was looking and you could tell that he obviously felt awful, so he kept bidding because he realised that she desperately wanted the house, but she kept crying. I suspect because she was thinking, “We haven’t got the money to buy this house.” And I’m watching, I thought, “Oh, it’s just a nightmare. It’s just awful.” And the terrible thing was—

Host: It’s so in the moment as well.

Alex: It is, and the regret—the buyers, the pain. It’s so painful. That’s why I said, I’m giving advice to the screen here: if you’re going in to bid, have a strategy and say, “That’s the dollar where we cap out and we are comfortable to do that.” Don’t go home and have regrets. Don’t go into the auction going, “Oh, we’ll just see how things go and we want to bid to about this point.” It’s a risky thing to do. The hard thing with an auction—there’s one winner. Everyone else loses. There’s no second place in an auction. So you need to be prepared for that and say, “We have decided, we’ve agreed, we’re going to bid to that point.” All the auctioneers are going to be like, “Shut up, Alex. Stop saying that.” But that is the truth. Go in and have what your budget is going to be, because you don’t know what’s going to happen in the room.

The other bit of advice I’ve got for people is if you miss out on a property—if you miss the auction, don’t beat yourself up going, “Oh, we missed it by $5,000.” You didn’t miss it by $5,000. You missed it by $5,000 below what the other buyer was willing to go to at that point. For all you know, they would have kept climbing and climbing.

Host: Exactly.

Alex: So you haven’t necessarily missed the home by what you think you have. You’ve just decided, “I’m out, I’m calling it.”

Host: Totally. I’ve heard you say elsewhere, Alex, a strategy of yours is pulling the auction early. What did you mean by that? Can you explain that?

Alex: If you find a good home and you’ve got a pretty good view as to what it’s worth, you’re really comfortable with it, you can put a pre-auction offer forward. Now, the interesting thing—and it’s such a balance—because a pre-auction offer, you have to know why are people thinking it’s going to sell at X price? What’s being promoted and why do they think it’s going to sell at a certain value? What value do you actually think it’s going to sell for? If you can do your due diligence—you get your building inspector in, get the legal review, get any other consultants in—if you can move at a good pace and you feel that you’ve really ticked everything off, you put forward a pre-offer. It’s a fine line, because it has to be an offer that makes the vendor go, “Yep, I’m going to take this offer, I’m accepting it, and if someone else turns up in the room, that’s fantastic.”

Typically I do it where you see—if you go into a property and there’s 120 sets of shoes out front, well, people are thinking it’s going to sit in a certain price point and you already know that’s not accurate. It’s likely to sell above that price point.

Host: That’s right.

Alex: You don’t see too many of them at the moment because it is such a saturated market and buyers are all over the place and there’s a lot of buyer nervousness. We’re talking to a lot of people who go, “I don’t want to spend all my budget because I’m worried about job security this year. I’m worried about the economy.” When I lived in Sydney years ago, it was such a hot market. Everything you did was a pre-auction offer, because you were just trying to jump in the ladder before it took off even further and everything was selling under the hammer. In Sydney, this was back in 2012, 13, 14—the market was just going crazy.

Host: Another hot market, eh?

Alex: Really hot market. But yeah, if you’ve done your due diligence and you think, “Well, I want to get ahead of the competition, I want to get ahead of everyone else doing their DD,” then you can bring the auction forward. It very much depends on what’s happening with the property and how confident you are in that price point.

To give you a very quick example: property I was looking at recently, people had assumed it was going to sell in the $900,000s. There’s a couple of reasons as to why they thought it was going to sell in the $900,000s. I had appraised it at $1.25M to $1.35M because I just know that market, I know how those sort of homes go. They had a lot of registered bidders on the day and all those people had gone out and done all their due diligence. They sold for $1.3M.

Host: Oh, wow.

Alex: Interestingly, the opening bid was in the late $900,000s, immediately knocked five bidders out.

Host: Wow.

Alex: And that just shows how many people didn’t actually understand the value of the home.

Host: But do you think that perhaps they were misled by the listing agent? Not to—

Alex: I dare not say. I think they obtained information that they want to hear.

Host: That’s spot on.

Alex: They hear what they want to hear. I think also people assume that everything’s a bargain at the moment. It’s not—good homes will sell for a very fair price at the moment.

Host: That’s very true.

Alex: They’re not all made equally.

Host: Good homes are still getting a good price.

Alex: It’s true.

Host: And just before we move on, one point I really want to reiterate around buyer’s nervousness. I’ve noticed from my side that people are just so terrified of overpaying, like we were discussing before, because of the changes that have happened in this market. Looking back three years ago, everybody knows someone who’s in an awkward position because they bought at the peak of a market and now they’re struggling to refinance or move on. So I think that, almost because that’s so recent, adds to that nervousness and uncertainty of those environments and auctions.

Alex: You’re spot on. And to add one to that is our reliance on CVs. I get so many people, they contact me, they go, “Oh, we want to buy something, but we want it to be 20% below CV.” I said, “That’s not how it works.” There are still plenty of properties selling above CV and selling way below CV. But people are trying to gauge the value off that as well as, as you say, the fear of overpaying and seeing what’s happened and now having too much stock. So a lot of people are feeling very stuck.

Host: That’s right. I suppose we’ve just been talking about the market, so as a sort of final wrap-up before we get into some more fun questions—although this is very fun, actually—where do you see the market going over the next 12 months and perhaps a bit beyond?

Alex: I know there’s a lot of people saying, “Oh, interest rates will be cut and then the market will take off.” I still think the factors of the uncertainty for people and there is a bit of movement still in and out of the country. I think personally the values will probably stay relatively flat, just while there’s still so much supply of property. I think vendors will adjust in their values and their views of what their home is worth, which will be hard for some, but also palatable for others. As I say, good homes are still selling for a good price anyway. So I don’t see the market suddenly racing off the way it has previously, and I think, again, people will just hold out, do their research, look for good homes, and it’ll get there. But I don’t see any great massive jumps up and down and sideways—a bit of a plateau for a period of time.

Host: That’s not a bad thing.

Alex: Which is nice.

Host: I think as a person in the industry, it’s nice to operate in a pretty stable environment.

Alex: It’s very nice for us.

Host: Good way to put it. Because, obviously, comparing to a hot market where your pre-approved buyers are under so much stress and there’s always time pressure, urgency to get ready for an auction, it’s nice for them to have a bit of choice and get properties under contract, do their due diligence, and feel a lot more positive and less stressed about the whole buying process.

Alex: Yeah.

Host: But no, very well said. We are going to dip into our favourite part of the podcast. We just want the listeners to know a bit more about you, Alex. So this is actually not property—maybe a couple of property questions, but Rory, take it away.

Rory: Okay, question number one. After a hard day, you’ve been butting heads with real estate agents and just grinding out your due diligence, you come home and there’s a lovely home-cooked meal. What cuisine is it?

Alex: If it’s been cooked by my partner, it’s a steak. If it was me—half the nights you get in so late it’s scrambled egg on toast. Otherwise, I am a huge fan of Chef Ottolenghi. He’s an Israeli chef based in London, and he does amazing things with vegetables, with fruit, with all sorts. He does beautiful, beautiful food. So, a bit of Mediterranean, I think.

Host: Oh, very nice. I’m going to check that out. Now we’re going to put a record on. What sort of genre are we listening to while we enjoy this Mediterranean?

Alex: I listen to all sorts. In fact, at pub quiz, my designated category is music and cinema. I would say there’s probably a bit of blues. I’m a big fan of blues and probably a bit of a sucker for eighties music as well.

Host: Nice. We ask all our guests this question, but I already know what you’re going to say. For context, we get a lot of business people, a lot of people in real estate, who come as guests. So, property flipping or long-term property holding? What’s your preference?

Alex: Long-term property holding. All about long-term. Buy land—they’re not making more of it, as they say. I just think property flipping is—I mean, I know plenty of people do it, but I’ve always thought you’re better to hold, buy something good and hold it.

Host: We a hundred percent agree. Protect your money from inflation. Now let’s go back to you starting Martelli & Co. What piece of advice would you give yourself knowing what you know now?

Alex: Damn good question. I would say be patient, be a bit kind on yourself. You don’t have to do everything perfectly at the start. You’re trying to do so many things, you’re trying to be all the things all at once. For example, it’s been two years on and we don’t do anything on Instagram and Facebook, because most of our social media, per se, we’ve done via LinkedIn, because that is typically our audience. At the start, I would have said, “Oh, we need to be on all the platforms, we need to promote this and that.” There just isn’t the time. You don’t have the ability to be all things to all people and cover all the platforms. So probably the best thing I did at the start is say, “What are our core competencies?” and we’re going to focus on those and drill in on those and just skip out everything else. So, at the start, I’d be like, just be kind on yourself—all good things in time.

Host: Absolutely. That’s great. Well said. Stepping into our shoes for the next OCR review, do you think we’re going to get a cut? Do you think we’re going to get an increase? Do you think it’s going to stay the same?

Alex: I think there’ll be a cut.

Host: You think there’ll be a cut?

Alex: I reckon, yeah. I think they’ll want to stimulate, and you know, that’s their call, but I think there’ll be a cut.

Host: I agree. I think everything outside of our industry as well is still hurting and we’re not seeing the growth we need.

Alex: I agree.

Host: Well, Alex, thank you so much for joining Rory and I.

Alex: A pleasure. Thank you very much for having me.

Host: We really value what you do for the buyers in New Zealand, so thank you very much.

Alex: Appreciate it, appreciate what you guys do for the buyers as well. The partnership we have with financial advisors is absolutely critical and it’s a journey together.

Host: Brilliant. Thanks, Alex.

Alex: It’s been a pleasure.

Welcome back, everyone, to our next episode of the Blueprint Podcast. I'm back here with Rory again, and we're really grateful to be joined by Arthur Loo from the prestigious law firm, Loo & Koo Solicitors. He's a titan of the legal industry, been around for 30 years, and we're lucky enough to have him as our neighbour, so we see him all the time, up and down the hallway, and talk shop a bit. Arthur, thanks so much for coming on.

Arthur: Oh, you're very welcome. Thanks for the invitation.

Host: Absolutely. We know you're a very busy man, so we appreciate you taking some time. Like I mentioned before, this podcast is mainly for our existing clients, potential clients, and our referral partners. You’ve got a really good base of knowledge on all things legal, especially property, which aligns with what we do. But just as a business owner as well, we really want to get the best out of you within the 40 minutes we've got and really understand where you've come from to build such a formidable business. I'll just kick off with: how did you actually end up starting Loo & Koo 30 years ago?

Arthur: Right, I’d been practising law in a Queen Street law firm. At the time, there was a lot of Chinese immigration, or immigration generally, from Hong Kong, Taiwan, a little bit from China, Southeast Asia. Being able to deal with clients appropriately, culturally, was starting to be a bit of an issue. I was in a regular New Zealand firm. The receptionist was Caucasian, everyone else, with the exception of my secretary, was not Chinese. People ringing up would find it difficult to get past the receptionist, or even leave a message, and they would ring me at all hours of the day and night at home. One night my wife took 13 calls while she was trying to cook dinner, and I got a really warm reception when I got home! This was before mobile phones, so people would ring up, “Where’s Arthur? He’s at the office. No, I called the office, he’s not there. Is it possible he might be driving home?” That was the sort of thing.

But really, I recognised that there was going to be a need for people to be able to communicate with clients in their language, in a culturally appropriate way. Ken Koo was someone who had worked for me, but at that time, he was at another law firm. Christmas 1995, he rings up and says, “Arthur, I’m coming over for a cup of coffee,” and I knew what he wanted to talk about. We had a chat and said it was really about time we started a law firm where we could communicate with our clients in their own language and deal with them in a culturally appropriate way. So I resigned from my partnership—I’d been there 15 years. I’ve been practising law 48 years now. Ken left his firm and we set up Loo & Koo here at 8 Manukau Road. The location is great. One Sunday afternoon we were driving around looking for office space and I saw the ‘for lease’ sign outside here. It was the whole floor, 4,000 square feet. I rang up and said, “Look, the space is perfect, the location is perfect, but we’re looking for about two and a half thousand square feet. This is a big space, a big commitment.” But we said, “Let’s go for it.” We took the whole space, sublet some, and then over the years we’ve expanded into the whole floor and then taken a portion of the floor next door. So we’re now probably about 5,300 square feet and it’s been a great journey. We started with about eight or nine people in the office. We’ve now got 30. From two partners to four partners and a great staff—very capable and loyal. It’s been very rewarding and gratifying.

Host: That’s brilliant. So you act for a lot of people, obviously New Zealanders and English speakers as well.

Arthur: Brilliant. You obviously saw that opportunity with the influx of migration happening. How big was the opportunity at that time and how has it grown in three decades of business?

Arthur: Pretty good. I can speak Cantonese and passable English, and my partner Ken spoke Mandarin as well. Then we had people in the office who could speak Cantonese and Mandarin, so that attracted a lot of clients. Obviously, if you don’t speak English perfectly, having someone who could deal with you in Chinese was a great boon for business. And to be able to deal with them, as I say, in a culturally appropriate way. For example, Chinese, or Cantonese especially, are a bit superstitious about numbers. So we decided to code our files. The coding system was the first three letters of the surname and then five or six numerals. For English speakers, starting with one. Eight—you know how Cantonese people like the number eight—so, for example, Mr Chan would be CHA8xx, and so they all got eight in their client number. For the Taiwanese, I think it was six. For the mainland Chinese, it was three, and so on. Tahitians got nine, Koreans got five. That also let us know immediately what their preferred language was. So if we picked up a file that had an eight in it, we knew they spoke Cantonese; a six, we knew they spoke Mandarin.

Host: It’s amazing. And I mean, 30 years in business is no mean feat. Dan and I were talking before we started this episode about you coming in—he turned 30 in February this year. So while you guys were launching Loo & Koo, he was running around in nappies.

Arthur: Yeah, yeah, yeah. Excuse my language once again.

Host: And further to that, Blueprint is in our second year of business, so it’s something to aspire to. As a bit of a journeyman of the law, you must have seen some changes over 30 years—the good, the bad, and the ugly.

Arthur: Oh, lots. The way we go about practising, the practical side of things. I was telling some of the young people, one time I said to a young secretary, “We used to stick carbon paper between several sheets of paper and an impact typewriter. Copies came because of that.” Fax machines have come and gone in one generation—almost less than that. Emails now—who posts a letter anymore? When I was young and we practised, we used to actually pick up a file and go and see the other lawyer when we settled on a property. We’d pick up a bank cheque and actually go to where the title deed was.

Host: Is that true?

Arthur: Yes. Typically, say on a Friday, to go and update the title—not to update the title, but if I was buying a property from you, you had the title there, or your discharge of mortgage. I was buying from you, so I would have to get a bank cheque to pay you. The only way to do that was to get a bank cheque from the bank, walk down to your office, and hand it to you. You handed me the transfer and the title. Then I would take it back to the office and give it to the registration clerk to take it to the land titles office to register it. What was good about that was that I got to meet you, talk to you, see the cut of your cloth, and there was some rapport. The next time we had a dealing, we used to exchange undertakings—“I’ll do this if you do that,” like, “I undertake that the water rates are paid,” or “the land rates are paid,” and things like that. Or sometimes if we had an issue, I’d ring you up and say, “Look, Dan, let’s sort this out. You tell your client A and I’ll tell my client B, and we’ll get it sorted.” Which is good for the clients, good for the profession. Now, we don’t get to meet the person face to face. You tend to stand back and write turgid letters to each other. It becomes a little bit harder, I think, to resolve issues. There are so many more lawyers now and we are a bit more—not suspicious, but we don’t have that camaraderie. I trust you, you trust me, and let’s get it sorted for the benefit of the client.

Host: Absolutely. Once you’ve got that face-to-face relationship, there’s that mutual respect, that acknowledgement of each other’s efforts and understanding. If I had not met you, it becomes a bit harder, even if I pick up the phone and call you. It’s a bit harder to do because, you know, face to face is good. I hate acting for clients who I’ve never met before. Quite often people email me and we do it over the telephone, but sometimes if issues arise, it becomes harder to resolve.

Arthur: Absolutely. Especially if you’re mostly limited to emails. Emails can be quite cold, regardless of if you put “warm regards”—they’ll still be a bit cold, a bit impersonal. Sometimes it’s hard to strike the tone, and if you’re conversing, it’s easier to elaborate or explain.

Host: I just want to take a quick step back to where we started about your business journey. We have a lot of viewers, Arthur, who are business owners and also our referral partners who are running their own consultancy businesses and trying to grow them. Obviously, you guys started with just yourself and Ken Koo, and then you’ve built to the point where you’ve got more than 20 staff now. What advice do you have for someone who’s trying to grow a business, take the risk to hire people? In the current market, what should you be thinking about? What numbers are important before you consider hiring someone to have confidence in what you’re doing?

Arthur: You’ve got to back yourself. You’ve got to be genuine, I think. You’ve got to be nice, treat people right, and that will attract work. In professional services, you’ve got to like the other person, have some warmth or trust in them. If you come across as being genuine, being sincere, people gravitate towards you. Having a bit of a sense of humour helps, because why would you go to somebody who was a cold fish? You expect most professionals to be able to do the job, so then it comes down to the client-advisor interface. It’s got to be pleasant and warm, and obviously you’ve got to do the job. But if you go to somebody who’s an absolute cold fish and there’s no warmth to the relationship, what’s the point? Generally, we want to be happy. We want all our relationships to be pleasant. If you’re in professional services, where it’s so important, it’s a privilege to be in a position where three minutes or less after meeting somebody, they’re telling you their most intimate details about their lives and reposing their faith in you to do the right thing by them.

Host: Yeah, it’s an absolute privilege to have that. We experience the same thing with our clients—straight away we’re talking about their financial position, which is extremely delicate. So you’re grateful for that, and a lot of it comes with just being a good service person and being warm, right?

Arthur: Yeah, and then working hard. The old truism: the harder you work, the luckier you get.

Host: Absolutely. With things having changed so much over your tenure, something that we talk about often with our clients, and we have dealings with your team when we refer clients as well, is ownership structures. You’ve got trusts, super trusts, hidden trusts, all these different ways that you can own your assets. Do you think, as time’s gone on, the requirement or need for trusts and all those sorts of different, unique structures is higher than ever? Or do you think, as things have developed, some of those structures have become a bit outdated?

Arthur: I don’t think they’ve become outdated. There’s always a need for them. It’s really about appropriateness. At one time, trusts went completely retail and everybody wanted to have one because they were fashionable. At your dinner party, you’re talking about your trust, so maybe I should have one too. A lot of people set up a trust when there wasn’t the need for it—they weren’t in a risky business, they weren’t in an occupation that was risky. But a trust is largely about asset management and asset protection. There may be many reasons why one would have a trust, like if you had a handicapped family member that you wanted to provide for, that sort of thing. But quite often, I think you can do other things to manage your asset planning, or through a well-prepared will for a lot of people. I always say, don’t set up structures that are overly complicated or structures that the person doesn’t understand. A lot of people don’t really understand the structure of a trust. But if it’s appropriate, by all means. But I wouldn’t set up one for the sake of it, just because your best friend’s got one. There are administration costs and all that sort of thing. If it’s just mum and dad with a house and they’re both salary earners and the children are fine, I have set up trusts for people where there’s a handicapped child or something, which is entirely appropriate. But just to set up one because your best friend’s got one, I wouldn’t necessarily advocate that.

Host: You mentioned wills as well, and obviously here we write insurance policies and life insurance policies, and sometimes that estate question gets brought to the fore. In your experience, what are the pitfalls of people not having those estate plans in place, and have you got any examples of where things have gone awry when it’s left to the default system versus people with structured plans?

Arthur: I think everybody should have a will because then you can provide exactly how you want your property to be dealt with. Otherwise, the provisions of the Administration Act take over, and that may not be what you want. A well-drafted will, even a simple one for a mum and dad situation, doesn’t have to be elaborate. But if you don’t have one, you’ve got to do a search to make sure that person didn’t have any more children under the Status of Children Act. Then you’ve got to maybe advertise for wills so that the person who applies for letters of administration can say that they’ve made a diligent search to see whether the person left a will or not. That leads to delay and adds more cost, and at a time when a person is invariably grieving, the delay and extra costs are unnecessary compared with the relative cost of doing a simple will. Sometimes, if there’s more than one person who could apply for letters of administration—like, say, the second parent goes and there are four children—one of those children has to apply, and the other three have to sign consents in favour of their sibling. That all takes time.

Host: One thing that interests me and confuses me a little bit is that a person can write a will, and then there are protections for certain people to challenge wills. I find that particularly confusing. In some situations I get it, in others I don’t. I don’t understand the somewhat lack of freedom to designate a will.

Arthur: Spouses, children, and grandchildren have a right to challenge a will through the Family Protection Act. There’s that tension between testamentary freedom and making sure that beneficiaries—next of kin who have an expectation, where the deceased might owe them a moral obligation—are provided for. You get instances where a parent disinherits a child because of various family dynamics. It’s really trying to strike that right balance between testamentary freedom and making sure that a person who should be looked after, who the will-maker owed a moral obligation to, is provided for. If they don’t do it in their will, it’s done through the courts. Quite often, the settlement is usually negotiated before you get to a full-fledged court hearing, but that’s another matter. Sometimes parents may be mean and disinherit a child for reasons that are not entirely fair, so there should be that ability to redress. Then there’s also the Testamentary Promises Act, where a will-maker might say, “Did you come and look after me, live in my house and all that? I can’t pay you at the moment, but I’ll make sure you’re looked after in my will.” And then they don’t discharge that obligation, so that person to whom the promise is made should have the ability to make a claim.

Host: And I suppose blended family scenarios could get quite complex as well, where you’ve got either spouse having children from previous relationships and whatnot.

Arthur: That’s where I think people should make a will, because you’ve got my children, your children, our children.

Host: Brilliant. Moving around to something slightly different, or back towards the finance side of things. We deal a lot with property developers. I’m sure that yourself and the team do as well. It’s been a pretty chaotic last five years with changes in interest rates and the market and prices. We’ve had a lot of clients over the last couple of years who have been affected by the changes in values with off-the-plan purchases. I’m sure that’s something you’ve seen quite a bit of. Are you still having clients who have issues with their settlements with off-the-plan purchases, or are you recommending people avoid them at this point in time? What’s your view on that?

Arthur: With settlements, we’ve just found that in the last wee while, most of our sales are settling, whereas last year, with some developments, quite a number were not settling. So that is pleasing, that people are able to go through and complete the purchase. Buying off the plan—yes and no. I think you need to look at who the developer is, look at their product, and have some confidence that the finished product is good. Check out the track record. You should be able to look at plans, interpret plans and specifications, and be able to look at storyboards of the fit-out and all that sort of thing. Some people, not everybody, can visualise what the finished product might look like. At the moment, I think some developers are probably hurting—they’re sitting on a lot of unsold stock. You see, every now and again, ads for someone who wants to sell the whole development lock, stock, and barrel. If someone is well capitalised, maybe they want to take a punt and buy the whole lot and sit on it and wait for better times. But then you’ve got the cost of holding. What do you do? Do you rent it out? When you rent it out, all of a sudden the property becomes second-hand.

Host: In some of your circles, do you have a general view of the future of the property market? It’s been a winning horse forever. Do you think it continues on that same trajectory, or has the future got something different?

Arthur: Property, like any other commodity, goes up and it goes down. But the good thing about earth is that they’re not making any more of it. The market will always be there. At times it’ll become more buoyant, and at other times, less so. Right at the moment, things are globally a little bit uncertain. But in New Zealand, in a way, we’re reasonably well insulated, and I think the price fluctuations are not that huge compared to overseas. During the Asian financial crisis, the global financial crisis, prices had big fluctuations. I saw, as a notary public, I notarised quite a lot of documents where people were buying properties in the United States for under $30,000 USD.

Host: Wow. Whereabouts?

Arthur: Atlanta, Florida, Las Vegas, I seem to remember. Some of them were buying properties sight unseen, where people were just walking away from properties.

Host: You have to go down to Mataura in the South Island for anything close to that in New Zealand. I still don’t think you get that chance for a house. Auckland probably has one of the most unique property markets in the world. Having just looked around a bit and followed, obviously for my tenure in the business and just for the last couple of years, watching some areas dipping, some not, some property still going for crazy prices at auction even though it’s a slightly depressed market. That’s been really interesting to watch.

Arthur: There’s that constant pressure on supply that’s always going to flow through. A lot of what drives the property market is the cost of money. If interest rates go down, the cost of borrowing goes down, properties appreciate. When we saw a couple of years ago, three years ago, when interest rates were low, that was the greatest buoyancy in the market. Prices went up 40 or 60% or something in a year. So it’s the cost of funds, and that affects and flows through to other areas like building costs and all that sort of thing. If the cost of borrowing is low, it puts a lot of confidence in the market.

Host: I remember the lowest it got—I was sitting with my colleague in mid-2020, and he wrote a loan for a million bucks, interest only, and it was $500 a week for the repayments to borrow a million dollars. It was just crazy looking back. You’re surprised you didn’t marvel at the situation more, compared to what a normal market looks like.

Host: Arthur, it’s been really good to have you on. Before we wrap up, is there anything else that’s important to mention? Obviously, we’ve referred a lot of clients to your business. We’re super happy with the great work your team’s done taking care of us.

Arthur: Well, thank you very much. We appreciate that. It cuts both ways, so we hope that we’ll be able to send people up as well.

Host: Likewise.

Arthur: It’s been quite an interesting journey for myself. One of the great things is dealing with people. You deal with people in all walks of life, professional and from the client’s point of view, and it’s always a pleasure to deal with nice people.

Host: That’s right. So you’ve done 30 years—how many years have you got left?

Arthur: A few, I think. I’ve been in practice 48 years, so I was with my previous practice for 15 years. I’m not a danger to my clients yet.

Host: We always ask a couple of quick-fire questions that are non-business related when we wrap up. So we wrote these last week. I haven’t read them since we wrote them, but I’m just going to fire them off.

After a long day of setting up trusts and dealing with probates, what’s your favourite go-to cuisine and what will you wash it down with?

Arthur: Maybe Italian with a nice pinot noir.

Host: Yum. The Mediterranean diet. Favourite music genre?

Arthur: Oh, blimey, I’m an old fossil. Just any popular song where you can at least hear half the words or make out the lyrics. No doof-doof. Somebody like Rod Stewart or something.

Host: Nice, classics. In terms of your journey with real estate, are you more for personal investing, property flipping, or long-term property holding?

Arthur: I tend to hold. I’m not a flipper. Not into flipping. Years gone by, I’ve done up the odd property with friends to sell, but that was just for fun, with a couple of mates. You go in and do up a unit, that sort of thing. Nothing big. So we buy the asset, hold it, let inflation devalue the debt.

Host: That’s exactly what we preach to the clients usually—buy the asset, paint and wallpaper, and then sell as quickly as possible. But you prefer the holding.

Arthur: Yeah, just what we preach to our clients.

Host: Wind back to ’95. What advice would you give yourself, knowing what you know now, starting this journey you’ve been on with Loo & Koo?

Arthur: I was involved with a lot of charities, a lot of community work—heading, chairing all sorts of organisations. I’ve derived a lot of pleasure out of that. Half of me says I should have been at the office working, but I got a lot of pleasure out of doing it. I thank my lucky stars I was born in New Zealand and I’ve always wanted to give back to the community. But there were times when my partners or the people at the office were missing my presence at the office, so it’s a hard thing to balance. Half of you wants to say, “I should have been at the office working,” but now when I look back upon my life and the things that I’ve done, the experiences that I’ve had that money can’t buy—I’ve been on all sorts of boards, done trips to China with the Prime Minister, stuff like that—I wouldn’t have had the honour of doing those trips if I wasn’t involved in some of the things I was involved in. I’ve headed cancer charities, charities that try to educate school-aged children from abusing alcohol and drugs, I’ve headed sports clubs, my local community group, all that sort of thing. It’s brilliant and taken a lot of time, and a long-suffering wife—a very supportive wife. I’d like to think I haven’t made too many mistakes business-wise, not cocked up files, touch wood, not with any of those either.

Host: That’s cool. It sounds like you’ve done a lot of good, which is impressive. So not too many regrets, but the advice maybe is be a bit more mindful of your time.

Arthur: It’s juggling time. Quite often it’s been at the expense of family time. You somehow try to hold it all together, make it work, and it has. Having an understanding, supportive wife makes a big difference.

Host: Our last question was actually about the OCR review and your thoughts on if we were going to get an OCR cut, but it’s obviously been announced today that we got a cut.

Arthur: I think that was always on the cards. At the moment the world is topsy-turvy. The OCR only has a little bit of influence on the cost of funds. A lot of our cost of funds depends on what is happening overseas, and if treasury bills in the United States are commanding a high coupon, there’ll be more money flowing that way, and invariably it will increase the cost of funds for New Zealand borrowers, for lending institutions. The banks—most of the money that they lend, a lot of it comes from overseas, because New Zealand doesn’t save like Japanese housewives. The banks have to source the money that they lend from overseas, and so their cost of money is high, and it gets passed on to the borrower in New Zealand. So over the next few years, it’s wait and see. Hang onto your hat and keep your fingers crossed.

Host: Just pray. That’s where you guys come in—you structure a loan and the borrowers are careful about what they do, they’re informed about what they do, and hopefully they won’t get into too much trouble.

Arthur: The banks do a lot of that legwork in the background with the stress testing and making sure lending’s affordable. But people’s situations change all the time, so it’s just making sure that you’ve got a good financial plan and, exactly like you’re saying, sound advice from mortgage brokers. Some might want to push a client into something that is maybe a little bit unsafe, but so long as you get sound advice and sound financial planning, they should be safe.

Host: Arthur, any last questions? We’re good?

Host 2: No, I think that’s a nice chat, Arthur.

Arthur: Thank you very much. You’re very much a friend of Blueprint and hope to have you on soon.

Host: Cheers. Thank you.

Property prices have gone up at an unsustainable rate. If you look at a section in Auckland, from about 1990 to 2018, they went up 900%, and then we still had another boost through the Covid period. There's now a whole generation of people who have priced themselves out of property. If you've got 10 grand on the credit card, then you're very silly. We changed that. This place has got to be on fire.

Welcome to the Blueprint Finance Podcast. We're here to talk to David Seymour. We're very grateful to have him here as our local Epsom MP. David's got really great insights on the future of the country, which is really important to all of our clients and our business partners to really get a grip on where we're heading as a unit and what's important to us.

So, David, thank you so much for coming on.

No, thank you. And, look, I admire what you're doing. You're young people starting a business, not complaining, serving your customers, building it up. That's a really positive thing and we don't celebrate it enough.

Thanks, David. We appreciate that, eh?

Yeah, definitely. There is some complaining, but it happens inside the walls of this room. But yeah, look, we want to start with the big questions our clients have when we talk to them. A lot of them are micro, which we can address, but a lot are more probably poised towards yourself and where you think we're heading as a nation.

Obviously, the biggest thing we talk about is what's the market doing? The property market, right? Over the past three years from the peak of the market, we're at a point where we have the highest DTI (debt to income ratio) in the world, comparable with the likes of Canada. We're at the top, and now with the correction that's happened, markets on average have dropped 30% and it seems that things have stabilised.

Now we're seeing the OCR peeling back and property prices starting to come back up. Is it too soon for something like that to happen? Do you think it's stable where we're at right now with the market?

Well, if you're asking for advice about the market this year, I'm not that close to it. What I do know is that over the past 30 years, property prices have gone up at an unsustainable rate. If you look at a section in Auckland, from about 1990 to 2018, they went up 900%. Wow. And then we still had another boost through the Covid period, and then that came back, but we're still probably ahead of where we were then.

So, you think about that for a moment and then you say, is this sustainable in the widest sense? I think one of the big problems New Zealand has is there's now a whole generation of people who have priced themselves out of property ownership. Now you look at people protesting, people upset, people mentally distressed—there's a lot of mental distress out there, according to the Ministry of Health. I put a lot of that back to people not having a clear pathway to having their own place in the country.

You just have to look at somebody who is young in this country, who goes to school, listens to their teacher, does their homework, does well in their exams, gets a qualification, comes out with $30K or $40K of student debt (I think the average is $36K), spends three or four years of their life, and they're now earning $55K, $60K, $65K maybe. And they say, "Gee, anything that looks remotely like the house my parents had within 10 kilometres of here is a million plus." At least. And you say, "This game's rigged." So that's why I believe that there's a lot of political unrest around the world. Fundamentally, we can't keep going this way.

Then, what's the government doing about it? Because they're not just complaining. So, Resource Management Act reform, building material reform—so you can get, you know, if it works in Japan, it'll probably work here. They have rain and earthquakes too, but they build houses much cheaper. There's also infrastructure funding and financing reform, all of which is designed to produce more homes, cheaper. I recognise that from an investor's point of view, people will say, "Well, that doesn't help. I'd rather just go up 10% every year so I can keep, you know, every time I refresh the mortgage or take a wee trip to Fiji at the same time." I can understand that, but it's not sustainable. In the long-term future of the country, the last 30 years has not been sustainable anyway.

That's probably more than you bargained for, but that's the—

No, that's perfect. That's good.

Awesome. Okay, the next thing we want to talk about is KiwiSaver. Now, a lot of the times that we're talking to clients and we're on the phone to them, the first question is, "What's going on? What can we help with?" Most of the time, recently, let's say one out of every six calls, they'll say, "We're going to Australia." We say, "Why are you doing that?" Obviously, they're saying they're going to earn a higher income, but recently what we've found is that a lot of people, specifically young professionals, tend to go to Australia because their super scheme outdoes what we have as KiwiSaver in New Zealand. Do you think we have a robust system in the KiwiSaver space? Because it's, what is it, $88 to about $100 billion that's available there?

Let me take the sort of contrarian view on this, which I nonetheless think is right. I don't believe that compulsory saving schemes or even sort of semi-compulsory "nudge you in there" saving schemes actually increase people's saving. There are people who have studied this around the world, and there's pretty good evidence. People will look at their Australian Supers and say, "Oh, we've got so much money," or people will look at their KiwiSaver and say, "Actually, this is a really valuable thing." I get that, and I don't deny it. I don't take that away from people. I think they should keep it, and good on them.

But I also think what's missed is that KiwiSaver contributions are not free. You've got about $500 a year coming from the taxpayer. That is money the government is borrowing that we all have to pay back. Second, people that have KiwiSaver contributions on the employer side—you're kidding yourself if you don't think that that 3% or however much you're drawing down has limited what your employer is prepared to pay you in cash. They're factoring it in. Let's not kid ourselves. Then there's your own contribution, which together with reduced take-home pay from your employer's contribution being lower, reduces your ability for other savings options.

The number one saving option most people have is paying off debt. So if you're putting 3% or even more into your KiwiSaver, that's awesome. But if you've got $10K on the credit card, then you're very silly. The same argument can be made with a mortgage. Most people are still paying 6 points on their mortgage right now. If you pay off your mortgage, that is the same as getting a 6% zero-risk return. No one is offering 6% with zero risk out there right now.

So, I just make the argument that actually, people can talk all they like about, "Well, you should force people to save more and look at what the Aussies have got," and all that. But then once you dig down into it, you'll find that they've got less mortgage repayments, more debt on other things, consumer finance or whatever, less saving in other schemes because they're compelled to do all their saving in one area.

That's interesting, eh?

Yeah, I think that's really focusing on day-to-day, right? For anyone local that has a property and obviously got a personal loan or a car loan and you're umming and ahhing about KiwiSaver, you've got bigger things to get rid of first before you're putting your money away. Now, what are your thoughts on the whole KiwiSaver thing? There is potential there, there's money there, and obviously we attract foreign investments and foreign capital all the time. Do you see anything that could be created using KiwiSaver for long-term infrastructure investing or on the realms of just making the country a bit better off with the funds that we've got and how they operate?

Well, maybe, but I think it's always really important to know what your objective is. If you have two, chances are at some point they're going to compete. The objective of KiwiSaver is to get your maximum return so that you can retire as well as possible. The objective of infrastructure projects is to borrow for the minimum possible return so that the infrastructure is affordable. Now, if you say that you are going to put your KiwiSaver into infrastructure, well, it might be a good idea, but if you are forced to do it, then chances are that's going to force you to do it using investments that wouldn't have been your first choice. On the other hand, if we're going to build infrastructure funds with KiwiSaver and make sure that there's a really good return for people's retirement, we might find that we're paying more for our bridges and roads, or we build fewer bridges and roads and pipes, and then the whole economy is less productive.

So, just be real careful about mixing up these two objectives. One needs a high interest rate, the other one needs a low interest rate. If you try and mash them up, someone's going to end up very unhappy. Possibly both.

It's a bit forceful, eh?

Definitely.

Okay, cool. Well, if we can talk about what ACT's plan is about small businesses—you guys are very vocal about helping small businesses, especially in the employment law side of things, which I think is really, really good, especially for people in this current economy who have to take a lot of risk in order to get things off the ground. With those changes that you're making, do you think those are things we'll see immediately implemented and straight away making an impact, or are those foundational things that are going to take 10 years, 15 years for us to have New Zealand as a place where it's actually globally easy to start a new business?

Well, every law has a process. It sounds pretty naff and boring, but it's true. Some of the stuff is already done. This is mostly what Brooke van Velden has done, and she's a great champion of business. She grew up in a household where both her parents had their own business. She would basically say to you, "Look, I've done the so-called Fair Pay Agreements—they're gone. I've done the 90-day trial for all businesses, not just those under 20 workers. That's done, it's in place." The minimum wage, she's actually pulled back to pretty much the smallest minimum wage policy that really was politically acceptable, because frankly it's gone up so much, so massive pressure on, and not relativity is of course mean it's right through the wage scale. That's led to a lot of inflation, made it harder to take people on, made it harder to take on apprentices, for example. So, she's delivered on a minimum wage that is a bit more sane after five, six years of crazy inflation there.

Then she's doing other things, like making it easier to dismiss someone if there's a personal grievance. There are cases where nobody disputes that one employee was sexually harassing the other one, but because the employer didn't do all the right interviews and tick the boxes and dot the i's and cross the t's, the offender ends up getting compensated by the employer who never wanted the whole headache. So she said, "Look, if you've got a personal grievance (PG), you can't get compensated if you were factually found to be at fault." That's crazy. Changes like that are going to come in relatively soon, and you'll see soon she's been doing a big project on health and safety law, and I think she's really going to turn that upside down—and it needs to be turned upside down because it's so corrosive of our culture. When people are just living in fear, they don't do more health and safety, they don't make things safer. Our records show that unfortunately, if you use fear, you get compliance. You don't necessarily get safety, and Brooke is really going to turn that upside down.

Oh, brilliant.

Yeah, that's awesome.

All right, David. We know that New Zealand's economy has a lot of small business operators, right? Either you've got an owner-operator sort of model, or you've got a company such as ours that has three or four staff now. It's not hard to see that if you look at the amount of companies that have lasted over a hundred years in New Zealand—some solid names—there's not many, or it's just a monopoly. How do you see us scaling in New Zealand from being SMEs to having more bigger companies that employ people in the local economy?

Well, I think part of it is about attitude and culture. For too long, we've sort of felt like entrepreneurs are something a bit sinister and business is kind of bad. A lot of countries, particularly the US and to some extent Australia, don't really have that attitude. We need to look at business as being a beautiful thing where four different types of people come together to solve problems they can't solve alone. Those are entrepreneurs with their ideas, investors with their capital, workers with their time and talent, and customers with their needs. This is a form of voluntary human cooperation that solves problems for four different types of people all at once, without anyone needing to be forced to do anything they don't want to do. I think that's a beautiful thing, and we should really celebrate it.

If you want to see our whole economy change, aside from changing the attitude and culture towards business, changing the regulation certainly helps. Like being able to get overseas capital, being able to get migrant workers—people say, "Oh, you've got to keep it in New Zealand, you've got to make jobs for Kiwis." And I just say, "Well, hang on a second. You're competing against a firm in Colorado." I visited a firm that's making orthopaedic instruments out of titanium—one little thing that goes in your leg is worth like $20,000. Their main competitor in Colorado can get foreign investment from 49 other American states, or from anywhere else in the world, because the United States is really open to investment from outside. They also have a pool of labour—basically anyone from half a billion people on the North American continent. You've got nearly 40 million Canadians, 350 million Americans, and 120 million Mexicans that are available for their labour market.

Now, if our guys have to accept investment from New Zealand, maybe Australia, workers from New Zealand or Australia, and anyone else that can jump through a million immigration hoops, it's going to be hard for them to grow. The orthopaedic surgeons are going to go to the guys in Colorado. Other things being equal—we kneecap ourselves by being closed to the rest of the world. And then we kneecap ourselves with too much red tape and regulation. I talked about health and safety, haven't talked about the Resource Management Act really, but oftentimes people say it takes longer to get permission for a project than to actually do the project. We need to fix our red tape and regulation, and if we do that, there's no reason that we can't build world-beating companies in spite of our geographic isolation.

That's a great point, because like you say, we don't have access to foreign investment, but even with that, the geographical limitations of us being here, paired with that, makes it so challenging for us to be world-leading, eh?

Yeah, but there are things you can change and things you can't change, right? One of the reasons I do what I do is that I know we can't change our geography. We can't quickly change our population. But we can change our policies. And we can change them relatively rapidly—we're quite nimble as a country. What I like to do is try to win people's votes without bribing anyone with someone else's money or without promising to make rules restricting anyone else's freedom. That's pretty challenging, because if you listen to most politicians, most of the time they're either promising you other people's money or to make rules restricting other people from doing something you don't like. I refuse to do that because a free society is a creative society. Creative societies are prosperous and happy societies. Humans are born to be creative. We love being creative. If you look at the way small children play, and then we suppress that. I think we should try our best to always make ourselves a freer society.

Tell us a little bit more about the RMA. It's just a topic that has been chanted on about for a while now. I guess we lack action as a nation quite a bit, right? So where is the RMA going and where do we see it in action in the next 6 to 12 months?

It's going in the bin and it's going to be replaced by two new laws. One will be urban planning law, the other will be an environmental protection law. What this means in practice is we are putting property rights at the centre of resource management in New Zealand. That means two things. Number one, if it's your property, then the presumption is you can do what you like on it. Number two, if you want to object to someone else using their property as they see fit, then your objection better be based on an impairment of your own property, because everything comes back to property rights in this law. I think that's a massive, massive shift. So often I hear people being restricted from doing things on their own property, and I say, "Hang on a minute. Who else was being harmed?" I talked to one couple—they said they had objections against the drawers they were using in their kitchen. I thought, how could that possibly harm anyone? It's bizarre. This was a single-family freestanding structure, so there's no possible way that could affect another person, but it was still subject to regulation. Getting resource management to a property rights basis is going to be massive for this country. I don't think people have quite realised how massive, but you think about New Zealand—it's a great piece of real estate, great climate, great people. There's a lot of good stuff here except it's almost impossible to develop and use it and make a place for yourself to live, which is why you've got a whole disillusioned generation.

Now we change that, this place is going to be on fire, 100%. And it's going to be awesome. So, when does it change? You're right, there's a lot of chatter about it. I remember when I was first elected in 2014 and the Nats had 60 seats and I had one, and I said, "Look, that's a majority. Let's deal with the RMA." They didn't want to do it. Still got the emails—the National Party had the opportunity and did not want to do it. We've come back nine years later, we're in government and we're doing it with them. We're doing it really based on ACT's principles of a property rights-based RMA. So it is very exciting stuff.

Absolutely reminds me of your shower tray. You know, the shower tray in your house—it was too big. All that red tape you had to go through just to—

Seriously? Yeah, yeah, yeah. He had a shower tray in his house. I had to get an exemption from the council for my shower tray.

They were making me spend 10 grand first.

It's lucky that they were onto that. I mean, imagine what could've happened.

Yeah, someone could've died.

Well, this is what I mean by regulation, right? People spend too much time caught up doing things that won't actually make the boat go faster.

That's right. That's the core of our issue.

Well said. And that's something that as you get big and develop, it's going to happen and you've got to push back on that. You have to push back on that and know where you're steering the ship, because the same thing happens in business. As you get bigger, your regulation requirements increase and you have to still find a way to be focused on good client outcomes.

Dave, we just want to talk about one of the bigger things our clients are always asking. We're talking about refixes, rates coming up. Obviously it's been a couple of years of pain. We're glad to give some relief now with rates coming down. But, comparatively, us and the UK host the most profitable banks in the world. Our banks do really, really well. It's obviously because we've got high-earning individuals and good infrastructure, but perhaps they're doing a bit too well and there should be some more competition. Now, obviously a big driver from this current government is trying to prop up Kiwibank and get a more competitive edge. Do you see that becoming something that's a bit more forefront in the future for the current government?

Look, it's always good politics to beat up on bankers, right? Because basically these guys manage risk, which is intangible. If you're a potato grower, everyone knows what you do, but if you're a banker, you manage risk and it seems like you're taking money out of thin air, because risk management is not really a visible thing. So you can understand why it's good politics to beat up on banks. And you're right, if you compare the Australian banks with their subsidiary companies here in New Zealand, the returns are different. New Zealand is doing a bit better. All of that is true.

But I would just point to, well, why is that? Have we done everything we can to make it easy for new entrants in the market? Like Payments NZ—having a payment system that's basically owned by a closed shop with some of the banks, you should be able to access the payment system, that would be a good start. But then we do a whole lot of things that just make it more expensive to be in business in New Zealand and make it less likely competitors will want to enter the market. So, there are people who say, "Oh, we're going to put more rules on the banks to make them more competitive." I would say, ask yourself how many rules need to be removed. If you remove the rules, then suddenly you find yourself in a much better place.

Absolutely. I think that's the biggest thing—being able to open it up for new entrants, because if you compare, obviously we're a much smaller population, but the amount of lenders we have here compared to Australia, it's just not even comparable. A lot of my friends who own property over there, they've got their mortgages with boutique banks you've never heard of, every niche requirement.

In fairness, if you go on interest.co.nz and see how many mortgage lenders there are, there's not just four banks in New Zealand. There's 20. There's at least 20 with a licence. There's at least a dozen that you can get a mortgage from. I just look at Kiwibank—they've been trying to disrupt the market now for 20 years, and the thought is that if they get some more capital, they'll be able to do that finally. I just suspect with a lot of this stuff, people love to beat up on the industry. But it's the same with the supermarkets.

Yeah, for sure. Beat up on people doing it well—we need less of that attitude in New Zealand. Actually, not to change topics, but you look at supermarkets—basically anywhere you live in New Zealand, in half an hour's drive or less, you can go from usually 7am to 9pm and get fresh produce at a price that you can afford to feed yourself on the minimum wage.

Now, how much should that cost? This is a mountainous country with enough people to populate a medium-sized city. It's 1,500 km—it's the size of the US Eastern seaboard. People say, "Oh, there should be an extra competitor." Should there? I don't know, maybe. What's your comparison country that's a 1,500 kilometre long mountain range with 5 million people? How many competitors should they have?

Exactly. Just want to make a quick disclaimer—we absolutely love the banks. We're big fans of the banks. In no way are we bashing the banks in that question I asked David. Continue.

No, that was really good. I think competition is really healthy. But you have to understand competition at scale as well and what sort of scale we're playing at with a country like New Zealand.

Well, this is the issue, right? How many wide-body jet makers are there? There's two. Maybe they should be broken up into four and then you'd have four half-size wide-body jet makers. That would actually scare me. Some businesses, you actually want them to be bigger because they're more efficient.

I guess the next question we've got for you, David, is: we've always relied on farming, tourism, even immigration. As a business, we're seeing a lot of superstars coming from the tech scene in New Zealand, right? I'm sure you've met or seen a few of them. New Zealand is very much a country that's basing its business interest on trust. We're a very trustable source of business for anyone foreign looking at us. Do you think that we need to do more in the space of technology as well as natural gas and energy than we have been doing over the past 20 years?

Yeah, well, look, energy is a great tragedy because when Jacinda Ardern just announced she was going to ban a whole industry, the damage that has done, not only to that industry but to trust in New Zealand generally, is really difficult to fix. We can say, "We don't believe in that and we wouldn't do that to you," and foreign investors say, "Yeah, but that's not the point. We're not worried about you, we're worried about what the other guys are going to do." The damage that they have done to New Zealand's reputation is impossible to value, but it's actually criminal in my view.

The other thing is, there's a huge opportunity with tech, but I don't know what the opportunities are. If I did, I wouldn't be doing this job, I'd be rich. I just think our job as a government should be low taxes, light regulations, good education. You'd be amazed what people will do.

The fundamentals.

Yep. But there's always some politician who wants to go out and get their picture taken with someone doing something cool. So then they start splashing cash at them. The truth is, most of the time you don't know what the next big success is. You look at a company like Kami—very cool stuff. I know one of the guys that started that. Who thought that making effectively PDF viewers for American educators could be turned into a $330 million exit? Well, turns out that's exactly what they did. How many politicians spotted that? Basically none, except for a few people from a "Something Growth Fund" team where they're trying to claim all the credit when they sold out. But hey, that's just politics, I guess.

For sure, David. It's very clear, seeing you speak, that you've got something in common with all the team here at Blueprint—that you love this country.

Yeah, I do. And something we want to talk about is the idea that the young talented folk, after they get educated, after they get their base work experience, tend to go overseas. Some of them, we're lucky enough to have them come back with that overseas experience, but some, they never return. For me, obviously being a New Zealander, Madhav shares the same point of view, and just seeing that happen, we're not aware if that's just a global trend, if it's happening across all countries, or if it's a New Zealand-specific thing because of a smaller market, right? So our question is really: keeping talent long-term to make sure we're having a really good thirties and forties in the future—is that just a feeling or is that something that political involvement could help with? What's your view on that?

Well, I'm going to sound old saying this, but when I was your age, I was in my late twenties. Basically everyone I knew, including me, lived outside New Zealand. But if I think about my closest dozen school friends that we used to do New Year's camping and so on, today at one point it would have been 9 out of 12 would have been away. Now it's 3 out of 12 who are permanently settled overseas. So there's a couple of things in that story.

One thing is, when you're in your twenties, it feels like everyone's left—last one out, turn off the lights. Second, when you're in your thirties, you're supposed to have moved back. But thirdly, if you look at my little example of a dozen close friends for New Year's and camping and so on, 25% of them live in Australia now.

So all these things are true at once. Yes, a lot of people go away. Yes, most of them come back. Yes, we still have one of the biggest diasporas or exporters of people in the world. I think it's fatal to us because basically educating a citizen to 22 years old with a university degree is expensive. Life education expenditure is about $330,000 per citizen. If they get a university degree, it's probably more like half a million bucks. Then you've got 18, 20 years of doctor's visits and use of infrastructure and so on. So it's probably like a million bucks to get someone to that exportable stage. We're losing 60,000 a year. That's $60 billion worth of human capital out the door. So, yeah, it's a pretty serious problem.

Now, of course, a lot of people from around the world want to come and join us and we welcome them, and that's really fantastic. That's the only reason we're still afloat, really. But there is something about the country keeping the promise that it makes to its own citizens. The people who grow up with first world expectations in New Zealand often discover that they can satisfy those expectations better in other countries, and that's a real shame.

What do you do about it? I bring it back to housing. If you look at places where young people are moving and having lots of kids and are happy, you look at places like the southern states of the US. You buy a house for $300,000 and it's five times bigger than my little place, which costs four times that much and has two bedrooms. So you imagine how different your outlook is there. It's the same with business and employment, right? Because part of this massive transfer of wealth into housing over the last 30 years—in some ways that's a tax that is paid by the businesses, because if you want to employ someone, one of the things you have to do is pay them enough to live, obviously. But if you're in a country with very high housing costs, then you've got to pay people more to get the same work done, and that makes our economy less competitive.

So there's a whole lot of reasons why, at the end of the day, what is this country about? Best lifestyle in the world. What's the problem? Can't build a place to live here. What's the solution? Make it easier to build a place. That will be good for New Zealand. From your investors' point of view, one of two things will happen. Either I'm right and the government's going to make it easier to build homes, fund infrastructure, use different materials, get consent, so it's all going to happen a lot faster and prices will be kind of low, but New Zealand will prosper. Or I'm wrong and it'll still be impossible to build a home for some reason and incumbent owners will do quite well for a while, but the country's long-term sustainability will be imperilled. In which case, you'll find that actually, a moderation of house prices over the next couple of decades is the best scenario for everyone.

A hundred percent. I mean, interest rates have dropped so much over the last nine months, and lending's become a lot easier to get from the banks. The test rates have dropped and all that's all fair and well. But when we talk to first home buyers or property investors, I think everyone's a bit more cautious now and it's kind of a lesson learned after leveraging up to your eyeballs in Covid when you see a 2% rate, and then getting humbled by the fact that the property value drops by $200K.

That actually happened to Grant Robertson too. He borrowed at 2% during Covid and then got kicked out of government 18 months later. Unfortunately, we've now got the same problem—$200 billion of debt, $10 billion of interest. Welcome to the New Zealand government.

I thought for a second you were talking about his residential home, but you're talking about the—

No, he screwed the pooch at a monumental scale, I'm afraid.

Yeah, yeah. And I mean, you can imagine, when I'm getting on the phone with a client, I talk to them, we ask them for the address, search the system to see what the value is. We look at the value and see when they bought it—bought it for $800K, value $620K, saying, "Oh, my loan is $635K and I'm renewing on the mortgage." It's really awesome that the banks have dialled back on the interest rates and the RBNZ so that makes it a little bit more manageable because that client's been used to a certain level of repayment and refreshing that mortgage across, now it's not going to be at that same rate. There's some relief, I guess, with what you said about making things easier to build—a lot easier in the sense of consents and all the red tape that you get, development contributions, all that sort of stuff. If you dial that back and you have oversupply, it will be good for New Zealand to have that stable growth, because you're not scrambling to buy a house anymore. There's 15 to pick from and they get built in about six months.

Yeah, and it means ultimately you can start working on other things. Life. You can live your life. Your house can be a base rather than a summit.

That's right.

Because it's gotten to the point now where so much of your energy, your income and your time has to go towards housing yourself. Whereas, like you're talking about in America, the states where housing is such a low percentage of your income, now you can focus on being productive and that flows into our economy, right?

Oh yeah.

Well, David, thank you so much for joining us today. Seriously, it's been a real treat to have you on. We're just really pleased to see some positive things happening in the economy.

Yeah, a lot of action, which is what we appreciate.

No, that's awesome. Well, thanks for having me on the show and may your business continue to grow.

Thank you, legend. Cheers, David.

Cheers. Thanks very much, mate.

There's a bit of an art form to this, you know—there's a balance between having protection and what it costs.

Cost is king. In this particular example, we saved a client $9,000, or will save them that over the next 12 months.

Holy ****.

Yeah, so it's a pretty—excuse my language—it's a pretty massive win.

I saw a quote from a monk recently, and it said that humans have got hundreds of problems, until you have ill health, and then you've got one.

Welcome back to this fortnight's Blueprint Podcast. Rory and I are super excited today to talk about a client's success.

Yeah, and it's in my space today, Dan, which I'm pretty excited about. Insurance has been a part of our business for about six months now.

Yep, and the process that we're going to work through in this example—we've been having a lot of success. What I mean by that is clients are really understanding the advice.

Yeah, because there's a bit of an art form to this, you know—there's a balance between having protection and what it costs.

So, cost is king. In this particular example, we saved a client $9,000, or will save them that over the next 12 months.

Holy ****.

Yeah, so it's a pretty—excuse my language—it's a pretty massive win.

And, you know, we just want to pre-empt that that's not our goal—to reach outcomes like that. They're pretty rare.

Yeah, and a lot of the time we're actually dealing with first home buyers, so we're not saving them any money on insurance. We're setting them up for the first time.

That's right. But it also highlights the importance of people who have had cover in place for a long time having a review.

And this is the case, but we work through this process with clients who are new to insurance and clients who already have insurance. It's the same process.

I think the thing that excites me the most about it is the term that we use—it's a risk analysis, right? Because when people think insurance, they think, "Ah, it's extra cost I've got to pay for," but when you actually take into account what it means for your financial journey, it's a risk analysis. The structure of your insurance should actually be changing over time—maybe not constantly, but every five to six years—based on how your income's changing, how your debt level's changing if you're a property owner or investor, and how much your household relies on you.

Yeah, absolutely.

So I think it's super exciting because in our space, it's the most tailored part of it. When you get a mortgage, many times it's pretty stock standard, especially for first home buyers. The recommendation will be pretty similar, depending maybe on how much deposit the client has. But for insurance, it can be so varied because of how the income of the household is structured, what sort of debt they've actually got, and what their long-term financial goals are. But absolutely, we can put that doorstop in for anyone, and then it's about how you make it fit within the budget.

But mate, that sounds ridiculous, that we're saving someone $9K on their insurance.

It's crazy.

Yeah. You mentioned a buzzword there—risk analysis. In insurance, we call it a needs analysis.

Of course, that's right. And here at Blueprint, we call it a strategy session.

Yeah, that's right. So, without further ado, let's have a look at this example.

Yeah, let's tuck in. I love a spreadsheet.

Let's run through it. The first thing we look at is what cover the client already has in place. In this particular case, I haven't broken it down, but they've got pretty comprehensive cover.

Yeah, they've got medical, they've got income, they've got life, and various other products in between.

Already in place.

Already in place. Awesome. In this particular case, the cover was offshore, so there were a few issues with it. The cost was one, the sustainability of the premium was another, and then there was a bit of exchange rate risk. Just for where it's based—we won't dive into too much about where it was located and stuff—but insurance is meant to be there as a safeguard and take away risk.

Yeah, there were a few risk factors with this insurance policy that we wanted to remedy.

I can almost guess the part of the world or the kind of part of the world that this insurance is from—you know it well.

Yeah, yeah, yeah. And what are we calling our client for this case study?

Client X.

Awesome. Okay, cool. So, completely anonymous.

Yeah.

So, to start with, there are three areas of personal risk. There's medical costs—we have private medical cover. There's what we call disability benefits, and there are a few products that fit into that category: income and mortgage cover, trauma cover, total and permanent disability cover.

That's right. That's really the crux of our exercise today—focusing on those areas, because that's where there's the most juggling numbers, for sure. We'll also look at life cover as well—that's the third category of risk.

So, page two of our spreadsheet. It's quite basic what we put in here, but we've got the income details. If we're dealing with a couple, we'll obviously have two incomes. We've broken down their deductions, which will become relevant later on.

This particular client has a $50,000 mortgage, so they're in a pretty outstanding spot, debt-wise.

Brilliant.

Yeah, so they're at the business end of their mortgage—almost mortgage-free.

They are, yeah. So they're really looking towards retirement and putting funds away for that.

Yeah, and so that's where their insurance policy was a bit of a handbrake on maximising their investment goals as well. So, a really good position—no other debts, a little bit in KiwiSaver, they've got a bit of cash, and that's what we've got.

So what we do then is this all carries over into their cashflow statement. This is what we look at with every single client, and there are one to three variables here. There's one or two incomes in the household generally, and there might be some other income if we're looking at someone with an investment property or a side business or something like that.

But in this case, you can see we've got a net income of $5,600, total expenses of $3,800, and then their net is about $1,700 per month.

Yeah, so it's a basic budget just based on their fixed expenses. It's a basic budget, mate, but the thing that's popping out is that 18% for personal insurance.

Yeah. Do you like that pie graph?

Of the gross income, it's 18%, which is gross. So of the net income, it'd be like 26–27%. It's huge.

Yeah, and look, it's not crippling this person. He obviously lives well with it, as means if he's got a small mortgage as well.

He's good financially, you know, we're getting a good overview of who this person is.

Absolutely. But it's pretty alarming when your personal insurance expense is almost the same as all your other essential expenses combined. And that's the case here.

The first product we look at is income cover. On the right-hand side, there are maximum calculations. There are two ways we can calculate income cover: on an agreed value basis (so there's no tax, and we can insure up to 62.5% of their gross income), or a taxable income cover, which is subject to tax and therefore tax relief as well. Even if you're on PAYE, you can claim a taxable income protection.

Oh, that's brilliant.

Yeah, there aren't many things you can, but income cover you can, if it's a taxable benefit.

Incredible.

And we can insure up to 75%. So what we're looking at here is if we take away this client's income, the deficit is about $3,800 in the red. This varies quite a lot when we're looking at couples, for example—sometimes we meet with couples who have a similar income, sometimes there's quite a big difference, so there'll be really different amounts to get this spreadsheet or this cashflow back in the green.

So at a minimum, we want to be breaking even. In this particular example, the client actually took the full sum of agreed value, and you can see here, plugging that insurance gap with $4,825 cover, they're back into the green.

So if for some reason you can't work, that's the insured amount he's going to get net in their hand.

Absolutely, that's the one. Net, no tax. A couple of other variables down here—what we look at is wait periods and payment terms. Generally, we want a payment term to the age of 65. In most cases we do—it's the best type of cover for that long-term protection, for sure. It's going to cost a bit of money to do that, so that's why getting the sums insured correct or reasonable is important.

And then the wait period—in this case, we've gone for a 13-week wait, which is what we aim for. It seems like a long time, but it's the best period to maximise efficiency in terms of the cost of the policy.

For sure.

And the reason we can justify 13 weeks here—the client's got $20,000 of cash. He's got some KiwiSaver—we don't want to touch that if he's ill, but he does have that. But the cash, he's got enough to get him through three months.

Brilliant.

The next disability benefit we talk about is trauma cover. There are lots of different ways you can spin this, and different advisers will do things differently. We can do multiples of income, gross income, net income, we can cover mortgage or total essential expenses, or we can just do a generic amount as a recovery fund type thing.

Yeah, so the way we do it is we look to plug the gap from income cover in the client's net income—that's how we do it as a starting point. In this example, we've got 10 years of cover, which means that the income protection with the trauma cover of $100,000 means there's no financial loss over a period of years.

You're topping them up for 10 years.

We're topping them up for 10 years.

Awesome. So that's got them covered in most cases. A lot of the time we only look at two or three years, and that's typically because we've gone for a lower sum of income cover. But this client's got a lot of income cover, so $100,000 covers them for 10 years.

Brilliant.

Total and permanent disability—so with this one, it's worst-case scenario, right? You can never return to work again. It's a pretty tough diagnosis. Again, lots of different ways we can calculate it—we can look at debt, replacement income, and again, just generic recovery funds.

So in this case, we've gone 25 years total income replacement, which takes this client to age 65. So it's $150,000 as a top-up. It's a pretty small amount of permanent disability.

Yeah.

He's got the to-age-65 payment terms, so he's pretty well covered in his income cover.

Brilliant. This is just a little top-up.

So is this pretty similar—I know we're going to get into it in a second—but is this pretty similar to his existing cover, but also a new recommendation based on his current situation? Because his current cover is also not quite fit for purpose with what he's paying, right?

Correct. His current cover's quite different, to be honest. When we're looking at it, and because his cover was comprehensive, we do this type of review. Some clients might just want to price check the market—they go, "I've got a million dollars worth of life cover, $200,000 worth of trauma cover, this is what I'm paying. Am I overpaying?" And we quote the market and go, "No, it looks reasonable, it's okay," or, "No, you are overpaying." Oftentimes we can save money in those cases—could be medical loadings, things like that, that haven't been reviewed. So no, this structure's completely different for this client.

Awesome.

So that's TPD. For medical cover, for now we'll skip that, Dan, because there's not a lot of calculating that goes into it. We choose an excess and we discuss the product—it's pretty straightforward.

Yeah, there's a bit to it in how it works alongside the public health system and ACC, etc., but for today, we're just sticking to the crunchy numbers.

Oh yeah. So the last benefit was life cover. Earlier on, we saw this client had a $50,000 mortgage left, no dependents. He didn't have a great need for life cover, so he had a reasonable sum existing. But he's got a lot of equity in his home, some cash, some KiwiSaver. We've gone with $50,000 of life cover just for final expenses, legal fees, the funeral, that sort of stuff.

Yeah.

And you can see that gives him a total estate of $900,000, excluding his car and contents and stuff like that.

Yeah, he could have had $0 if he wanted to.

Yeah. See, this is a great example of a client where, because of his life stage, he's utilising the other products, where most people, it'll be based around the life cover, then you've got your accessory of your TPD, your trauma. But this guy, he's able to just lean on the other products more so than the life cover, because it just doesn't make sense for him to have a big lump sum. He's got his house nearly paid off, he's leaving a legacy there.

Absolutely.

So he doesn't actually need it.

Not at all. No, 100%. Medical and income was really important for this client, and so that's what we've done.

Oh, incredible. So the last thing we do, Dan, is bring it all together and summarise it. We also then look at what's in place—what are we looking at in terms of our recommendation, what's in place, are there any areas where we think the client's over-insured or underinsured. Then that becomes a conversation with the client, for sure. This client had a ton of insurance, right, but for this exercise, we're not going to do a product comparison or benefit comparison, but that's what we do at this stage. Once we've done that, we go and quote this up.

And so we will show the viewers what we do for that—Quote Monster.

Quote Monster.

This is a very iconic page for insurance advisers in New Zealand.

I couldn't do my job without it. Well, I could, but it would be a lot more difficult. This is a great tool—big plug for Quote Monster here.

What we do is we put in client details and then you can see a list of benefits that we can select. I haven't actually quoted this entire package because I don't want to highlight insurer pricing and the price differences—I don't want it to be about that. So I've just done a little nominal amount of life cover and trauma cover. But you can see here that it quotes the market, and with the benefits I've chosen, there's hardly any difference in price. With this particular package, there's quite a lot of difference in price in reality, but we don't want to get into the weeds in different companies and stuff.

The other thing we can do here, and while we're here I'll highlight it, is if we are looking at replacing benefits or even just recommending benefits, we can go in and compare.

Directly compare.

Yeah, directly compare testing or other options.

Yeah, absolutely. For example, if we were looking at trauma cover and I've just selected AIA and BNZ, we get some benefit scores—what's covered under a policy, what's not. You can actually see here, so AIA is one of our main insurers, and BNZ Life (which has been taken over by Partners Life now, so these products aren't on sale), but you can see here there are 15–20 odd conditions covered by one company that aren't covered by another. So, like, blindness—you could hold a trauma policy and go blind, and one company pays you out and one company doesn't.

Not sure about you, but I think going blind is a traumatic condition.

100%.

Yeah. The main providers, you won't see big differences like this, but we do see it elsewhere in the market. So anyway, we quoted up, Dan, and we come back to our spreadsheet.

Alright, Dan, so we've gone into Quote Monster, we've got our starting package and we've quoted it up. Then we come back and we want to present this in a way to the client, or we see what it's going to cost as a percentage of their income and present it in plain English.

Plain English, mate.

Yeah, absolutely. This is really important because, like, you've just gone through a bit of this process with me and a lot of talking from me and all these different products, and by the time we get to this point, clients are going, "What is this going to cost me?"

Yeah.

And I tell them, "Look, we will get there. We'll get there and we'll make it work." So we plug it in here. I've got a few numbers up here—ACC deductions on a monthly basis, and their KiwiSaver—the kind of rules of thumb that we work to.

So ACC is insurance for accidents and it's generally about 1.6% of gross income. There are rules of thumb that we work to—as we know, ACC is insurance for accidents, and it's generally 1.6% of gross income. Slightly less on higher incomes—there are caps to ACC because there are caps to the replacement. The minimum KiwiSaver contribution that most Kiwis are doing is 3%.

So what we find is that an insurance premium in that range is generally affordable, and we can often get the package that we've just gone through for sure. With medical, it can be more expensive, so it can go up to about 5% of gross. Higher than that, obviously, depending on the client's situation, and it's a little bit steep. So at this point in time, I plug it in, see how it's looking, and then I'll do some amendments based on what I would look to do first, to refine it and get it down to a more comfortable level. Obviously, clients have the final call and they're the ones that know what's important to them.

Right, absolutely. Because some people might prioritise private medical cover over a trauma policy or TPD, you know?

Absolutely. I might put together a package that's 2% of someone's gross income and they say, "You're dreaming, mate." And I go, "Cool, what's your budget?" Then we work to that, and I'll guide you on what amendments I would make, for sure, based on your budget. And that's absolutely fine.

So you'd say 2% and they'd say, "You're dreaming"—as in that's too expensive?

Yeah, sometimes. Sometimes people want more.

Yeah, of course.

Yeah, I think I'm over 3%. I'll have to look at it again, but I try to at least stay above in that 3–5% region of cover.

Yeah, I think that's where you have to be. The key things we're looking at here—like the 3% to your KiwiSaver—you have to keep that going in the event that you can no longer work. People just forget that your income is your biggest wealth-building tool over the length of your life. You have to keep those contributions going, you have to keep the consistency there.

Yeah, 100%. I saw a quote from a monk recently, and it said that humans have got hundreds of problems, until you have ill health, and then you've got one.

Yeah, exactly. So with this insurance, we don't want finance to be one of them as well—a problem if we're ill.

100%. I thought you said for a second you quoted a monk, like you're doing a policy for a monk, which I would love to—that should be our next case study.

Yeah, absolutely.

So anyway, mate, back to the drawing board. We've quoted these benefits—$160 a month. We've actually suggested they retain some of their current cover, which is $223 a month, and we're just a shave under 5% of gross.

Brilliant.

So I've taken this to the client, I've also got a few other options up my sleeve, and so we're at 4%. We're at 4%, so this is pretty good, and they've got medical, they've got really comprehensive income cover.

Yeah, if we recall from the cashflow, initially we were at 18%. So we've shaved off more than two-thirds of their premium, which was over a thousand dollars, and given them a similar amount of protection—we're not taking too much stuff away.

No, we're giving them what they need at this current point in time, explained it in a way that they understand through this process, and they've gone, "Absolutely, that's what I need. Sign me up."

Yeah. So in this particular case, we go through—usually when we're amending benefits, we're making it more affordable. In this particular case, the client wanted a bit more certainty over premiums, because one of the things we were reviewing with their current cover was unsustainable increases in premium.

Yeah.

So we made some amendments, and with their life cover and their trauma cover, we've gone level to age 65. Total and permanent disability income cover—we've levelled that for 10 years as well. So, giving them certainty, and they were quite comfortable with the increase in premium. The increase in premium put them up to around 7% of their gross income.

Awesome. So we've still saved them 11%. Over the next 12 months, we worked it out—it's about a $9,000 saving. Over 10 years, the current policy would have more than doubled, and this new policy with these levelled premiums is going to have really gentle increases. So over 10 years, $9,000 in year one—you do the maths, and with that client intending to invest that money...

Yeah, I was just going to say—six figures over 10 years, for sure.

Oh, at least. And in the next 10 years, that compounding effect of that cash, it just grows exponentially.

Absolutely. For our clients that wouldn't know—level versus stepped: level cover, explaining from a guy who's not an insurance adviser (so you can correct me)—level, the price is not going to change over time, it's going to change a very small amount. Stepped, that's going to increase with your age and with CPI and that sort of stuff, right?

Correct. So, pretty much correct. With level premiums, they won't increase for age, and that's the biggest increase—just for CPI, they could increase for CPI if that's attached to the policy, and they could also increase, unless it's guaranteed, if the insurer increases their product due to claims experience. Some providers will offer guaranteed level on life cover only, because it's quite predictable in terms of claims. Trauma cover, you don't generally get a guaranteed level premium. If the product price increases, everybody wears that, but you won't get age-related increases. Costs more initially, saves over the long term. Really good if you've got a need for cover and you can see the need for it longer term to flatten it out, or if you just want absolute certainty over what you're going to pay year over year.

Very good.

Cool. This is how we do it, mate. Any questions?

No, man, that's awesome. Honestly, it's making me think that I need another insurance review with you, even though we just had our review a couple of months ago.

Yeah, well, I just want another one.

Let's absolutely—I think we can upsell you.

Yeah, I need some extras, I need some frills. Having this after you having the mortgage strategy session—it's so important because we take so much time and effort, the clients work so hard to get debt-free faster, make sure they're investing in their retirement, work on investment property. If you don't have your income, that plan's not going to go ahead, and when we forecast the retirement amount of, you know, net $6 million, $7 million, which is what you need to safely withdraw the funds for your retirement, it's just not going to happen. So it goes hand in hand, and it's a really nice transition for our clients to make sure that we're on the right track.

100%. We're probably looking after about half of our clients' mortgages and insurance as well, which is really great. The other half have got their own arrangements. There's a couple that don't have insurance, but that's a case by case, right, and everybody does their own thing.

Awesome. Cheers, Rory, that was awesome.

Thanks, mate. Thanks for enduring that with me. Alright, well, thanks so much for listening, guys—to our existing clients, our referral partners, our business partners. We really appreciate you guys supporting Blueprint, and hopefully you found some value in this episode. We'll be back soon. Cheers.

Cheers.

There’s a lot of interest. That’s off their standard repayment. They’ve paid off $10,000 in the first year.

Why does this one get a revolving credit? Why is this client not getting one?

So many different people have so many different ideas of the best method of debt reduction.

But we’re going to bust some myths today. We’re going to give our opinion, the Blueprint opinion.

Hello guys, and welcome to the next episode of the Blueprint Podcast. I’m here with my co-host Rory, and today we’re tackling some tough subjects—ones that we really like to talk about, actually, because there’s a bit of controversy on how to actually pay your mortgage off faster. So many different people have so many different ideas of the best method of debt reduction.

Some people think it’s investing. Some people think it’s hammering down your mortgage as quickly as you can. There are all these different methods you could incorporate. But we’re going to bust some myths today. We’re going to give our opinion—the Blueprint opinion—and we’re going to talk a bit more about those methods and explain them with some numbers too.

Yeah, absolutely. And I think the key message you’ve just made is that there are some promises out there about certain numbers and timeframes for paying off your loan. What we want to get into today is practical steps that people can take to make a real difference to the amount of interest they pay the bank.

I think a lot of people will be interested in this because we’re talking about first home buyers here in our examples, and they could be any age—people in their 20s or 30s—and there’s a scary number next to that loan balance, and it’s usually 30 years.

That’s right, which could seem like a lifetime away. So this will be really interesting, Dan, and I know you’ve got some great examples to work through.

So, the first step—what’s our first example of paying your mortgage off faster?

Yeah. So I suppose the best place to start is, we’ll build a bit of a case study and we’ll work around that.

So I’ve got a bit of a plan. Let’s say we’ve got a couple—let’s call them John and Jill. They’ve got a mortgage, $800k balance, and their property’s worth around $1.2 million. So let’s say they’re maybe three or four years into home ownership, or they had a big deposit. So there’s a bit of equity there.

And the reason for that is so I can show all the different options—a large size mortgage that they’re trying to pay down as quickly as they can.

Cool. Okay. So this is the client we’re going to work off, and we’re going to address a couple of the main methods. So there are three main methods that you can consider to actually pay your mortgage off faster.

So we’re not doing any clickbait headlines, we’re just giving the truth. The first one is actually paying your mortgage off faster—doing things like keeping your repayments the same when the interest rate drops, or increasing your repayments, which we’ll take a look at. The next one is the revolving credit method.

Instead of making lump sums on your mortgage, you can actually retain some of your cash and offset your mortgage, reduce your interest costs, and in the long term pay less interest and pay it off quicker.

Brilliant. And the next one, which is a bit more controversial, is investing—buying an investment property, holding it through a property cycle, and using the proceeds to pay off your mortgage.

Yeah, nice. And as we go through them, I’ll pick your brains a bit and we can get into the pros and cons of each, and the risks with each, if any.

So let’s start with revolving credit. I think it’s a good one because when you’re doing the insurance for our clients, you can see the structure we’re setting our clients up with, and often there is a revolving credit in there. Clients always ask me questions: why does this one get a revolving credit? Why is this client not getting one? So that’s another thing to touch on before we get into this. This is very general financial advice. We’re speaking to John and Jill’s situation, not speaking to everyone. If you want specific financial advice, you need to chat to your financial adviser, disclose all your information so they can give you really accurate figures.

But we’re speaking to a couple of the methods we’ve seen people have success with—our clients have had success, and us personally. And what people are actually talking about when they say “pay your mortgage off faster.” So here’s the first example. We’ve got the $800k mortgage for John and Jill. Throughout this example, we’re going to use a 6% interest rate.

So throughout interest rate cycles, very often interest rates are less than 6% over 30 years. By using 6%, I feel we’re being conservative in terms of how much this is actually going to cost. We’re starting off on a 30-year loan term. You can see their repayments are weekly at $1,100 on the 30-year loan term.

So if they didn’t change a thing, if the interest rates stayed the same throughout the whole loan term, they’d pay their mortgage off in 30 years. We’re also going to make an assumption that outside of the weekly repayments every year, John and Jill are able to save $20,000. So they can save $20k every year, and they want to put that towards their mortgage.

Now, John and Jill have also told me that they don’t want to fully commit every single dollar towards the house. They want to have access to credit, or their cash, so that they can redraw it for either renovating the property, or just to have some security for the family. They don’t like the fact that every single dollar is going towards the house—there’s no savings. So, that’s why we’re going to take a look at revolving credit.

We’re taking a look at the next sheet now. This is after 12 months. So, they’ve had a successful 12 months. They’ve paid off their first $10k of the mortgage—principal and interest stable loan. That first 12 months, it’s pretty sad.

There’s a lot of interest. That’s off their standard repayment. They’ve paid off $10,000 in the first year, just off the standard. You pay off $10k on a loan of that size. So you can see here, they’ve paid off the $10,000, but they’ve also saved that $20,000. We’ve put $20,000 into a revolving credit facility.

You can see here, loan type: revolving credit. So that’s at the end of year one. I’ve saved it. It’s gone into my bank account. And now I’ve created a revolving credit. And now you’ve sat down with Dan and said, “I want to make a revolving credit. I’m ready.” Yeah, hit me. Yeah, okay. And we set you up on your anniversary.

Let’s say you’re fixed for 12 months. That’s the date we’ll do it. Okay, sure. 12-month fixed. We’ve put in $20,000 and now we’re offsetting that $20,000. So on this $20,000 of mortgage—remember it’s still mortgage, it’s just called a revolving credit now—you’re offsetting it with $20,000. So it’s essentially like a savings account or an overdraft account for your mortgage, where you’re not paying interest on that money.

You can see if the $20,000 wasn’t in here, there would be a repayment. You can see how this just went up here to $117. But because it is there, you’re fully offsetting that amount. You’re not paying interest. Important to note, revolving credit products have a higher interest rate. We’ve just assumed a 1% higher for this exercise.

These aren’t real rates right now. We’re just looking at the example. A couple of great things have happened here. We’re storing that money at $20,000, and we’re paying less interest overall, because that’s $20,000 that we’re not paying interest on. So the main fixed balance has actually reduced to $770k. But Rory, here’s the magic.

We’ve kept our repayments the same. We’re still paying the exact same amount, that $1,100 just over. And the loan term has decreased. So remember, this is after year one, beginning of year two. This loan term should say 29 years, but for the same repayment, you’re actually paying off the mortgage in 27 years.

That’s brilliant. You’re with me? Yeah. Incredible, right? So now we’ve set up our clients in a position where their payments are the same. They’ve got $20k reserves if they do need it, but that money’s working in their mortgage. That’s fantastic. So it’s a really good opportunity for them to now double down and focus that same amount they’re paying weekly on the principal.

So it’s a good result here, but let’s see what happens in year five. Let’s say they do the exact same thing for three years. Every single year, they’re adding $20k in savings. What’s that going to look like? Let’s jump over to the next sheet. You can see here, now their revolving credit is $80,000 because the last three years

they’ve added $20,000 to the revolving credit. So four years they’ve saved $20,000, put it in the revolving credit. Exactly. Now, what’s happened in the last three years, they’ve paid off an additional $43,000, and they’ve also saved $20,000 each year, like we mentioned. So they’ve paid off an extra $43,000 of principal.

Throughout the whole time they’ve kept their payment exactly the same. We haven’t had any benefits or privileges of lower interest rates—we’re assuming the exact same rate. Now you can see the revolving credit here is $80,000 in cash reserves sitting there offsetting their mortgage. But also the loan balance has come down to $667k.

Because every time that $20k comes up, they’re chiselling off a piece and putting it in the revolving credit. So now with the same repayment, they’re on a 20-year loan term after four years. You can see that’s 20 years remaining, so that shaves six years off, is that correct?

Yep, that’s right. So now they’re in year five, and they’ve got 20 years left, versus where we started at 30 years. But now they’ve still retained the revolving credit, so they can use that if they need it. So there’s a bit of power there in terms of cash available.

You know, they’re not fully committed, but instead of having it in a savings account that’s a lower interest rate—obviously you’re paying more on your interest than you’re earning in savings—they’ve got it sitting there in their revolving credit. Brilliant. It’s pretty powerful. So this is really good for people who have got some excess cash that they want to be saving.

They might ordinarily have put this into a savings account before they were homeowners, but they also want the advantage of having access to those funds for a rainy day or an emergency, whilst gathering interest savings at the same time. Because that’s what’s happened. Commonly people will start paying off their mortgages and say, “Look, we feel like every dollar is going towards the house and we’re one emergency away from being in a bit of trouble.” Or you can have that rainy day fund, but you can actually have it working for you. So this is a great way—you can see how if we just kept going through this every year, we’re going to pay this mortgage off in about 15 years compared to the standard 30 years, just by using this method.

Obviously, the more that they can save, the more that they can increase that revolving credit, the quicker you can pay it off. So it’s not a myth that we can pay off our mortgage in 15 years.

Yeah, 15 for sure. I mean, seven… Yeah, seven is a bit controversial. I’d like to see that example.

What are the drawbacks here, Dan? So, you’ve got to be disciplined. Have you seen any traps where people have set this up and then come out worse off?

I definitely have, through lack of discipline. The thing is, we sit here with our coffees and say, “This looks fantastic.” But at the end of the day, life doesn’t work out exactly how you plan, right? You might go down to one income in the household, get made redundant, or you’re just not able to save. And so if you can’t hit those goals every year, then it’s not going to work in your favour, because obviously the revolving credit rate is higher, you actually risk paying more interest.

So you’re exactly right. It does require a lot of discipline and frequent review and financial planning. If you’re doing this every 12 months and keeping an eye on it, most likely it’s going to work as long as you’ve got that discipline. But if something’s happening, you just let a couple of years go by and you’ve got this revolving credit that’s got no offset, no cash offsetting it, then it’s actually not a beneficial method.

Yeah, absolutely. Brilliant. So that’s our first method.

Now we’re getting into the one which I think is your favourite. It’s the very controversial one—the seven-year method.

Yeah, the coveted seven-year method. This one is the one that we see advertised a lot, or people are referring to: buying an investment property and using the capital gains of that property to pay off your owner-occupied mortgage.

Nice. Now, initially when I say that, as an insurance adviser who’s dipped into property investment, what are your thoughts about that? Do you feel like it’s feasible? I mean, does your brain bring up some risks to that? What do you think?

Well, I think there’s a lot of factors, like your investment horizon. Property markets are currently down, depending on when you bought. Again, it depends on your horizon, so there’s risk in property. I think if you zoom out over time, it’s a pretty safe bet—has been—but there are no guarantees.

Well, that’s why the question marks come with the seven years, right? Because if you read information about property cycles, they’re longer than seven years. The premise of it is just suggesting that it’s putting too short of a timeframe, in my opinion, on how long it actually would take to achieve something like this—using your investment property to sell and then pay off your mortgage. We could manufacture an example and support the seven-year method, but there’s a lot of things that would have to go right for that to come true.

Yeah, timing the market becomes a factor, which in investing you never, ever, ever want to have anything to do with—timing a market. You know, your time in the market is what you want. If you’re trying to depend now on external factors, other than letting inflation and cycles do their thing, then you’re setting yourself up for disappointment.

Yeah, sure. And then the risks of having multiple properties, and then increasing interest rates and serviceability risk and all those things are pretty high if we’re trying to go for a rapid method of taking up that load. We love property investing here at Blueprint, but we love it long term.

So, we’ve got the Blueprint Property Investment Calculator here and we’re going to go through a scenario for this method—using an investment property as a vehicle to pay off your mortgage quicker. Let’s go back to John and Jill.

Remember that they had a bit of equity in their property, so you can use your equity as a deposit for a mortgage. And that’s what they’ve done in this case. So they’ve fully financed a property for $650,000. That’s a $650k mortgage. Once again, the interest rate is 6% and we’ve done an interest-only mortgage, which is a $750 weekly mortgage that they’re paying.

In terms of rental income, what I’ve tried to do is put something sort of middle ground. In Auckland and all the major cities, you struggle to get a 6% rental yield. You would struggle, but regionally you can get much more than 6%. So we’ve tried to find a nice middle ground between capital growth and your cash flow, which are always the two pillars of property investing that you’re balancing.

So we’ve got a 6% rental yield, which is $750 per week, that we’re working off. I’ve got the expenses here. You can see the generic expenses: insurance $1.6k, rates $2.5k, and annual maintenance of $4k. We’ve also got a property manager in there as well, at 8%.

So, what do these numbers end up working out at? If you’re holding this property long term, your cash flow is going to be negative every week—negative $215. Okay, so that’s you topping up out of your own pocket, $215 a week, to keep this investment property ticking along.

How does this affect you over a year? Annually, it’s $11,220 negative cash flow. And over the 10-year period, it’s a negative $112,200. So you’ve got to be mindful of the opportunity cost here.

That $112,200 could go towards paying off your mortgage quicker, rather than investing—it could go to investing in other opportunities. There’s always opportunity cost that we have to be mindful of, but we’re putting it into property now. So what we’ve done over this 10-year period is we’ve also assumed a capital growth rate of 4%.

Now, there are arguments for a 3% capital growth rate, there are arguments for a 6% capital growth rate. Once again, we’ve assumed 4% to be conservative. So, after 10 years holding this property, this is the projected value: $962,000. Pretty nice profit, right?

Good gains, yep. So let’s play this out. How does it actually look if we use that to pay off our mortgage? So, the balance of your mortgage—say if John and Jill just had the same mortgage and paid it off over a 10-year term—the balance will be $670k. Now, let’s say they use the net profit from the sale of their investment property, minus agents’ fees and lawyer fees, which would be about $272k. They use that to pay off the $670k, make a lump sum payment. So their loan is going to reduce to $398,000. You can see it here—$398k at a 6% interest rate.

Now, what happens after we do this? If we keep their weekly repayment the same, roughly the same at just over $1,000 a week, they’ve reduced their loan term to 10 years to pay it off.

So, 10 years? 10 years, yeah.

Total term, 20 years? Total term, 20 years from this exercise. There’s no paying off your mortgage in seven years unless you do a highly speculative capital growth property development. We’re not even going to entertain those numbers—it’s just not going to happen. Or we need multiple houses and to take on more risk, which for that timeframe is just not advisable. If clients are in a position to buy many investment properties, that’s great, but we would never recommend it for just a period of seven years. It’s an achievement to get a first home.

What we want to look at here is that capital growth rate, and over time, consider the rent from that property would keep increasing. The property would be cashflow positive at some stage because of how inflation is going to keep causing rents to rise.

It’s nice that in 10 years you can sell it and pay it off, but imagine what you could do in 20 years if you held that property an extra 10 years. With John and Jill, they’ll be able to sell the property, pay off the remaining mortgage, and have cash at bank. Or be in a position to invest again.

This was costing them $11,200 a year, versus the revolving credit example was $20,000 a year. It’s a leaner example in terms of additional costs.

It actually is. So the numbers—and I’ve used some pretty conservative numbers in terms of maintenance, management fees, those sorts of things—are pretty realistic in terms of what we’re seeing with our investors right now and what it’s costing them in a higher interest rate market. Both are great options, but with the property investment option, if you give that another 10 years, you’re just way better off.

Absolutely. What’s the downside, what are the risks of this versus the revolving credit? The biggest risk is with the revolving credit method, it’s a guaranteed return. So, you know for sure that every dollar you put towards your mortgage, you’re getting a return. With property investment, we can’t forecast the cycles.

There’s really good data for the last hundred years in New Zealand as to what happens when you just let inflation do its thing and devalue your debt and property. But we can’t guarantee that. So, that’s the main risk. Property investment does have inherent risks. You’ve got vacancy risks with your tenants. You’ve got tenants who might wreck your property.

Have you got an example, a real world one, where you’ve seen this go wrong—the pitfalls that you’ve seen or heard someone falling into?

People over-leveraging or just people not being patient. Property investment is really easy when you give yourself a lot of time, and it works really well when you give yourself a wide berth and a long investment horizon. But when we see it not working out for people is when they don’t have that long-term vision.

Purely a short-term speculative play—you’re just never going to be happy, unless you’re a calculated property trader who knows exactly what’s going on and you’re putting all your time into it. Passive long-term buy-and-hold investing is the best way to build wealth, in my opinion.

We’re going to go to the last one, which is my favourite and it’s super trendy right now.

Oh, that’s incredibly trendy.

The reason it’s trendy is because interest rates are dropping, right? We’ve been in this period—now we’ve had higher rising rates for about four years and now they’re coming down. So we’re finally able to give some really good news to our Blueprint clients who are listening: that rates are coming down.

Jumping into our next sheet, where you can actually pay off your mortgage quicker by doing absolutely nothing.

Like I said, Rory, can’t get enough of this method. Just cannot get enough. In all our fixed rate reviews at the moment, clients who are coming up for their review, I’m always pushing to see if we can keep the repayments the same as interest rates drop.

We’ll look at a couple here—$800k mortgage again, 6% rate, but we’re going to make an assumption that the rates drop to 5%.

Nice. Disposable income.

I mean, that’s what you’d think. But I’m trying to say, let’s not change the repayments, because every single dollar that you put towards that extra payment now is going towards your principal.

So if we just look at this example here, let’s say that the interest rate drops to 5%. Now, you would have seen here the scheduled payment has dropped by $501. So, let’s take that $501 and put it towards the principal. This is monthly repayments, by the way. You can see here, the repayment term has reduced to under 24 years.

So we’ve shaved off six years plus. One percentage of savings—that’s an easy method, providing you’re pretty comfortable living with the 6% interest rate repayment, which we assume we are. This is a first home buyer on 6%. But my favourite thing is, look how much interest you’re saving between the difference.

So $569,000 interest here is what you pay over the life of the loan. If I take it out, almost an extra $200,000 in interest that you’re going to pay. It’s incredible, isn’t it? Just that compounding interest because you’re not paying it off quicker. So that’s a bit of a superpower—actually paying off your mortgage quicker.

But those are the only real three ways that you can achieve something like that. Obviously, there are many ways within that you can do it, but I suppose we just want to let our clients know, whenever you guys hear those sorts of things from advertisements or media talking about how you can get your mortgage paid off in seven years, ten years—these are the core ideas. And we think the seven, ten-year timeframe is probably a bit unrealistic.

But if you had a chat with us when your fixed rate comes up, we can give you guys the ideas and give you specific tailored advice as to how to actually achieve that.

Yeah, absolutely, Dan. That’s been really interesting. And I think we could probably title this episode “The Things the Banks Don’t Want You to Know.” Dabbling in all three would probably be a pretty successful outcome for most families.

Wealth building exercise—absolutely agree. What was your favourite?

Investment property, seven years, mate. I think they’re all really good. The revolving credit is fantastic in terms of if you’re a first home buyer, putting away a bit of security, but at the same time reducing interest.

It’s fantastic. Absolutely. And then taking advantage of interest rate drops, as we’ve just talked about—it’s powerful. That’s a $200,000 saving in this example alone, just by keeping your repayments. And really achievable. And then obviously, the next level is an investment property, I think.

A hundred percent. I think the investment property comes once you build a bit of equity. It’s a great wealth-building long-term tool. You just need to make sure that what you’re actually getting out of it aligns with what you’re buying, so that’s why it’s so important to chat to an adviser or even just a property mentor.

Awesome, Dan. Thanks so much for joining us on this episode. We really appreciate you guys listening—our existing clients, future clients, and our referral partners. Thanks so much for your business and supporting Blueprint. We love taking care of you guys and we’ll see you on the next episode.

All right. We’re going to go do our day job now.

I had braces when I started. Would you let an 18-year-old with braces sell your house? I wouldn’t.

Folks, welcome to another episode of the Blueprint Podcast. We're lucky to be here, Rory and myself, with one of the top agents in Auckland, in my opinion—and facts prove it—Ben Ryken. Thanks for coming on, man. Ben's been in the business for just over eight years now, I believe, and he's worked his way up. He's been at the same firm for six. Very consistent, very stable performer, and a real lighthouse of knowledge for locals who are looking for real estate advice and sales solutions. So mate, thanks so much for coming on.

Thanks for having me. I'm really excited. We look forward to tapping into some of that knowledge as well.

I guess before we deep dive and probe you—you're a real estate agent. It's a bit of a crazy industry. I think if you ask most real estate agents how they got into real estate, the classic answer is they fell into it. I don't think anyone grows up and wants to be a real estate agent. It's not like a career choice or something you go into your careers advisor and say, “Should I do this?” Essentially, I was working at a warehouse, picking and packing and doing odd jobs. I went in for a salary negotiation and got bugger all, and I just thought, hey, I've just worked my arse off for a year. I thought, hey, I've been coming in early, I've been staying late, I've been working really hard, and I didn't really see the reward of it. And I literally—it sounds quite cliché—I literally googled, “What's a job in New Zealand where you can work really hard and get the reward for it, based on how hard you worked?” Real estate popped up top of the list. I had a lady that sold my mum's house out in Botany, got in touch with her, had a chat, and ended up joining her company and resigning from the job I had about three weeks after I did that Google search. It was quite impulsive, which I wouldn't advise to any 18-year-old. That's how old I was at the time. I wouldn't advise just jumping straight into it. So we've been doing a lot of sales for a while in real estate, but here I am almost 10 years later.

You started at 18 years old?

Yeah.

Did you find there was resistance, being a young buck?

Oh yeah, absolutely. That's why I say, I advise any 18-year-olds who are keen on the industry to get in. When I started 10 years ago, there weren't a lot of young people in the industry. It was a lot of older people who, it was a second career for them. They were flight attendants, nurses, or came from corporate jobs—people that were in an industry where it was service-focused and they could transfer those skills over to real estate. And then, like I say, work pretty hard and reap the rewards. I didn't really have anyone to talk to about that. I just jumped in and went for it. Looking back, if I was to do anything differently, I'd try and do an apprenticeship and be an associate or personal assistant to a successful real estate agent first, to learn the ropes before you jump headfirst into commission-only sales and a sink-or-swim mentality.

Yeah, I love that. I did it, but I would not recommend—do as I say, not as I do. We all have our own unique journey and you happened to take the harder road and benefited from that. Looking back, you would recommend someone else...

Yeah. I guess it was better to do that and learn what not to do at such a young age and not really have too much to risk. I was married, lots of bills to pay, but no kids, and we could give it a crack. I think it was worthwhile doing it the hard way.

Yeah, I think it resonates a lot with not just salespeople and real estate, but our business, just our clients as well and investments. Taking a journey, you're never going to get it 100% right. And there's not one playbook to actually nail that process. You have to figure it out, and it's a lot of trial and error. So you have to hit that on the head.

A bit more about your career. So you've obviously honed in on your area, your patch. You've got Remmers, you've got a bit of St Heliers and Meadowbank, and maybe some more fringe suburbs there.

Yeah.

But what made you commit to that area? You are an East Auckland banger like myself. I grew up in Botany. To be honest, I think I had maybe gone into Remuera maybe three times in my life before going there for a job. You make it just seem so cool, picking up and going to real estate. But honestly, getting into real estate was quite an impulsive decision. I was at Bayleys in Howick, which had just been Professionals and Bayleys had bought them. I went to a business over breakfast, or one of those sort of networking groups where you have one person from each industry, share stories and speak. Someone said to me, “Do you know this guy? He started when he was young and he had a boutique agency in Remuera.” And I said, “No, I don't.” And I'll go talk to him, and again, I'm quite impulsive. Went and got a job there within four or five weeks and just started working in Remuera.

It took a little while to really focus on Remuera and the surrounding suburbs. When you're young and need to sell houses, I sold a house in Beachlands, I sold a house in Albany, I’d take what I could get. And it's taken a little while, and in the last few years I've really focused on a geographical area, knowing that as a business owner of selling homes, it's much more effective to have in-depth market knowledge about a specific area than trying to cover so many areas.

Sure. That makes sense. A hundred percent. And then your vendors and your buyers reap the benefits. You know the area, you know the property. And real estate is a people game, so it's not too much about the houses. It's about how you can convey that information to someone and give them confidence about the schools, the area. How close you are to the mall, is it safe for your kids, that sort of thing.

How close is the Wendy's?

Yeah. Where's the nearest KFC?

Yeah. Very close now. So it's about being able to convey that with confidence. And I know that if I went and sold a house out in Henderson and someone asked me, “How's the local school?” I'd have no idea. So I wouldn't refer that business on. It wouldn't be fair to those sellers to try and represent their home and not do my very best.

How hard is it to develop a patch? To hone in on an area and build a career in a suburb? With rivals, like you mentioned the Professionals, Bayleys. Do you have turf wars in this?

Oh, it's a very competitive industry and certainly in Remuera, I'd say it's probably over 200 active agents selling in Remuera, but it's a large suburb as well. A lot of door knocking, cold calling, a lot of prospecting work, but most importantly building trust with people. And then, it's not—I've never knocked on a door—that's probably a lie. In the last six or seven years, I've never knocked on a door and asked someone, “Will you sell your home?” or “Do you want to sell your house?” I probably started with that mentality of just trying to find someone who wants to sell their house. But what I quickly realised trying to build a farming area was I need to provide value. I need to build a little community and I want people to see me as a trusted advisor, to come to me for information. So it was more about, “Hey, I'm Ben from Ray White Remuera. This is the information I provide to your neighbours and some other clients, can I give this to you as well?” And relationships like that have started from door knocking, been listings in the last few years, and it's just grown from there.

Magic. Lots of door knocking, June, July, in the rain. Most effective time to door knock is in the rain, people feel sorry for you. But essentially just a lot of hard work and there's no successful real estate agent—and there's a heck of a lot more agents more successful than me—that would tell you it's easy. It's just a lot of hard work. And time is your best friend. Obviously you've had to grind and do that prospecting work, create a community, and that takes time. Then you build a reputation and you become a trusted advisor that you are today.

But did you ever struggle in those early years? Is this for me? This is too hard.

Oh yeah. Probably when I look back, I had braces when I started. Would you let an 18-year-old with braces sell your house? I wouldn't. I hope none of my clients from there are listening.

But did you get a deal with braces?

Yeah, I was on deals with braces. Anything is possible. I don't want to hear any excuses from the sales team. I always had reservations about my age and experience. It takes a couple of years to build confidence from that. A lot of my friends didn't have houses to sell. And so you don't really get the easy road in, whereas when people join the industry, they're in their late thirties, forties, fifties, already got a network from a career, already got friends that will give them a shot. I didn't really have anyone to give me a shot. I had to go out and find people to take a chance on me and I'm really grateful for the people that did. Many people that I've sold for multiple times from 2015, 2016, those years.

That's amazing. We call that your platform business—your close clients and friends and family who trust you, know you can do a really good job. And for us now that we're developed and old gentlemen with a bit of backing, we get that consistently and that pays the bills and then we can push harder to actually thrive and help more people.

Yeah. So fast forward, you dropped the braces, you kept knocking, you didn't quit, you never gave up. Long story short, you're consistently in the top five of your office and your office is the number one office in New Zealand.

We're the number one Ray White office in New Zealand for the last 10 years. I've been super lucky in the last few quarters, a couple of years, to—when people ask me, like sellers, I say I'm in the top of the pack, because it changes from quarter to quarter, month to month. Essentially we sell a few more houses and do a better job than our peers. And it's a really competitive industry, even within our own office. We've got 65-ish agents, maybe a little bit more now, close to 70 agents. It's quite cool to be in that position, but it's taken a lot of hard work and years to get there.

And just to take a quick tangent, I think touching on that, your office, I've been lucky enough to know quite a few of your colleagues and they're really good professionals. How much of your success is just surrounding yourself with professionals?

I got to credit that because you sponge off the people you're around. Depending on which office you sit in or who you talk to at the water cooler or in the kitchen, heating up your lunch, you can either get really good energy and feel good about your day, or you can get bad energy and be a bit mopey. If someone loses the deal and they're sad about it, that energy can pass on to you and then all of a sudden you are mopey for the rest of the day too. So I've been guilty of that before. I have to put my hand up. A good friend of mine in Ray White, but not in our office, always says to me, “It's just another cheeseburger.” And what that means is, for us, we're dealing with people's biggest assets. It's a huge thing for ourselves. And we take that really seriously. Every time someone decides to sell their home with me, I'm so grateful because they could choose hundreds of other people to do it, but they've chosen me. But when we say it's just another cheeseburger, we're just doing our job. And I don't need to take the highs and the lows so seriously that it needs to impact my day or week or month or year. The “just another cheeseburger” thing is like anyone working at a McDonald's—they're wrapping up a cheeseburger and they're passing it down the line and then they do their job again.

Yeah. Sometimes real estate agents, because of the accolades we collect and how we have to self-promote to get business—we have to put our faces on billboards and business cards and put ourselves out there. You don't get business sitting in the shadows. Sometimes we take ourselves a little too seriously and if something happens, a deal falls over, we don't get a listing, it can affect our whole day. Just another cheeseburger.

It's quite a phrase. And you've got another one actually.

Trust the process.

Yes, trust the process.

We love it. Can you tell us a little bit more about that? What does it mean to you personally and what does it mean in your business and to a client?

So “trust the process” came about many years ago and there's a sort of funny story about how it came about and it wasn't really to do with real estate. But once I brought it into my professional life, what it really meant is, as the market changed, and it wasn't this boom market we were used to—and even in 2015, 2016 when I started, that was a really good market, and then it went, it was a bit challenging for 2017, 18, 19—it was that, I'm not going to change my process based on the market, I'm not going to waver from what I know to do to get a good result for my sellers, so I would always invite my sellers to trust the process. And it was a bit of a funny thing for a little while, a bit of a gimmicky sort of thing. And then I started to have people call me and say, “Hey, Ben, are you ready to trust the process?” And at first I thought it was just people who had seen it on social media or whatever, but I had elderly people who just had seen it on my pamphlets and brochures and dailies we put into the letterbox. They would call me and say that as well. And I thought, okay, it's not just a tagline that fits with just my demographic of who I am, but it can make sense to everyone if they actually understand it.

It's religious. Honestly, it makes you feel religious. Trust the process.

It's super powerful. It's gold. They talk about it a lot. You hear the All Blacks talking about it a lot. About our game plans. We've got to just trust our processes. You're talking about sort of tough markets and stuff, like success isn't a straight line and it's not linear. And sometimes the work we do doesn't pay off on the day. It might pay off tomorrow. It might pay off in a year's time.

I was just giggling before, because I remember that I've actually got a COVID mask from 2021 that says “trust the process” on it.

Oh really?

Yeah, I mean like ultimate marketing, that is good. I'm walking around in New World, trust the process. If only we'd been wearing masks for a little bit longer. So I might have ordered a few too many of those. And then the mask thing was thrown out the window and yeah. The guy who's letting him to COVID test me, he's like, “Oh, maybe it's time to trust the process.”

Insane marketing.

Yeah. That's gold. We're going to need to get a catchphrase for Blueprint though.

Yeah, for sure.

The most rewarding thing is like when we started our brand, Blueprint Finance, and you get clients saying back to me, “Hey, I'm super excited to work with Blueprint.” And that means not just myself or one of the mortgage advisors, but get my insurance sorted, and yeah, the whole package. So it's like, “I want to get blueprinted.” It's a great name. Like I love that. I love the name Blueprint.

Do you actually?

Yeah, it's because of the Jay-Z album Blueprint.

That's what I was thinking, because that's what it is, yes, it's mapping out what you're doing with all your financials and “trust the process” the same. I don't even want my clients to feel like there isn't a plan. And there might be times that, hey, I'm not sure about the next step, but let's discover it together and trust the process. For my sellers to trust me to get them a good result, it was also for me to know that if I do the work, then I'll get the results as well in terms of winning business and getting good results and hopefully selling more houses.

I think it's also just the idea that there's a process, which I bet a lot of salespeople don't actually even address. A lot of people are a bit ad hoc and won't have the same way to do every single thing.

Exactly. Which is concerning.

Yeah. No, look, that's great.

Ben, I've known you for a long time. I've seen you with your clients. Can we touch on how we met? This is actually a really good story.

It might be a weird story for some. You tell it.

Ben and I go way back, but firstly, I knew his wife before I knew him. Knew of each other and there's this running app called Strava.

No Olympic athlete doesn't know Strava.

Strava. This is going to sound like you're never going to live this down. It's making a resurgence because run clubs are the new places to find dates.

Yeah.

So it's making a resurgence, but we've been on it forever.

Yeah. We started, so back in 2015 we were both on Strava because I was right into my running and so was Ben. Ben's always been into his running. And we follow each other on Strava. I was actually following his dad first, because his dad was prolific on Strava. He was in his late fifties and running like 50, 60k.

Yeah. Quite cocky.

And then I said, “Oh, let's get Ben on the Strava.” Hadn't met him before. It was like when you follow someone on Instagram. They follow you back and that's like the start of a thing.

That's cool.

I'm assuming, I don't know, I've been married for 10 years.

We send each other kudos. It's like liking each other's activity. If I post a 10k run, he can send me a kudos, he was flicking me some kudos and I was like, back. We're just hitting each other. And then one day he just hit me up and said, “Let's go for a run.” And we started running, but we didn't know what each other did. He said, “I'm a real estate agent.” That was the first time we met in person and we hit it off straight away. Because we were the only guys that we knew doing what we did. And probably the only few at that time, maybe even now, that really enjoy their jobs. So we really bonded over that. And now the rest is history.

Yeah, absolutely. It's a funny story because it's like, such a weird thing to be like, “Hey, should we go for a run? I've never met you.” And where did we go? Like the Sommerville running track or something.

Yeah. I'm pretty sure. And it was like, “Hey, I'm Dan. Hey, I'm Ben. Nice to meet you. Let's go for a run.”

It sounds like you guys get a bit of common Strava, pretty young in your careers, it was just pretty impressive. And then some differences as well, like Ben, I know you're a bit of a wine connoisseur, and there was a point in time where Dan bought you one of his favourite drops, and you reviewed it on your app.

I did, unfortunately.

What'd you say, mate?

Oh, I can't remember what the words were. There's definitely photographic evidence of our reaction. I was running an Instagram page at the time, Ben's Wine Reviews, and it just came from a love of red wine. Dan was kind enough to drive out quite a distance, and dropped me off a nice bottle of Fickle Mistress.

It was my favourite.

And for our weekend away. And I was like, cool, I'll do a wine review on this. I couldn't tell you it was not good.

Did it get a five?

No, it was out of 10. I can tell you it was on the low three range. It was just brutal, like you treating your friend like that.

But that's what I'm...

Yeah. And that's the thing that's important. If you're doing something that's just not up to par, Ben's the first guy to tell you, which is great. You need a mate like that.

But back to where I was like, boys, we lost a lot of listeners just now. Let's get back on track.

So what I was actually trying to say is you're a master negotiator. I've seen you helping your clients get wins on the auction floor. I've also seen you negotiate with your wife for a night out. Yes, you're a master negotiator. These things happen over time, nine years in the business. How do you find your skills as being a negotiator improving and what are the important things when you're trying to negotiate for your vendors?

I think when you first start out in sales, you think you just need to try and convince someone to do something. The more you're in it, you realise you just need to figure out what their needs are. So I've learned to ask more questions and do more listening. Try and figure out exactly what that person needs. Like what's the end goal for them? And yeah, there's been deals that have been really lucky to have happened and there's been deals that I know how, if I hadn't pushed and prodded and done my thing, that wouldn't have come together. They made a massive difference to the buyer and the seller's lives.

Of course.

So it's really cool to be that middle person. And I think that's why our role as a real estate agent will never become obsolete, because you do need that person to massage both parties into a deal where they're not feeling it. And I know that if I'd put two people in a room together, it would not be done. You need to address these things. What does this person want? What does that person want? Because it's all based on self-interest. Just learning by experience—I don't think you can learn any better way than doing the deals or being part of the deals. The odd time I would be listening to a colleague in the office on the phone to a buyer or seller and watch them get a deal across the line. But I just love it. I love the thrill of the chase and getting a deal done. I walked in here, I was telling you guys about a deal that I'm doing at the moment after an auction pass-in today. I can't wait to close that tonight and hopefully get the buyer across the line, get the seller a sale and move on. Better work to be done.

Yeah, I think that passion, that drive, the number one thing that clients can see and that's why you get so much repeat business and referrals—they can sense that need for success and winning a good outcome for all parties. We've got a lot of mutual friends and everyone who's done business with you has got such good things to say about you. It's all about that passion, right? What's important is when I can prove to a seller that I've done everything possible to get them the best price or results. And it's not about price for a seller—sometimes it's about certainty, sometimes it's about the terms of a deal. For a buyer, they know we're working for a seller and trying to get the best result for the seller, but making them feel comfortable and stress-free in that process as well. And that's why when you get really good reviews or really good feedback from the buyers, it's just as important as that feedback from a seller. And they'll become a seller one day as well.

Yeah, for sure. Absolutely. It's a two-way transaction, eh? And like you touched on earlier, it's all about people, eh? I have concerns sometimes about some of our sectors—financial services, robo advice and that—but AI is not coming for your job, eh? I can't see it happening and there's lots of players trying to create something where you do it yourself, but the fact of the matter is that we do something that can be difficult at times. We talk about money a lot with people and lots of people don't like to discuss money. We break things down into bite-sized chunks where people can understand it better. We help put perspective into people's minds. When someone's—just an example—if there's a five grand gap on a deal and a seller goes, “Oh, look, I won't sell it. I'll just do it again next time.” But five grand was their marketing budget. And they'll have to pay that again in three months’ time to get it on the market again. Those two numbers cancel each other out. That's just a very small example. There's a lot of examples like that with a lot bigger numbers. But putting that perspective into a buyer or a seller's mind about those things to allow them to come to their own conclusion of why they would do that deal then and there is really important.

Been some great news a couple months ago. Yeah, the better half just joined the team so obviously we're all pretty wrapped about that. How is that dynamic? Improving obviously the client experience and also the sales process.

It's improving it massively and it's very interesting because I spoke to a few people about doing it before I invited her to join the team. Yeah, and we made it official. And it was 50/50, some people said, “Oh no, don't work with your partner,” and then a lot of people said, “Oh no, you'll really enjoy it.” And it's funny because there are a lot of husband and wife teams in real estate. I don't think Mickey ever planned to do it, but it just made a lot of sense. I needed some operation support and that other person to bounce off. And I needed a female as well because sometimes you're in a dynamic where you're dealing with a husband and wife and you're a guy, a young guy dealing with people in their 50s, 60s, 70s who need a sort of female, softer person to be there with. And so it's not to manipulate the situation or anything. I always give the example of sometimes when you know a buyer hasn't got a house that she's wanted to buy at auction and she's a little elderly lady. I can't really wrap my arm around her and console her—it's just inappropriate for me—but Mickey can.

Yeah. It's so good.

So those sorts of situations, it really helps. She's so detail-orientated and she brings all of her skills from her PR and events background into the job. And we're marketers before we negotiate. It's like before I can sell a house, I've got to promote it. And she's got that skill already. It has unfortunately turned our evenings into brainstorming sessions sometimes—“Have you done this or have you done that?”—but hey, real estate's an all-consuming thing and there's no such thing as part-time real estate.

I think you touched on a great point. The fact that she complements you in a way is that you just have that deficit, right? Certain client types. And also, yes, you do talk about it after hours, it's a passion you share together now, which is just one more thing to get closer about.

Yeah, absolutely. And our clients see us enjoy working together as well, and I think that resonates with them. And then they enjoy working with us too.

Do the kids like that mum and dad are working together?

Yeah, I don't know if they really understand it. But they think it's cool. They love coming to the office. They're obsessed with the printer. “Did we use the printer today?” “Yes we did.” “How much printing did we do?” “Quite a lot of printing.” I guess what I'm concerned about is that my daughters might feel like their only option is to go into real estate and I certainly wouldn't want that for them. But hey, if they think their mum and dad do cool jobs and they want to be part of it, then they might be the first people ever to grow up wanting to be a real estate agent.

Yeah. The ones that didn't fall into it. You might be interviewing them on a podcast at 18.

Look at these old guys now.

Yeah. Oh, that's cool.

Hey, while we're on a personal note, let's just talk about something personal again. We want to do it actually—heavy taste of wine and we were going to blindfold out and really test your knowledge. It's going to be the next podcast, eh?

Yeah, you know we had to keep that one for a rainy day because we know that you aren't drinking. Dan says that you're doing 75 Hard, which is, I know a little bit about, it's a hell of a challenge mate. But what's the issue? Provoked you to do that.

Funnily enough, I said to you the other day, Dan, that when you're doing the 75 Hard, Rory just comes up in conversation and that's all you can really talk about. Unfortunately, here we are again. Sorry listeners. What drove me to do it? When you have kids, you take a little bit of attention off yourself and your own health and you start getting busy with the kids. My wife and I were both feeling out of routine, exercising and eating okay, but we really needed some sort of big change to get back. Like we used to run all the time. We used to go to the gym a lot. We used to be really healthy as far as our standards go. After COVID and all that sort of stuff, we just felt a bit... just life, eh?

Yeah, just life.

A mutual friend of Dan Rice did it and he had a great time. I think it's changed his life and he'll listen to this and probably agree with it. And I saw his results and how it's changed his mentality about exercise and fitness and health and that really inspired me. Because, and again, he'll be listening to this, I used to try and drag his arse out of the house for a run. And he would never want to. And yeah, he's motivated me to do it and been a good support person as well as Dan and some other mates. And yeah, unfortunately can't enjoy a nice red wine at the moment. It's a bit of a silly time of the year to do it, going into a silly season, but so far so good. Day 23 today, I think.

Day 23, I was going to ask. That's awesome, eh? And it is such a challenge. And I don't think you can go through that and come out the other side not better from it. But 23 days in, we won't go into every detail of 75 Hard. You can Google it. But what's the hardest part?

Oh, the drinking the water.

Oh yeah, it's a gallon of water a day?

Yeah, like over 3 litres a day. And the way that Mickey describes it, she said, “Now you know what it's like to be 9 months pregnant.” Because they say, yeah, I need to pee every three minutes. And that's why this podcast stopped. It's just been good. I've been getting back to the gym, going for walks, reducing TV time. A bit of leisure time there, but just feeling good in the routine. 75 days is a long time, especially when you're doing things day by day. It's going through all the other areas of my life in a positive way.

Yeah, for sure.

And speaking about positivity and mindset, the recent changes—moving to spring out of a pretty tough winter for New Zealand business, marking a significant milestone in the recession. I wouldn't say we're anywhere near the end of the recession, I'd say we're still deep in it. Very sharp OCR cut. So finally a bit of positivity injected back into the market. Just reflecting on what was a challenging couple of years. What do you see for the years ahead for yourself and Auckland real estate in general?

The last couple of years have been challenging because we've had to sell houses for prices that people sometimes weren't too happy with because of the market. And people had lower borrowing capacity, so they couldn't buy the house they thought they could buy. It has been challenging. There's still a silver lining and for a lot of people it will allow them to move on to the next step of their lives if they were selling, or if they were buying, they borrowed a little bit less, and they're probably grateful they didn't put themselves into a position that was a bit more stressful with the higher interest rates.

That's right.

With the OCR cutting by 50 basis points, it gives a lot of confidence to the market, and also going into spring, which is a busy selling season. Had the timing been different and we were going into winter with this, it would feel a little bit different because there'd be lower levels of stock. But what we can see already is that buyers are understanding that, well, it's a great time to buy right now because interest rates are going to start falling. They already are, but they will start falling. But the prices aren't inflated prices like we saw in the COVID market. They're not adjusted yet. There's a saying that most real estate agents use, which is “marry the house, date the rates.” And if you can buy a house at today's price and enjoy the lower rates of tomorrow, then that's great as well. It's a great outcome.

Well said.

We wrap up this segment with what's called the fast five. We've got five questions that we ask, or I guess it's something a bit changed per guest. But we've got some for you. The whole idea is quick fire. We'll put you in the hot seat. You got to give us the truth and it's going to reflect a bit about who you are as a bloke.

Ben, who's your most influential music artist?

Oh, this is a guy. This is a big music guy. We've been to a lot of gigs together, guy. And this is, he's driving the appraisal. He is pumping himself up, whatever the music. You can't ask such deep questions. My most influential artist... Off the top of my head, it'd be like Chance the Rapper or Kanye because I do love rap. But if I think about what I really love, it's music like Prince, Michael Jackson, like all that old school stuff as well. That just gets in a good sort of vibe and it's timeless music.

As long as we haven't cancelled Michael Jackson yet.

No, he's definitely, yeah, it's still up for review, isn't it?

Michael's a great answer, because he influenced all your favourite rappers, and your hip hop artists, right? Think about how many samples Kanye West used from Michael Jackson's songs.

Yeah, PYT. That's an incredible sample.

Exactly. Next one.

Oh, yeah, next one. Alright. Cricket. Cricket. Who is the GOAT? Come on mate. Didn't we spend four hours watching a test match?

You're not a cricket player.

I'm not a cricket player or a cricket fan.

We're going to make it rugby league, I watched a bit of rugby league. I was obsessed with Benji Marshall. As a teenager, I had pictures of him on my wall. I was a chameleon West Tigers fan—if it wasn't the Warriors playing, I'd be a West Tigers fan.

Man, I was gonna ask him Carlos Spencer or Benji Marshall. I thought we were gonna ask him Carlos Spencer or Beauden Barrett. That's a way cooler question.

We have watched some test matches together. I just want to spend time with you mate. Next time you come we'll do some research.

Now, I did say rugby league, but obviously some of our listeners, this isn't applicable. We always ask this, because of our industry, this is really good for you. Real estate, are you about long term holds or short term flipping transactions?

I subscribe to the Warren Buffett ideology, which is, it's not timing the market, it's time in the market. So I guess a long term hold. And a lot of more successful and wiser people I've met have always had that ideology as well. I look to them and what they're doing. I guess if there's a right time to sell a house, it's a right time to sell a house too.

If it's opportunity into another investment, right?

Yeah, definitely. I know this is meant to be quick fire, but I was listening to the Psychology of Money this morning and they're talking about Warren Buffett and if he had stopped investing at 60 and wrapped it up thinking, “I've done enough,” he would have been a multi-millionaire, but well under 100 million. It was in those later years that he went to be the multi-billionaire that he was. And not through being necessarily the greatest investor either. They talk about his year over year returns are like 22 percent. But he started at the age of 10. It's time in the market. They reference another guy who's getting, 68 percent year over year returns. Who's still very wealthy, but nowhere near Warren, because of time in the market. It's 100 percent time in the market. The exponential curve—those later, the more you can get, the more you can boom over. And that's why we've got an advantage as young guys, listening to the information and really being clued up on it, and not only discovering that in our later years. A lot of people, I think, only start to think about those sorts of ideologies into their forties or fifties. And by then, you've got plenty of decades ahead, but it doesn't have the same impact as being in your twenties or thirties.

I think it also flicks onto our careers as well. In the industries that we're in, it's also time in the market to build trust and gain a large client base and be more influential in a positive way to your clients. When I have an outlook of our future in the industry, that's really what I'm aiming to be—20 year plus, well recognised in the industry. That's what we want for Blueprint. That's what we want for your business.

I say to my wife, Mickey, that I'll be probably the only person in Remuera real estate that's done a decade of real estate still in their twenties. Yes, it's a lot of experience, but you still get the youthful enthusiasm and energy and willingness to do anything to get a deal done for our seller. That's quite cool.

That's amazing. You're gonna be 10 years in the game before the next guy's even started his career.

Yeah. Cool, man. I don't think you're gonna struggle with this one to be honest. I think I know the answer—Indian or Chinese?

Oh, Indian. Yeah. Caucasian. Yeah. Very mild. Kiwi mild.

This last one is actually Rory's sort of trademark question. So we just like to ask clients, if you could go back 10 years and give your 10-year-younger self a piece of advice, what would it be?

Oh, that's a tough one. Probably like I said at the top end of this podcast, to maybe go and work for someone else and learn the ropes with some money coming in. I went straight into commission-only sales, which was a really tough gig at 18, 19 with no track record or experience. But in saying that, I think I would also tell myself to enjoy my early 20s a bit more than my late teens. Like I was just so focused on work and I guess it's got me to where I am today and I still feel like I'm in chapter two or three of a hundred-chapter book, to just enjoy it and not miss out on a few things. So we've gone to a few gigs, but we probably could have gone to a few more gigs together.

That's true. Trust the program.

Yeah. Jacob used the wrong break. He thought I'd steer you away from some of it. Someone in a video switch up. People now who do go and do a three or four year, like being an associate, getting a small cut of a sale and building that network, building trust with people and then going out on their own. If I was to go back and tell myself, I'd say, go do that because you go in so many different ways.

It's an apprenticeship.

Yeah. Like I only feel like I started doing five years into it, which is normal for me. But at the same time, I could have just gone onto a successful team, and done the same work, but had results immediately, and had financial security immediately. It's a lot of insecurity in the first five years.

Yeah, sure. And that's the real pain, isn't it?

Yeah. The real pain is that, and that's what makes people give up because they go, “I've been doing this for a year, made no money. It's not gonna happen.” I just couldn't do anything else. I dropped out of school apart from doing the mortgage programme, I'm like, I literally don't know anything else. There wasn't really an option to give up. But that's probably a big reason for your success. It's like, when we jumped into Blueprint, to some regard, you burned the ships. And that's what you did.

Yeah. There was no plan B.

No, there's still no plan B.

And there's no success. Plan B is joining Blueprint, but yeah.

That's really it. Mate, you can make a gun broker for sure. But yeah, it's burning the ships in your career, your relationship, your marriage and your investing life. I'm going to invest in my KiwiSaver or the S&P 500 or NZX or this property and you stick to it. Even doing a small amount, say just dipping your toes in, but consistency. If I could go back and speak to myself from when I was 18, had braces and decided to join real estate, I would say, mate, go and join a team, slow down. Impulsiveness and acting fast got my wife really young, and there's no way I can land her nowadays.

You bought the dip.

They've always seemed to work out, those decisions. And Mickey's like that too, we both know we're impulsive decision makers, but we make it work and live with the bad ones we make as well as the good ones.

You're action takers.

We're action takers and we don't mind if we take a wrong action because we know that we'll have the confidence to take the right action again. It's like buying 500 masks with, let's say, “trust the process,” and then three months later, no one's wearing masks.

One of the questions I'd like to ask Ben is just to cast your mind back to Ben 10 years ago. And what advice would you give?

Absolutely. Yeah, a very different Ben as well, ten years ago. I think that the main thing I would do is tell young Ben from ten years ago is dress a little bit better. Get suits that fit me. You're on a budget. And probably, join a team or get a mentor of some sort and maybe not jump into that sort of commission-only sales role that I did. For sure it's taught me a lot, but I know that I would maybe have learned a little bit differently had I done that. I definitely have no regrets as to what I have done. However, I think that it might have been a bit more financial security, might have learned a different way or a bit quicker if I had joined a team. Yes, so maybe find a mentor or a team that I could have joined earlier on than just going out on my own and trying to sink or swim.

It makes sense actually now we talk about that again because you googled, you know, “If I work really hard, will this career be successful?” So you were finding your path. You didn't have Brenda say, wasn't in your family, or you didn't have an uncle that was an agent that said, “Hey Ben, get into the industry. It'd be great.” You carved your own path and jumped straight into the fire.

If there was a different answer on Google, I would've just done that too. That's my personality. But real estate was one of the top answers and that's why I chose to give it a try.

You could have been selling scrap metal, infinite money glitch.

Now, Ben, the most exciting thing to me is towards the end of your last five years, I know you've got some really good mentors to help you. And just seeing your growth during that period was next level. What I'm really excited about is in five years’ time or 10 years’ time, when the young buck comes in and comes under your wing, and just what they'll learn. Because I've had the privilege of training a junior advisor here at Blueprint. It's one of the most rewarding things I've done in my career. And I'm excited to see your growth through that.

Ben's associate would be like 40 years old.

Nah, but seriously, Ben. Thanks for coming on mate. It's been an absolute pleasure. I've been learning about you on the fly. You're an interesting guy and lots of wisdom.

I appreciate it. Happy to hang out with you guys at Blueprint headquarters.

Thanks so much, man. You're very much a friend at Blueprint. Thanks for all your support. And like Rory said, you're just a true inspiration. You see the vision, you go for it. And we're just lucky to be sharing the industry with you.

Trust the process.

Dan: Rory, we're back.

Rory: We are, mate.

Dan: For another episode of the Blueprint Podcast. Last session was pretty good with Jono, talking about the ins and outs of that side of our business, which is KiwiSaver.

Rory: Absolutely.

Dan: So, you're such an integral part of our Blueprint team, protecting all the clients who are in need throughout their financial journeys. We really appreciate that. As co-host, we want to make sure people know who they're dealing with and who to listen to for every podcast. So, this episode is all about you, man – that insurance guy.

Rory: Yeah, no, that's really exciting, Dan. It's nice to be in the limelight, eh?

Dan: Yeah. So where do we want to kick things off? I mean, you're a pretty modest guy, but as I've gotten to know you over the time we've been in business together, there's so much to the Rory sort of lore, as we call it.

Rory: I'm five years in insurance now, it's gone in a flash. Before that, I spent ten years as an athlete.

Dan: Absolutely, man. Top athlete.

Rory: Yeah, I went to a Paralympic Games. So, I'm a below-knee amputee. A lot of listeners and viewers won't know that about me. I was run over by a truck when I was three years old and had my leg amputated below the knee. When I was about 25, I was at a crossroads in life, to be honest. In my early 20s, I was a little bit lost and didn't have a lot of direction. An opportunity came along one day – Paralympics New Zealand were recruiting athletes and looking for people to go to London 2012. This was back in 2009. I got a hold of the application form, signed up, and went to training. Long story short, I got invited to move down to Dunedin and train full-time as a javelin thrower.

Dan: Incredible. A one-legged javelin thrower. Did you throw in high school? What was your relationship with javelin before?

Rory: So, I threw in high school, in year nine, first year of school, athletics day. It was a fun event, but I was more interested in team sports – cricket and rugby – so I didn't take to it then. The journey would have been a whole lot different if I picked it up then. I wasn't really aware of the Paralympics as a young fella. I had a career of about 10 years, went to four world championships, and went to a Paralympic Games in Rio.

Dan: Yeah. And it was awesome. It was life-changing for me. And, eventually, as you do as a sports person, you get to the end of your career, whether you like to or not, and so you start wondering what's after. I had a finance degree and I was in my early thirties by this stage, and I decided I wanted to get into financial services.

Rory: I was interested in wealth, to be honest – Jono's job.

Dan: Did you know people in the industry or you just had your own interests and wanted to pursue it?

Rory: Just my own personal interests. I just felt like financial services would be a good fit for me because it requires some kind of literacy in financials, but more so people skills. It's more of a relationship game, it's not technical, so to speak, like some finance careers can be. It just seemed like a good fit, and wealth was just an interest. Insurance is always something that you fall into, and I fell into it. When I was competing as an athlete, an insurance company wanted to write an article on an athlete who had a story about adversity. So they contacted Paralympics New Zealand, who gave them my number. They were recruiting one day, a year after I'd given this article to them, and basically shoulder-tapped me and I got to meet the CEO of the company.

Dan: Wow.

Rory: And moved from Christchurch to Auckland to work for Partners Life. Yeah, so I completely fell into it. Obviously, it was in line with how I was thinking – financial services – and it was just a really good opportunity. It was something new, and I got to move cities, and the company was willing to put me out as an adviser after a little bit of training, but basically straight to the cold front, and say, "This is the pathway we've got for you," and support you in that. So it was cool, man, and what an awesome way to start out my career in financial services and as an insurance adviser.

Dan: One of the largest companies in New Zealand. You got exposure to claims, underwriting, servicing, admin, and just got to understand the general lay of the land of what an insurance company does.

Rory: Yeah. So at the back end, there are these products, which are just pieces of paper – promises to protect people – and try to sell them. What happens behind the scenes to put that together?

Dan: That's right. And who are these people and what are they like? Because there's all sorts of stigmas and stereotypical thinking around insurance.

Rory: I think that gave me a pretty good leg up as an adviser, to understand actually who are the people behind these companies, right?

Dan: Because that's the same thing on the mortgage side and wealth side. A lot of people work at the bank before they become an independent adviser. They get exposure to the actual viewpoint and lifestyles of the people in the industry. They're great people who are passionate about securing people's finances and taking care of them.

Rory: I suppose, when you first start your journey, you don't have to be a client to know that this is a pretty crazy business to work in. You're dependent on how many clients you can help as a business, it can be stressful.

Dan: Yeah. Some people would say, you gotta be pretty crazy to work in this business. But I would say, it's about having an actual genuine passion and interest in what you do. I think that's what we all share here at Blueprint. All of the providers that we work with and all the products we help people with – we're genuinely passionate and keen to help people.

Dan: So, in those early days at Partners, was there a moment where it transitioned from just being a job to being like, "Actually, yeah, I'm frothing this"?

Rory: Yeah, yeah, yeah. I guess, yeah, there – I don't know if there was a specific moment. I just took to it, you know? You work with people every day and I think what we do is important. That probably comes to fruition once you experience a client that needs to make a claim. It's perhaps not the heartwarming feeling like getting someone into their first home.

Dan: Yeah, that's right.

Rory: It's still important – more important when people are under financial stress. It's rewarding, but it's a different kind of rewarding feeling. You know what I mean? It's like you're not high-fiving when the client claims.

Dan: Yeah, absolutely.

Rory: But you're pleased that they've got that policy and you've helped them put it in place. You say, "Thank goodness we were there to help," right?

Dan: Yeah, absolutely.

Rory: I think that's what drives me, you know? Making it simple. Life insurance and health insurance can be complicated, and we make it really simple for people and available. So, you know, taking down some of those barriers so people can just get covered.

Dan: Yeah, absolutely. And I think since you've been here working at Blueprint as our in-house adviser, the conversations about how you operate as an adviser and sort of going the extra mile is what makes all the difference. And I think why you get referred so many clients and why so many people want to work with you is because you've got this sort of, "I really know your stuff, I really understand the policy," but also you've got this drive to push back on some insurance providers to A) get claims across the line, but also B) get people protected. I know you've got a couple of stories of when you've helped some people out where it was a bit up in the air, maybe, whether we were going to get the claim paid out or not, and just with a bit of gas behind it from an adviser, that actually helps come claim time, right?

Rory: 100%. And I think that's advisers and financial services, right? There are nuances to our job, that's why we are beneficial for a client, you know? Because we represent them, and there's humans involved everywhere. The example that I've got, it's a pretty sad case, it's a child's trauma claim and it's pretty serious. It's an unwell child, which is something that people don't necessarily think about when they cover – like, what if something happened to my kid? The situation is, you know, someone's got to become a carer. A parent is going to become a carer. There are these bucket list things now that this family wants to do because of limited time. Navigating that's pretty tricky. The company was brilliant to work with, and a lot of trauma products in the market have built-in benefits for children. That was paid straight away. The company was fantastic to work with. They also had an income product and within that there's a feature called Dependent Caregiver Benefit.

Dan: Yeah.

Rory: And basically what that does is what it sounds like – if you're required to leave work to care full-time for a dependent, then there's a monthly benefit that's payable. The nuance here was that the client didn't have that option ticked, so it's not a built-in benefit, it's an optional benefit.

Dan: Oh, wow.

Rory: It wasn't selected, so the claim was declined. The insurer was Partners Life. I had a lot of experience with their product. The benefit is actually free for certain occupation classes, so whether it was ticked or unticked, it wouldn't have affected their premium. We presented a case and the company took it to their Customer Outcomes Review Committee.

Dan: That's another thing clients probably don't know about – there is this channel where we can challenge a decision, put a case forward.

Rory: They will, with an open mind, review it. They actually look for reasons to pay a claim.

Dan: Yeah, exactly, because that's what they're in the business of doing – paying claims. So they're not sitting around the boardroom going, "How can we get out of this one? Should we be paying this claim?"

Rory: 100%. And the outcome was that they should be paying the claim, and their claim went from $50,000 to $74,000, which is incredible, which made a big difference.

Dan: Yeah, for sure. That's a massive outcome. And I'm sure the client was very grateful for your efforts in such a time like that, you know what I mean? Because it makes all the difference. A lot of people think that the adviser or the insurance company might just do the deal and then bugger off. But you were there to take care of them during the claim. What an outcome.

Rory: A great outcome. You don't always get those results. Part of that is understanding what the client's entitled to. There's a little bit of human error there – someone's got to make the case, know what you're talking about. So now it's good. It's one of those ones, again, you know, a sad situation, but you're proud when you get a result like that. You move on.

Dan: Now, I've always had a keen interest in your part of the industry because it's super important. But also, there's a lot of cool things going on in insurance. People don't realise how insurance can be fun. It can be incredibly exciting.

Rory: I think you might be overselling it. I'll be a terrible insurance adviser. Insurance is super fun, guys.

Dan: No, but seriously, there are so many different unique products because people are going through different journeys, right? So, for example, you've got multiple insurance providers, right? You don't have insurance with just one provider. You've chopped and changed it a bit, haven't you?

Rory: Yeah, I've mixed it up. The reason I've done that – I'm insured with Partners Life predominantly, and that's like your bread and butter. Most of it's there. That's my big safety net. I got that as a staff member and continued it when I left. One of the benefits of that policy is that it wasn't underwritten. So I'm a person who has a whole lot of health history – surgeries and all sorts of stuff. I'd be riddled with exclusions if I was to be underwritten for health benefits and income. So Partners Life, great product. And then I've got insurance with AIA because they've got a really cool programme, AIA Vitality, which is a hit around the office. Everyone's loving it. Everyone wants a little piece of it. I think for young people, it's good – people that are interested in their health and regularly exercise or play sports. There are a lot of benefits where you can earn rewards, get various discounts on things like massages, gym memberships, or clothing. It also discounts your insurance premiums, and through activity you can increase the discount on your insurance. It's pretty unique, and obviously insurance companies want to insure healthy people.

Dan: Yeah. That's a great business model for them.

Rory: Yeah, for sure. It brings their risk profile down massively and the chance of claiming comes down.

Dan: Yeah, absolutely.

Rory: And so they're recognising that actually people that are actively engaging in exercise or, you know, it's also like screenings – fitness assessments, blood pressure, cholesterol, weight – and understanding their health, being proactive, and they're less likely to claim and get rewarded through the programme.

Dan: That's incredible. That's very cool. Because if you're already going to the gym four times a week, you might as well get some sort of benefit.

Rory: A little kickback. Where's my kickback? Absolutely. That's awesome.

Dan: I think on the topic of young people and insurance, you have some great conversations because all our clients who purchase their properties have their review with you at the end of the process, right? First home buyers. So you're talking to a lot of people as young as 21, 22, 23, who are probably leaving that mindset of being invincible, before you're really properly into the workforce and established as an adult. They're probably not even thinking about insurance.

Rory: A lot of them aren't. And they always leave with something after they've spoken with you, a bit of a safety net that's going to build up over time. How are you finding that conversation? I know a lot of people, when they bring up the idea of insurance and they're under the age of 25, they think, "Oh, how could this ever affect me?" I think it's very important to begin your insurance journey at that stage, having some basic medical, some basic trauma, that sort of stuff.

Dan: What do you reckon?

Rory: Yeah, like, the average 24-year-old's not necessarily concerned about life cover.

Dan: No way.

Rory: Particularly when life cover doesn't benefit you. But the first home buyer journey is a little bit different and often the first time people are getting exposed to personal health insurance.

Dan: Yeah, that's right.

Rory: So it's all brand new, and the process is about understanding risk. All insurance is a transfer of risk, and people are really accustomed to insuring their motor vehicles and their houses.

Dan: Well said.

Rory: Assets, plant, and people. I understand that if I drive on the road, someone might hit my car or I might hit an expensive car and I'll be out of pocket. Health insurance is really much the same. Often we might have an individual or a couple that have bought a home, and so we just discuss risks and it's all health-related. Often it ties around medical expenses, loss of income, or loss of life. So really kind of three buckets, and then just talk about the products that we've got to fill those buckets.

Dan: Yeah, for sure.

Rory: And often, you know, we're just insuring people that are in good health and understanding that that's beneficial. Long may we continue to have good health, but inevitably, things happen in life. Things will deteriorate, and they're often unexpected, you know, like having a crash of your motor vehicle. You don't leave the house going, "Today could be the day where I have a prang." And so, with being healthy, they've got all the options available to them and they're fully insured for the entirety of their policy.

Dan: Nah, it's so good. And I think also just getting into the rhythm of, okay, when I'm looking at my monthly budget, a lot of them are always talking about sort of 3% of your income is going towards insuring yourself against these sorts of things. And once you get used to that, whether you like it or not, you're going to go down the road. Most likely you're going to have a family and other people are going to be depending on your income. You already just get into those habits of saying, "Okay, this is the amount of money that's put away to transfer that risk," like you're saying, and then you're going to just live a much smoother life. Best case scenario, you have it and you never use it.

Rory: That's the best case scenario, right?

Dan: Yeah, absolutely. And you raised a good point around those small allocations. KiwiSaver is 3%. ACC is about 1.6%. You might be investing a little bit more into your future wealth, you know, another 7%, if you're following like The Richest Man in Babylon, you know, like 10% away. This is an ideal world, obviously in a tight economy, it's hard. But having a percent or two of your income going towards insuring your future health or wealth is really important. Especially if you're a young person, that's your biggest asset – your ability to earn income. If you think about how much you're going to be earning over the next 60 years, that's your biggest asset, isn't it? Yourself and your ability to earn. So that has to be protected, number one. In that first home buyer, they go into the house and everything's gone into the house. The savings is gone. The key was gone. And a short-term loss of income could be a loss of the house.

Rory: And long-term loss of income, yeah, this can be millions of dollars lost.

Dan: Especially now we've had a market correction, right? So a lot of first home buyers now are sitting close to a 100% loan-to-value ratio, LVR, you know, that deposit's kind of been squeezed because property prices have dropped.

Rory: No doubt. It's going to correct, and in five, ten years, they will be sweet. But right now they're feeling that pinch.

Dan: We were talking earlier today about insurance myths. There's a lot of BS that gets floated around insurance because, obviously, the people that have negative experiences – just like the banks, just like KiwiSaver providers – people have negative experiences with insurance providers, they're very loud about it. And some of the cases, I'm sure, if you looked under a microscope with certain providers internationally, you'd be able to find a case and say, "Hey, this was unjust." But there's a bunch of insurance myths. So the biggest one that you always hear is "insurance is a scam" and "insurers are looking for ways to avoid paying claims."

Rory: Yeah, that's just BS, isn't it? It's common, right? Because there's always a story of someone got declined and that seems to be the headline.

Dan: The loud news.

Rory: Yeah, the headline. Exactly. But the opposite's true, Dan. Insurance companies are in the business of paying claims. That's literally what they're there to do.

Dan: That's how they have such big businesses.

Rory: Absolutely. And they're for profit. Like, yes, they are businesses and companies that try to have an after-tax income, but they're scrutinised and regulated by the Financial Markets Authority. They pay claims, and I've got some numbers here actually from a couple of our insurers, and these are pretty consistent, right? So we've got company A, 92% of claims paid in the last financial year.

Dan: That's quite standard.

Rory: That's a lot. And 94% for one of our smaller companies. So 0.8 out of 10 will get reviewed and declined.

Dan: Yeah.

Rory: And I think it's important to understand that the bulk of declined claims are when people claim on benefits that they're not covered for. So, like, you've got a health policy, you didn't select the specialist option, you've been referred to a specialist, you claim, and you get declined because you don't have the specialist option.

Dan: That goes into that 8% of claims that were declined.

Rory: Oh, right. Yeah. Or you claim for a broken arm because you have a specific injury benefit, but then they get the medical records and you hadn't had a fracture. Claims that get declined are typically for people claiming for benefits that aren't covered in their policy. So, that can be a whole bunch of things. Perhaps they haven't met the medical definition of benefits, or they've got a medical policy and they're claiming for a specialist appointment but they haven't selected a specialist option. They didn't tick that box. And so that goes into the statistics as a declined claim.

Dan: Yeah. I think the ones that people worry about are non-disclosure claims. That's when you've withheld, either deliberately or in most cases accidentally, material information that would have influenced the insurer's decision at the time.

Rory: Yeah. So those are bad scenarios that we don't want to see in the industry.

Dan: Yeah. And there are processes that we follow to really mitigate those.

Rory: Yeah. Sorry, are we back on? Okay.

Dan: You were saying that they're in the business to pay claims.

Rory: They're in the business to pay claims. Insurance companies are doing everything that they can to pay claims and they go through that process. Insurance companies have no issue paying claims – that's literally priced into their premium. The reason they go through that vigorous assessment process, that application process, is their products are all rated for standard risks. So just a general member of the population. Certain people that apply for insurance have risk factors that they're either going to exclude – like, you dinged your car before you got car insurance and then you wanted to claim after getting the insurance. Like, it doesn't work like that. Or they might cover you, but charge a premium. The long story short is that they have the money to pay claims. But claims have a direct impact on the premium.

Dan: That's right. The insurance company can't lose, but they don't want to be paying claims that they shouldn't be paying because then that affects everyone else's premiums. If we move to general insurance as an example, when we have those massive natural weather events, those directly affected everyone's premiums the following year, right? Premiums shot up because it's passed on to everyone. Everyone else shares the burden of that. And then, red zones in Christchurch and now perhaps there are exclusions for earthquake cover or hiked up premiums if you want that protected because the insurance company doesn't fit the model anymore.

Rory: It's too risky. The business model doesn't work, so they've got to jack it up to even cover the costs because they're reinsured by bigger providers who see those areas as extreme risk – coastal areas or flood-prone areas. They're factoring all these things in. Just going back to the non-disclosure side of things, that's where you come in, right? As an adviser or someone helping a client issue a policy, it's your job to do the fact-finding, ask the right questions and triple-check to make sure that what's being put in place is going to get paid out if necessary, right?

Dan: That's such a valuable part of it because a lot of people – you know, there are some providers who provide insurance online directly where you can sign up, but I just can't understand why you'd go through that process if you can just use an adviser.

Rory: Yeah, 100%. There are a couple of checks that we do. Because we work with multiple insurers, they operate differently. They've got different products, different reinsurers, and different underwriting standards. A pre-existing condition with one provider could be uninsurable. With the next provider, they could give you full cover, standard rates, no amendments. There are literally examples that are that extreme. And, you know, I'm not a medical professional. There's no rhyme or reason to that, why they do it so differently, but they do. And so when we're dealing with a new client, it's always one of the questions we ask about their health history because we've got five providers that we work with. We can do a pre-assessment and find out who's going to give the best terms. Often it will be similar or the same, and that's great – that means that client's got access to the market. And then there are other factors that we consider, like who would be a good provider, whether it's professional or not, price, additional benefits, they're interested in AIA Vitality perhaps, medical is important to them, so they want a provider where they can have life and income and medical all together.

Dan: For sure.

Rory: So there are all those factors that come into it. And then there's the application, making sure the client's aware of their duty of disclosure, and if they've got a complex medical history, the insurance company is going to request what they call a PMAR – a full medical record – or, you know, if it's just making sure that they haven't forgotten things and if they are unsure, they can request their own medical records and we can still complete an application, but submit medical records alongside.

Dan: For sure.

Rory: And that's, you know, 100% peace of mind when we do that process. There are ways to safeguard clients. It's not just new clients, it could be an insurance review. We could be looking at replacing a client's policy with a different insurer because the benefits look better, but you've got to do that thorough underwriting health assessment before you can make those final calls.

Dan: Another big myth or an assumption: "I can't get covered because of my pre-existing health conditions." This one may be true, but have you looked at all the providers? I just touched on it before, where it's like provider A said you're uninsurable, provider B said we'll give you everything you need.

Rory: Yeah, exactly. So, and if a client's gone direct and they've, you know, perhaps they've done their own research or they know someone and they've gone direct to a single company or a single company adviser, and they've had a bad outcome, they walk away thinking, "I'm uninsurable." But they haven't actually approached every company in the market, and they may well be insurable.

Dan: Yeah, for sure.

Rory: Certainly some people may not be able to get covered, but you want that peace of mind. And you can only really do that through an adviser because they've got access to all the eligible providers for you.

Dan: Absolutely. Hypothetically, you could just go door to door. There'd be no benefit to you because as an adviser, we don't charge our clients, we get paid in commission. The commissions aren't hiked because they're working with an adviser.

Rory: It's actually cheaper for the insurance companies to use advisers, to distribute through advisers, and it's better for the client. I think even insurance companies would say that because of the fact that there are different offerings in the market, whether it's health or a product, we want competition and options. So there's really no downside to using an adviser.

Dan: Yeah, for sure. I was also just wondering, because we talk a lot about advice and being advisers and what that process looks like. It's unique for every single person. So people have insurance. Sometimes they're underinsured, but sometimes we meet people that are maybe a bit overinsured, in terms of what the actual financial goals are or the obligations would be if something were to happen. So have you ever recommended anyone to cancel their policy or significantly wind down their insurance?

Rory: Yeah, 100%. We certainly have conversations whenever taking benefits away, so long as the client's happy. Usually we're just saying, "Hey, do you really need this?" It could be life insurance and the client might be retired or nearing retirement where they've built their wealth. If they pass away, they pass away, that's a given, right? They might be better off putting that $500 premium in their pocket. Basically, there's a cycle, right? The younger we are, the bigger the potential financial impact, the lower the probability we are of claiming, which is good, but if we are one of those unlucky people that ends up in a claim situation, your loss early on is potentially huge. When we're younger and we talk about first home buyers, debt's high, eventually people start a family, that brings a new element of risk where it's not just you and your partner. There's a dependent now, and what does that look like for the household if something happens to mum or dad? Kids get older and eventually go to university, leave home and become less dependent. Debts come down, so our need for insurance reduces over time, and in an ideal world, that's how we want to do it – insure ourselves large when we're younger and then taper it down as we get older, with the exception of a medical policy or a terminal illness policy. There are some things that we might hang onto for a bit longer.

Dan: Oh, brilliant. Well, it's a good day when you get to cancel your life insurance.

Rory: 100%. That's pretty much like your retirement – financially independent.

Dan: Absolutely. And actually, on that cancelling of policies though, there's another side where people cancel their policies when they still need the cover, but they are struggling financially to afford the cover.

Rory: Yeah. People need to make changes to their expenses when times are tough, and that's just a given. Any change that has a financial impact should always go hand in hand with a discussion and some advice, I think.

Dan: Yeah, 100%.

Rory: There are ways of saving money, keeping some cover, and sometimes a little is better than nothing. Just highlighting the area of risk, right? Because it might be something left over that needs to be looked after, but everything else can be taken. So it's reduction, and then maybe having some left over.

Dan: Absolutely. Rory, this has been bloody awesome, man. I hope the viewers, the folks at home, are as thrilled as I am about insurance, man. It just gets me so G'd – all these benefits and what your journey's been. Because like you mentioned, you've had a hell of a ride up to where you are right now, working with us here at Blueprint, and it's just something you should be very proud of. So, we're stoked to be doing this with you.

Rory: Oh, thanks mate. Yeah, I'm stoked to be part of the team. Absolutely, man.

Dan: So we've got the Fast Five. We ask all of our guests. We do it together. So I'm flipping this one. This is a solo for you, but everyone's dying to know the answer to these questions. So just to know a bit more about who we're dealing with here. Rory, who's your most influential musical artist, if you had to name one?

Rory: For me, U2.

Dan: Oh wow. Was it because you got that free album on the iPhone on Apple Music?

Rory: No, actually, so I said earlier that I lost my leg when I was three years old. When I was two years old, I got third-degree burns from a jug.

Dan: Oh my gosh.

Rory: I was trying to wrest my bottle from a jug because that's how they heated it in the olden days. And so I tried to wrest my bottle and had third-degree burns. Anyway, an uncle gave me a Walkman with the Joshua Tree album on a tape.

Dan: Oh, no way.

Rory: And I think just constant – it's ingrained, mate. And you've got a Walkman with one tape, and you're two years old. It's all you can listen to and, yeah.

Dan: Well, I suppose that's early days U2 as well. It's like you are, you know, you've grown up with them a bit, haven't you, as they've developed as an artist.

Rory: Oh, that's right. It's U2 in the eighties as well. So, it's the OG.

Dan: Yeah. So, oh, that's so interesting. U2. I just love it. Absolutely love it. Bono. So it's a choice between rugby and cricket for yourself. Obviously there's athletics, but I know you're a big cricket guy. So who's your cricket greatest of all time?

Rory: Look, man, if they're Australian, we've got a problem. Look, great at the GOAT. I'm going over the test, man.

Dan: No way.

Rory: I'm going, mate, Shane Warne.

Dan: Yeah, Warne.

Rory: I'm going Warne because he's...

Dan: But you bowled quick ones, didn't you?

Rory: Oh yeah. I was pretty slow. So pretty slow.

Dan: What's with the leg spin?

Rory: I just think he's such a great lad, you know, and such a great ambassador of the game as well.

Dan: Yeah, for sure.

Rory: Into his retirement, he really was. Such a shame that he passed away. I hope he was insured, because that's an early one.

Dan: Obviously we're crazy about real estate here at Blueprint. What do you fancy in terms of your investment property – into your long-term property holding or do you like your short-term property trading?

Rory: Good. Oh, you mean, flip it and flip it. Flipping, yeah. Flip it. Yeah, that's right. No, I think probably long-term hold, eh, yeah.

Dan: So you see just the other assets, you see value in holding over time, letting inflation do its thing.

Rory: Yeah. I'm not a real estate mogul at this stage, but one of the first investment books I read was Rich Dad, Poor Dad, and his sort of formula.

Dan: That's a great book.

Rory: Yeah. And it might actually – I might be confusing his book with a property seminar – but there's a formula of, you know, you get three cash cows, cashflow positive housing, and your one grower – capital growth.

Dan: Yeah. So where's that area that you like to buy in?

Rory: Tokoroa. Three in Tokoroa. And one in Papamoa. Or Auckland. It's definitely a growing market. Tauranga – massively pumping off. Really good property there as well.

Dan: When we're doing a takeaway, Indian or Chinese?

Rory: Indian.

Dan: Mara butter chicken? Not even a conversation.

Rory: Not a mara butter chicken. I'll take that butter chicken and I'll give it some Indian hot.

Dan: Okay, you'd actually go hot?

Rory: Yeah, yeah, yeah, absolutely.

Dan: Oh, wow. Yeah. Ring burner. Okay, because this is actually a really interesting one. It's something that you love to ask our guests. What advice would you give yourself 10 years ago – talking to Rory 10 years ago?

Rory: Yeah. God, I thought about this a little bit. Get your shit together.

Dan: You'd give yourself a hard word.

Rory: Get your act together. You would have been a full-time athlete or training most of the time, right, 10 years ago. I would have loved to have been a little bit more disciplined. Don't drink. Eat right, go to bed, go to sleep, get up early, invest in yourself, read books, listen to people that have done it before. I think I could have thrown further as an athlete if I'd done that, although I did okay. But I just think you're always going to look back and say you could have done more, right? I think there was some juice to squeeze left there.

Dan: I think so, but so long as we are better than we were yesterday.

Rory: But that's the whole thing of getting your shit together, you know? Keep working on yourself. You said a great quote the other day, "The harder you work, the luckier you get." So true. You do work really hard and it's a great quote. You get out what you put in.

Dan: For sure. The tough thing is, especially being younger, you have to go through many cycles to realise that you don't see the gains until two or three years down the track.

Rory: That's right. The one with the delayed discipline.

Dan: Yeah. Delayed gratification. It's a bit like the hold and wait on property. Investing into a mutual fund – there's a compounding effect that goes with small actions repeated regularly.

Rory: Yeah, for sure.

Dan: Well, cheers, Rory. This has been such a treat, man. And I can't wait for our next guest.

Rory: Yeah. Right now, we're not going to leak who that is, but...

Dan: Lips are sealed. Stay tuned. Cheers, mate.

Rory: Cheers, Danos.

Dan: This is catching on.

Rory: Heh heh heh. Bucket list. It just feels so smooth, man.

Dan: Man, that was good. You interviewed me real well.

All right, guys. Welcome to this episode of the Blueprint Podcast. This episode is called "Blueprinted" and I'm very happy to be here with my co-host Rory. First ever episode as a co-host.

Yeah, this is the maiden voyage, eh?

Absolutely, man. Could be the Titanic like you said this morning, but we'll see how we go.

Nah, super excited.

We're lucky enough to have Jono here, our resident KiwiSaver adviser. The reason why this episode is so exciting is because we offer a variety of services here at Blueprint: mortgages, insurance, and KiwiSaver investment solutions for our customers.

Jono has got such an interesting story as to how he became our KiwiSaver adviser. Rory and I are just here to learn and listen and let our listeners know what great work you're doing for our clients. Thanks so much for coming on. They're going to learn very soon all your achievements, but obviously you've been an investment adviser for many years, managed some pretty big portfolios with some big banks.

But we're going to crack into that very shortly. So mate, thanks so much for coming on.

Excited. Ready to get into it.

Awesome. Yeah, no, it's brilliant. Guest number one. And it's awesome to have somebody in the house.

So I suppose, just to get to know you a bit, Jono, and for the listeners, give us a bit of an insight into your beginning and your lead into finance and how that all came about for you.

Yeah, sure. So for me, I actually just fell into finance to be honest. It's nothing I really went for growing up. I was actually really into sports. I really enjoyed my basketball and that led me to do sports science as a degree at uni. Back at school I wasn't really an academic type person.

I was good with numbers, maths and physics, but outside of that, it was sports science. So that's what I studied. I went away, did some travels, came back and then I realised, what am I going to do next? So I didn't really have a plan.

If I go back to uni there was one paper I did in particular, it was Accounting 101, and it was actually about KiwiSaver, funnily enough. And that paper was the one I got the best grade in. And it was all about KiwiSaver—foreshadowing, yeah.

So in a way it chose me and I think I'm meant to be in this space. I'm good with people. I like chatting with people. I like really helping people. And I think in finance, it's a really powerful way to do that. In order to achieve my goals, I get to help clients achieve theirs.

And I think that's quite empowering.

100%. Yeah.

So that's how it came about. Applied for a job at ANZ. That was the first job that I took up. It was a call centre job. At the time I was working at Pak’nSave. I was trolley boy. Didn’t really know what I wanted to do, but going back to my Accounting 101, finance, numbers, people, I was like, ah, I'll just apply.

Yeah. So yeah, I applied. I went to the interview. There were three of us there on the day and they went through a bit of a role play. I had to pretend I was a banker for the first time, which was quite scary and intimidating. They gave me the scenario and I had to come up with solutions.

I had to pretend that I was picking up a call. So I pick up this call and I actually took my hand to my face. I bring it to my face and I was like, “Welcome to ANZ, you're speaking to Jono now.” The interview people just started cracking up.

And offered you the job.

I was going to say, that probably got you the job. But I actually left and I was like, man, I'm never coming back here again. They're laughing at me. I clearly blew it. And no, I got the call back. I came back and apparently they hired one out of the three and it was me.

The other ones were definitely more qualified and had more skills and experience. But I think maybe I connected with them quite well. Then jumped into the banking side.

It's a good place to start a career in finance, at the bank.

A lot of people get a leg up in the banks.

Yes. And the call centre is one of the perfect starting points. How did you launch from there and evolve in the bank?

Absolutely. The banking side accelerated my learning curve. When I was at uni, I racked up all this debt. I was spending money to learn—student loan and other stuff. But yeah, that's probably why it took me four years to do a three-year degree, but I managed to get there in the end. I viewed it as a learning centre. Now I was getting paid to learn. Being in the context, that's super powerful.

Yeah. Real powerful. Like I was able to take hundreds and hundreds of calls all across the country. The initial role was just general banking, understanding general products, and then it moved into lending—so outbound, inbound calling home lending. I started to help Kiwis get into their first home through property.

That's when I started to learn more about equity and leveraging property to build your wealth. I was able to help Kiwis do that. At the time, to be honest, I didn't believe that I could buy a home. Yeah. And a lot of Kiwis out there are probably feeling the same way.

But by actually being in the industry and learning these things, I was able to create a plan for me and my partner to buy a home. And I think just that knowledge from the banking end and helping clients was real empowering.

Change of perspective, eh?

Yeah, dead right. Yeah, absolutely.

And then from there, I moved into business banking, did business lending, so helping small to medium-sized businesses as well, which was super challenging. I did that during COVID and there were lots of clients going through difficult times. Basically, everything I learned was scrapped because now it was all judgement.

Judgement lending. It was like trying to help people in need who were struggling and going through a tough time. That was a difficult time. But yeah, I did about five years lending-wise. Wow. Learned heaps, really passionate about it, and then I decided to take another challenge and pivoted into private wealth.

That's where I started to learn more about markets, how monetary and fiscal policy works, and how the different asset classes work. And then, yeah, I was just getting real fascinated about all of it. It was like a multiverse.

Yeah. That's incredible. In terms of getting into wealth, I imagine in the bank you would have been young for that area, which is a bit of an old boys club.

How did you go slotting into that environment and was your age a barrier or not?

Yeah, great question. It did become a barrier. But there was still a period where I was able to learn underneath advisers because there was just so much to learn.

I was learning this while there was a COVID crash. Portfolios were going backwards, share and bond markets were going backwards. And like, I wasn't even ready to be a front-facing adviser. I was lucky to work under experienced advisers that were much older than me.

Yeah. With a wealth of knowledge. And they basically coached me. And that was really cool. I managed to do my studies. I got a whole lot of experience working with high net worth individuals trying to grow their wealth through active management. It did get to a point where age was a factor.

And so just the nature of the clients we were dealing with being more towards the established wealth, high net worth, money with senior, old money. Yeah, they've sold their businesses, they've cashed up, they've sold their properties, they've got all this money. And I guess it's really hard to talk to a really young person about finance when they've lived much longer than me and probably seen a lot more than myself.

So do you think your age was something from your colleagues that they were saying is a barrier or did you get that feeling from the clients as well?

I don't think it was from the clients. I think it was just more the look—ANZ Private Wealth.

It makes sense to make sure that you've got someone there that has all the certificates, has all the knowledge, all the experience, and that is handling that pot of money. I ended up deciding to pivot away from banking, and the bank really helped me with that.

They supported me. They said this is a really good move just to get that experience. So I worked with a specialist investment firm called NZ Funds. They took me on and I was eager to learn. I learned so much from being there. I was overseeing a portfolio of $400 million of Kiwis’ funds.

That's a lot. So it was just having those conversations but being that main adviser that the clients could lean on.

Absolutely. I think going back to what you said initially about your first call centre job—that's really profound and I think it ties into a lot of what makes a successful financial adviser.

You said “getting paid to learn.” I don't think I've ever heard anyone say that about a job.

Yeah, that's right. And I really think the successful financial advisers have such a genuine, keen interest to learn about people and learn about how they manage their money so they can give better advice.

You talk to people all across the country. You're talking to people in Auckland, regional New Zealand, farmers, industry workers, and you're learning how much they earn and what their financial future looks like.

You can give them really informed advice about where they're going financially. You know what their career range looks like in terms of max income earning, and you can give them some really sound advice. Your ambition to keep learning throughout all those years you spent at the bank and NZ Funds—it sort of turned you into the adviser you are today, where you really know your stuff.

Yeah, that's correct. Yeah. Honestly, one of the main reasons why I went into private wealth is I wanted to learn how these people acquired all this wealth. Yeah. How did you get there? There's something that I don't know.

If I was to go back to my own sort of family, they weren't financially well off. They had good incomes, but they didn't know what to do with it. Yeah. And they didn't know how to invest, save, grow wealth, things like that. You don't have to know how. Yeah. So it's like a medium financial literacy.

Yeah. So I just wanted to learn: how are these people doing it? And then how can I apply that to my own world and also how can I use this information to help others? That's why I think KiwiSaver is so special. For me, I have a real opportunity to help people get into their first home.

I believe everyone should be able to purchase their first home here in New Zealand. But also when it comes to retirement as well, like having the retirement you deserve. A lot of people aren't thinking about it. I'm having so many conversations and it's the last thing on their mind. KiwiSaver is actually at the bottom of your list. Yeah, and for a lot of people it could be a million-dollar decision.

Absolutely. And getting into those conversations, it's life-changing. That's magic. So you went to ANZ and got paid to do your masters in financial services—from the call centres to lending to private wealth. Then you transitioned to a specialist wealth firm in NZ Funds, managing $400 million.

Overseeing, yeah. So fund managers managing.

And in that time you've accumulated a lot of knowledge, you've got a passion for the industry, and now you're with these Blueprint Finance guys, a boutique. How did you end up from the big commercial to an advisory business like Blueprint Finance?

I think for me, I'm always trying to put myself outside my comfort zone. It got to the point at the bank where I started to get a little bit too comfortable. That's why I pushed the investment specialist role and then coming here I'm noticing now the conversations are even deeper because I'm not limited to any one provider.

I'm no longer handcuffed. I can literally give advice that's tailored to each client. I can make sure that the advice that I give does meet their KiwiSaver preferences, their goals, that matches their risk tolerance, and what they're trying to achieve and how they're trying to get there.

Because although every KiwiSaver provider has their own conservative fund, growth fund, aggressive fund, they are all slightly different and tied to different goals. A great privilege for us in New Zealand is that you've got so many options, but that's why you have to go even deeper because you can really pinpoint what a client's objective is and then what that right fund is, right?

Yeah, that's crazy. There's 38 providers, which is massive—like 10 entered in the last sort of 10 years into the market. Some have gone, there's a few acquisitions, things like that, but KiwiSaver is one of the fastest growing bits of finance, like it's really growing really fast.

It's got to be the fastest, surely.

Absolutely. And I would say in the next sort of 12 to 13 years, once KiwiSaver has been around for 17 years, the average KiwiSaver balance will be $100,000. And I think at that point, that's when people are going to start to wake up and go, “Hold up, this is actually quite a lot of money here.”

“This has now become one of my biggest assets. What am I doing? I might need even more specialist advice.” So those that are getting the advice now, and getting it set up now, will have much higher balances come 10, 20 years’ time. There's so many options out there, eh?

With KiwiSaver, it can be viewed as almost like a set-and-forget, because it is building wealth and investing—and particularly KiwiSaver where it's locked funds. It's a long-term game. With so many options, the value of advice is critical. We were talking about the wealth gap and the 30-minute, half-a-million-dollar conversation.

You've got an example of a client where your advice makes a huge long-term difference to their wealth.

Studies have shown that working with a financial adviser does lead to better outcomes. And this is a pure example. So this client during COVID switched from a growth fund—they were at one of the banks—and moved to a conservative fund.

Why did they switch?

Main reason: the markets were falling. We had a decline of 30%. Obviously COVID happened, borders closed, businesses had to close their doors. Lots of uncertainty, and markets don't react very well to that.

Share markets dived. That was probably the first time for a lot of Kiwis where they started to realise that this KiwiSaver is not a savings account. It's actually an investment. KiwiSaver is probably not the right real name for it because it's not a savings account.

It's the value of the assets you own. So this client switched to a conservative fund because they thought that's the right thing to do: “I want to protect my money.” Fair enough. This client's really busy as well. So really busy, working really hard, has a very high-end role.

Yes. And so KiwiSaver is, again, one of the last things you want to think about. But big balance, six-figure income, so quite meaningful investment. It's been four to five years since that COVID dip, and what we've seen is that markets have fully recovered.

And that's what generally happens. Markets do go up more than they go down over time. Share markets have been around for over a hundred years and that's been a reliable way to build long-term wealth. I was having a chat with this client and one of the first things is just making sure you're in the right fund.

Conservative is definitely not the right fund for this person.

Yeah.

And so I got into that conversation, but one of the providers actually has this chart that shows the differences between: if you switched at COVID, if you stayed invested and stayed the course, versus if you stayed invested and contributed more.

The person that stayed invested and contributed more grew a lot faster.

That's right. The ones that switched were worse off financially. There are reasons for that—obviously you're switching away from growth assets, like your shares, listed properties. These assets go up and down quickly.

If you're selling those investments, you're crystallising that loss. You're making it permanent. You're moving away from growth assets, which are considered more risky, to more stable conservative investments like cash and bonds.

These investments provide income through interest coupons from bonds.

Yeah, so when the market fully recovered, these sort of assets don't reflect that. So that's why the client missed out. One is, when I have this conversation, it's really educating the client around the investment.

But the powerful part was because KiwiSaver has been around for a long time, this client was in the conservative fund—over the last 10 years it’s done a 4% return. This client had around $250,000 in their KiwiSaver.

I talked to the client about the Rule of 72. I use it as a bit of a guide, but basically there's two inputs: timeframe and interest rate. I said, okay: 72 divided by 4—4% return in a conservative fund—that takes 18 years for your funds to double in value.

The crazy thing is this client had 18 years to run to 65. So it's almost the perfect scenario. It was crazy.

Yeah. And then that’s her investment horizon.

That's her investment horizon. And that's still 65. And you’ve got to remember, 65 isn't the finish line. You still have 20 to 30 years in retirement for the money to last.

So that's a whole other conversation. But by making sure you switch to the most appropriate fund—which in this case, once I'd done the risk profiling and had a chat around how the client feels about risk and risk capacity, the growth fund has typically done around 8% after fees, after tax, if I was to round it down.

So 72 divided by 8—your funds double now in 9 years. So you go from $250k to $500k and then from nine years, doubling again, takes you to 18 years. Now you're at age 65, but your fund balance goes from $500k to $1 million. When I said KiwiSaver is a million-dollar decision for a lot of Kiwis—it is.

Yeah. And I'm not even factoring employee contributions, employer contributions, government contributions, that's purely investment returns. This client may have missed out on $500,000. Which is crazy, right? And it's easy to change funds, but the impact is bigger than the ease with which it is to make a decision like that.

And markets react to news, to good news and bad news. It’s an emotional thing for people when they see their retirement dipping, to then go and make a decision on their own without getting advice. The moral of the story is, don't make those decisions without someone in your corner.

Absolutely. That's the value of Jono in your corner. He's a mobile phone call away, and you stay the course. You need someone to say, “Hey, stay the course and actually hold the line. Actually put more in.” It was the best outcome. You were right. We are driven by emotions. We're human beings. If you look at behavioural economics, we don't view gains and losses equally. What I mean by that—flip a coin, heads or tails: you earn a hundred dollars or lose a hundred dollars. Most people wouldn't take that bet.

Yeah, for sure. Risk/return, it doesn't make sense. It's only when you get to about 200 to 250: you win 200–250, tails you lose a hundred—that's when people start to take the bet. So when people see their funds drop, it actually hurts. It's twice as painful as the equivalent gain. And that's the crazy thing.

Just purely on emotions, people can make knee-jerk reactions based on long-term objectives. That's why, always make sure you touch base with your adviser so that we can make sure that this is a long-term objective. You've got easily 10 to 15 years plus to run.

You can ride out short-term volatility. Markets take on average three to five years to fully recover. Sometimes it takes longer, sometimes less, but you've got the time and can benefit from purchasing these investments at cheaper valuations. Stay the course. This is the financial education piece that, working with an adviser, you'll be able to learn while you earn.

It's very hands-off, KiwiSaver, for a lot of people. As a guy who's made countless poor financial decisions, going back to that client with that COVID switch—I know so many people who did that. I'm not a KiwiSaver adviser, but I was in touch with my mortgage clients at the time and they saw the balance dropping and switched it.

But then for their fund to not even reach out and have that conversation, because they didn't have an adviser—that's really tough, right? Because that's a painful learning now for the client. They'll never make that mistake again, especially if they're still in that growth stage of their KiwiSaver journey, under the age of 55 or 60, depending on their goals. When you look at an aggressive growth or active growth chart, it says 10% return, right?

It's trying to get a 10% return minimum. That's factoring in massive drops from things like natural disasters, pandemics, global conflicts. That's priced in, so it's designed for you to remove the emotion out of it. And for that specific client, she's super stoked to be signing up now.

And thank God that she did, because how many more years would she have just gone on the conservative?

Oh, I don't know. That's the thing. Missing out. The information we give today is general to certain situations—obviously seek advice for your personal situation.

This is not financial advice. For example, Dan, when you were talking about COVID, there were a lot of clients that were looking to purchase property during that time. Markets fell 30% and they lost 10–15 grand off their KiwiSaver, which was their deposit.

That's right. And because they didn't have an adviser or someone to lean on, an adviser would have made sure that we protect your deposit. We're in a defensive or a cash fund. Yeah, there's five different funds. And so we want to switch and make sure you're in the right fund. The right move was to try and protect the capital there.

But those that have a long timeframe—it’s about growing the capital as much as possible. You can't achieve a fully funded retirement without investing in growth assets and taking some risk.

Absolutely. Yeah. But yeah, it's all personalised to your goals. It depends on what type of return you're trying to achieve. It's not all about trying to get the highest return and taking the highest level of risk. If you only need a risk/return profile that might achieve 4 or 5%, let's go with that. There's no need to take any more risk. Why take the additional risk when 4% achieves your goal?

So it's all tailored. There's a time and a place to be conservative, aggressive, or balanced depending on your stage of life. We've been talking about market factors and how they play on emotions, decision-making and advice.

So I sit across from you, or behind you, on a day-to-day basis and you talk about LVRs and OCRs and buzzwords.

DTI, interest rates.

Yeah. That's a landscape that's changing and how does that influence you and your advice and how does it influence your clients and what you do on the mortgage side of things?

Thanks so much for asking.

You were saying there's a time and place for every KiwiSaver model—the conservative or the active—but knowing you, you're always aggressive.

It's called Bitcoin. It's called fully encrypted.

Yeah. We had a poker night the other week and this guy took all the chips home. He probably went all in most of the time.

Yeah, exactly. So he's doing the same thing with his KiwiSaver. Every underdog has his day.

No, I was just making a joke. Obviously, Rory's got a balanced approach. He's in active growth at the moment. Then will peter off to conservative. That makes me question, mate—

It's such a good thing to bring up, because having lunch with you guys is such a treat, because I love learning about your industries. I'm not an expert. I know a lot about insurance and I know a lot about KiwiSaver—I like to think—but I don't know a third of what you guys know, and that's why I love sitting down, picking your brain, exchanging battle stories of how we're helping clients. I suppose how the mortgage is different, exactly like you guys are saying—we're in an ever-changing landscape.

Yours is changing a lot in terms of the markets and yours is really pretty consistent, but there are some big industry changes every now and then.

Totally. Our biggest change is on premiums. Price is changing.

Yeah. And that actually correlates to what you guys do when interest rates go up and there's a cost of living crisis and inflation. At the same time, insurance premiums go up with age. People are looking to pinch pennies somewhere. So there's always actually ongoing conversations:

“Can we take this cover down? How do we rework your insurance cover as well?” But I suppose on the mortgage side, keeping up to date with all of the product changes from different banks, the OCRs, the interest rate changes, and keeping your clients informed—

—so Dan, we've talked about our different disciplines. I actually like to refer to them here as the three pillars of financial success: your wealth, which we've touched on; your house, which is incredibly important; and your—

Health as well. Or risk protection, as we call it in the industry. How have you found having KiwiSaver and insurance alongside you and how's that synergy between what you do in terms of financing and risk protection?

Honestly, it's an absolute blessing to be able to be in a position, especially with you two fellas, to provide those services as well.

Because I've been quite a while in the game, you guys know my whole career. I've been an adviser—nine years ago when I started. It was a very long time before I established any sort of genuine relationships where I could be able to fully cover off a client on the insurance and the investments as well.

And it's crucial. It's absolutely crucial because although they might seem unimportant, especially on the KiwiSaver, people can't see the vision yet. Now that we can see, for people in their thirties, how big some of these balances are actually going to get and how important they're going to be to supplement your super—when you get to retirement age. And also on the insurance. It's just the most important thing because not only is it a conversation that we really want our clients to have, it's an obligation. If we're sorting out a client's mortgage, we're getting them the best possible interest rates—we're giving them really good advice on the loan structure. That's a third of the job, isn't it? They've got the mortgage sorted. Now the mortgage is pristine. I've put a bow on it. It's done. But you're taking on a lot of risk now. You're in a position where your financial obligations have changed.

You're committed to paying rates. You're committed to paying this mortgage. It's a privilege to have a mortgage. You're going to pay that off and you're going to pay the house off. Then you're going to have a house for your family.

That's an asset that's going to appreciate over time. But if that doesn't go right, we need a backup. We need the KiwiSaver and the insurance. It's a natural bridging of the conversation to have you guys come in with that check-in. Obviously it's an obligation on the insurance side.

And then it's an obligation, right? You need to have a discussion with your clients about risk protection. “We're taking on an $800k mortgage. What's your plan if you can't pay it?” “My parents have got a million bucks in the bank, sweet as.” For me, that's not the case. And I'd say for most Kiwis, it's not the case.

So let's make a plan. We had a recent client. It's very common. All our first-home buyers have a chat to you guys, even if they're clearing out their KiwiSaver, especially if they're getting their first home. Most of them don't have any personal insurance, especially ones without kids.

Just them being able to have that conversation openly and candidly with someone like yourself, no obligation, just understanding what role insurance is going to play in their life—because even if they don't take a policy with you right now, I guarantee you, once they have their first child or once they get three or four years down the track, they're going to know, “Hey, I actually need that medical insurance.”

Because if something happens to me and I need some serious help, there's no real plan. So it's super, super rewarding. But for me, it's more so like a relief to have some really competent guys there helping with those products.

And when I speak to your clients, there genuinely is no obligation. It's a discussion and an education. You need to say, “Hey, it's time to have a conversation about life or health insurance.”

But when they have that conversation, it's not compulsory. So that's a misconception actually. Often it gets put upon people that they need to have life insurance to take a loan. They think that they do, but they don't. The bank will require you to insure your home.

That's right. They want to protect their asset.

But in many countries, it's an obligation to have personal insurance if you're getting a mortgage. And in some states in Canada, you actually need mortgage protection insurance.

It's a very soft and educational approach to the advice that we give. It's really important that the personal risk protection is for the client, so that if they have a hiccup along the way and are off work for a period of time, they can maintain their mortgage obligations and keep the roof over their head.

Yeah, dead right. So it's not for the bank. It's for your partner. It's for yourself. It's for your kids. That's why you take personal risk protection. Obviously medical is always pretty good. But I suppose that just segues into talking a bit about the value you've added here in the office.

It's been great having you in, servicing these clients. How have you found going from being an independent adviser to being the Blueprint cornerstone of the risk protection side of things?

Oh man, I've loved it, to be honest. It's been fantastic. In my brokering career, I've always tried to align with like-minded mortgage brokers because buying a home or refinance is one of the big triggers for having insurance.

That goes hand in hand, those relationships. But there's a big difference to being under the same roof and colleagues—one team, one dream. There's a certain amount of efficiency that comes with it. We share similar information and know each other's clients. Whether I'm referring you a client, or Jono is referring me, or you're referring Jono—whatever way the information is flowing, we've all got the same data.

And that makes for a really good client experience. You've also got more touchpoints. So you have your 6-month, your 12-month, your 18-month refix review. You've got your annual insurance review, your annual KiwiSaver review. There's a lot of touchpoints and there's a lot of opportunity for clients to put their hand up and say, “Hey, I need to do something.”

“I need to change something around my finances.”

Yeah. And lots of times people don't get that and they drag the chain a little bit. “It's too hard, I've got to go into the bank or call the insurance company.” Whereas with us, we're a text message away or an email away. They might ring you up on a Sunday night because they have to, about their refix—talking to you and then they mention to you, “I need to sort out my insurance because of this,” and then you go, “Hang on.”

Exactly. It's awesome. Everybody in this office is like-minded and it's a client-first approach. Similar values and life stages as well.

That's the most important thing for me, I think, is that everyone's got the same values in terms of how to deal with the client. I can guarantee you if you put any of these guys in the same situation, they'd all play it the same way. And the client's getting a similar experience and a similar level of service across the board.

Which I think is really cool.

And we do have a bit of a success story from today.

Oh my God. Mr G. Yeah. He's a client. It actually all happened today. This is going to be one of many case studies.

And here at Blueprint, look, we're not breaking the mould. We're not doing anything new. We're just giving really good financial advice. But we have invented a new word. And it's called—it's actually, I suppose it's a past tense word, isn't it, about someone or something that's happened to you?

And Mr G is a client of ours and he's been “blueprinted.” If you're wondering what that means, it's super important to us. It means it's a client that we've met through the mortgage. We've refinanced him. We set his mortgage up really well. Happy with that. He is. And he's actually said, “Look, I've gotten an off-the-shelf policy, insurance policy online.”

Thank God you mentioned something because things might not be set up properly. Referring to a chat with Rory—tell us a bit about your relationship.

It was a smooth process. One of the great things about working as a team under this roof is the trust that the client builds up, which this particular client had built up from the lending team.

They came to me already having had a good experience. It was a really smooth process. The guys collected the existing insurance policies set up online. And they came off the back of this particular client actually leaving his role where he had insurance.

Yeah. And then I think he copied it—

Through work, yeah. And then I think he went online and copied and pasted his benefits.

—and got himself covered, which some of it was good for purposes, but there were some gaps and there was a bit of a quality issue in some of the products. So we reviewed it and took him through an advice process and showed him the difference and set him up with his new policy.

It was super streamlined because we're sharing information with his consent, of course. He's with us.

Yeah, of course. Yeah. Yeah, that's right. And so, no, really good experience for him and off the back of that I said that we had a fantastic KiwiSaver adviser at hand.

Oh my gosh. This guy. I knew about his investment side of things—not just in New Zealand, but some international stuff. So I was able to myself have a bit of a conversation with him and with the little bit of knowledge that I have from Jono, because I sit side-by-side with him.

And you're like a sponge on him, eh?

Absolutely. I'm learning lots from you too. He was very keen to talk to Jono who put the final Blueprint stamp on him, basically.

Oh my gosh. So the finale—tell us, you must've felt a bit of pressure on yourself.

Because when something like this in the office happens, everyone's talking about it at the coffee machine. Everyone's saying, “Are we going to get the Blueprint? We're going to get the trifecta.” Even Mr—

Mr G was equally as excited because he just thought the idea of a one-stop shop—he was loving it, because we were thinking about your insurance policy. It was like he was having like... but we were like, “Let's get it sorted. Let's make this the number one thing for two weeks and you never have to think about it again.”

Yeah. No—we protected his wealth and now we're looking to grow it.

100%. That's the goal. Having a conversation with Mr G—fascinating person, super onto it. We didn't actually change the provider or the strategy, but just having that conversation around, “Are you in the right strategy for your goals?”

Making sure we did the risk profiling and KiwiSaver preference questions and found out that this provider works really well. I did come up with some other options, but it's something that we can have a discussion with. So moving forward, I think what's really intrigued him is we're going to get in touch every year.

I'm going to do quarterly updates because he's quite busy. He doesn't keep up with markets, but he wants to know what's going on. So quarterly updates, video newsletters, making sure you're not missing the government contributions, making sure that you're on the right PIR rate—all of these hygiene things to make sure that everything is working smoothly. Over time your risk tolerance can change. Your goals can change. KiwiSaver is becoming actually a lot more—there's a lot more things you can do now. You can customise, you can go multi-manager approach.

So you never know—your goals could change and there might be something out there that's a better fit. But we'll keep in touch.

Yeah. And we're helping with the Aussie super transfer.

Yeah, that's brilliant. And he was an intelligent client, like he was pretty switched on. And like you said, busy, got a family, he's got a busy role, but made the time to have the discussions with each respective team member and soaked up the information and appreciated the advice and trusted the process. It was really smooth and efficient for him and for us.

It was good. It was real good. I'm looking forward to helping more clients.

Yeah, absolutely. Even with Mr G, I actually didn't write the loan. I didn't help him with his mortgage, but our teammates David and Jack got him sorted. This whole process is so interesting because they almost missed out, and he was previously helped by an adviser who was in a circle of friends. We obviously would never talk down an adviser, but from Mr G's words himself, he wasn't getting the service that he needed. Right, and with any service business, if you don't get the right service, you should leave. We almost missed out on helping him because of loyalty, but the way those boys worked to provide him such a good offering and take care of him and say, “Look, this is going to be us for the years to come.”

He obviously worked with us because the savings was there. To think it went from that, to almost not working with him, to him being a fully Blueprinted—first Blueprinted client.

Yeah. Yeah. Yeah. It was nearly the one that got away.

Jack was walking around the office in tears, playing Michael Bublé, thinking he'd lost his deal, but thank God he didn't. And I'm sure next client event, Mr G will be there and we'll get a picture with him and it's just going to be a very happy time. Hopefully everyone—

Hopefully we could bring him in for an interview. That’d be great.

Yeah, 100%. Get him on the pod here.

Yeah, absolutely. Jono, cool. This has been such a cool chat. And this is definitely not the last time that Rory and I are going to have you on, because your insight into KiwiSaver—next question, Rory.

Mate, I'm not the basketball guy in the office, but if I were to join LeBron James—who's the GOAT?

I might lose some clients or friends, but honestly, hands down, LeBron James.

Controversial, man.

If you've been following the Olympics, the guy's—turning 40 and he's still the best player.

Do you think he was the best player on that team?

Best player? Absolutely. Yeah, absolutely. He was close to a triple-double, getting everyone involved, facilitating everyone, rebounds, blocks, taking the charges.

So it's not even a debate?

No, not even a debate. I've been following LeBron since he's been in high school. I just think he's a massive talent. I think a lot of us will miss him when he's gone. So I'm hoping I can go over and see him. For me, it's LeBron.

Bigger, faster, stronger. Better.

I think there's always someone else who's going to come along. This is a big misconception that people get—this idea of being irreplaceable. I don't think anybody is. You could have said that about MJ. And then look at Jordan. Like, “There will never be another Michael Jordan.”

Moving on to real estate investment mindset. Our clients love talking about this: long-term holds or short-term property trading. What interests you the most?

For me, it would be long-term holds. That's where you're going to grow the wealth. We're thinking about doubling your money every sort of seven or ten years—that's what property has done. The growth rate might slow down, that makes sense, but yeah, short flipping is short money. But there are some benefits to doing that, and if you want to get some quick money, raise some deposit to buy your holds—yeah, it's a good strategy as well. So I'm looking forward to doing both.

Slow and steady wins the race.

100%.

Onto the most contentious subject. Favourite takeaway: Indian or Chinese cuisine?

Far out, I don't discriminate, eh? A bit of both.

Nah, come on.

I'm a seafood diet man. I just eat anything. I see food, I eat it. You guys had some cookies here today. I was munching away.

I'm also on a seafood diet. If I see food and it's a fish, I eat it.

Yeah, funniest podcast on the market. Dude, I am incredibly doubtful any of our clients or listeners have made it this far. That was just for us.

Honestly, if I was to answer that question—nothing beats a butter chicken. So Indian.

Yeah. 100%. I'm a huge BC fan as well. I've had the real thing in India but they don't make food like they do in New Zealand.

Quality of food here is just incredible. I want to do a podcast on your travels in India.

Yeah. Definitely. That'll be the hundredth podcast.

Last question. This is Rory's favourite question and I really like it too.

What advice would you give yourself 10 years ago—knowing what you know now?

I'd be 21. I'd be in uni, left school. I think for me, knowing what I know now, it's: don't believe everything you read. Think for yourself. And one of the big things I'm starting to realise more and more now is having the right people around you, the network. Even talking to my family, they had good jobs and things like that.

But if they had the right people around them, and provided that advice like we're doing today—yeah, how many people we're helping, how many people will be better off? Give it 10, 15, 20 years in the future, they're going to be super stoked, super happy, because we're setting them up.

100%. So for me, having the right team and having a plan and working the plan.

And this is what I learned—I quickly jump and have new ideas all the time. I just need to stick to something and just go at it. See it to the end. And that's what I'm looking to do here. Find your niche and then just go all in.

I just wanted to comment on that because I think a lot of younger people, young men or women, we don't actually have a plan. We don't have a mentor. We don't have someone necessarily telling us how to walk those steps. But having a plan and sticking to it and thinking for yourself—I think it's massively powerful and that's you mentoring your 21-year-old self there.

You don't need to know everything. You've got to leverage your networks. There's going to be things I know that you don't. Get on the phone and start talking to your friends, see what they're doing, what they're thinking.

I constantly send stuff to people and go, “Give me your thoughts,” especially people that think way different to me.

Yeah, for sure. Because every time I look at something, I think I'm right—until I get another opinion.

It opens up another can of worms. The reality is the answer is somewhere in the middle.

Yeah. If we can get as many people in a room and talk to as many people, the answer will be somewhere in the middle.

Jono, thank you so much for joining Rory and I this evening. Seriously, it's been such a treat and yeah, look, this isn't going to be the last time you'll be on.

So thank you so much. We're going to end off with a 2011 Rugby World Cup John Key awkward three-hand man handshake. One of these. Holy. That's the Blueprinted fist.

All right, cheers Jono.

Cheers guys.

Awesome, mate.