Do your homework
Those words are the mantra of many a parent wanting their children to do well at school, but when it comes to property Mahesh Joshi found it vital, writes Joanna Mathers. Photography by Jenny Siaosi
1 April 2023
Thanks to his research strategy Joshi was able to buy three houses, including the family home, in three years.
“Do your research”: it’s a tried-and-true property adage that underpins the success of many, including Mahesh Joshi. And the 38-year-old Wellingtonian’s research gave him a head start in property, enabling him to buy three houses, including his first family home, in three years.
But beyond the research, Joshi’s success was also underpinned by other factors: years of saving, life lessons learned back in his birthplace, India, and determination not to repeat the mistakes of others.
Joshi arrived in New Zealand to study culinary arts 12 years ago, and his family in India struggled to provide financial support. “I had to go through a lot of trouble to secure a student loan. In India student loans are not interest free,” he says.
Growing up in India, Joshi says he witnessed how bad debts could have a negative impact on people’s lives.
“My mum and dad had to sell our home because of other bad debts and high-interest loans, which resulted in finance companies chasing them for loan repayments,” he says. “These experiences taught me the importance of financial discipline and goal setting.”
Fast forward to 2015 and Joshi and wife Smita were both working hard and saving for a home of their own. They were living in an apartment with a friend to save money, and all their savings went towards the deposit on a family home. By 2019 the couple had a young daughter (Shreesha) and the money for a deposit on a house.
They did the sums and discovered they could get a $385,000 mortgage, so in February they put down a 10 per cent deposit on a turnkey in Newlands. Close to Wellington central, with settlement on the $525,000 two-bedroom home a year later, it was ideal. And for a year they saved as much as they could, and with the help of family were able to buy the home in 2020.
FIRST HOME GRANT
The family were also able to access a First Home Grant through KiwiSaver, which gave them extra money towards their home. And there was more help available: Joshi’s research revealed Wellington Council offered a rates remission of up to $5,000, freeing up more money. So, they applied and the rebate was given, which meant more money to put back into the home.
Excited about his discovery of the Wellington rates rebate, he spread the word around his neighbours at the 16-house development and many took advantage of the deal and were grateful for his help.
Around this time Joshi started listening to the Opes Property Academy podcasts and began to be inspired by the potential of property. He was also meeting broker/adviser Sebastian Pierce, who gave advice on refinancing to get more loans.
“Refinancing allowed us to take out a new loan from a different bank with better interest rates and terms,” says Joshi.
The inspiration gained from the podcast, plus the financial advice from Pierce, provided the couple with the knowledge and finances for their first investment property. And they found it just outside of Christchurch, in the town of Rolleston.
It was another case of “doing your research”. Mark, a friend of Joshi’s, suggested they look at a new-build development at Acland Park in Rolleston. The developers were offering turnkey packages for three-bedroom homes for $440,000. With just 5 per cent deposit needed, it was doable.
“The house had three bedrooms, two bathrooms, and a rent appraisal of $440-$460 per week,” says Joshi. But when the house valuation came back from the bank once the build was complete, it was $670,000. They rented it out for $520 on a one-year contract.
Joshi says an identical property in the development sold for $670,000 recently. It means they benefited from skyrocketing value growth in 2021, but it also showed the potential gains that can be made by new builds.
With good returns from their first two properties the couple decided to look for a new opportunity. The Dunedin suburb of Caversham is just 10 minutes from the
central city and has several new build developments and potential for growth.
So, they decided to invest in a 77m2 two-bedroom, two-bathroom townhouse, which was selling for $609,000. They paid a 10 per cent deposit in September 2021 and settled in September 2022.
While this is cash flow negative, Joshi is banking on capital gains and has it fixed at 5.39 per cent interest-only until August 2025.
They have also fixed their Rolleston investment property: 4.39 per cent until August 2024, again with interest-only payments, and it is cash flow positive. The family home in Newlands is also a good news story; since the purchase in 2020 the home has increased in value from $525,000 to $820,000.
‘Refinancing allowed us to take out a new loan from a different bank’
Joshi’s long-term goal is to build a diversified portfolio of properties that can generate a steady stream of passive income. “But the first of my immediate goals is to purchase a bigger family home, as my daughter is turning five in June and will need more space.”
He is planning to learn a new strategy, renovation, and will seek out opportunities to purchase undervalued properties that can be renovated and rented for a higher rate.
Research and due diligence, he says, underpin his success. This includes researching the developer’s reputation; the location and potential for capital growth; quality of construction and finishes; and any potential issues with the property or surrounding area.
“I personally think buying and keeping for the long term is a good strategy for newbie investors.”
MAHESH JOSHI’S TIPS FOR NEW INVESTORS
EDUCATE YOURSELF: Before jumping into property investment, it’s important to do your research. Attend seminars, read books and blogs, and speak to experienced investors to get an understanding of the market and the strategies used to achieve success.
DEFINE YOUR GOALS: Are you looking for long-term wealth building or short-term cash flow? Do you want to invest for passive income or capital appreciation? Clarifying your goals will help you choose the right investment strategy.
ASSESS YOUR FINANCES: Property investment requires significant capital, so it’s important to assess your finances carefully. Make sure you have a solid understanding of your income, expenses, debts and credit score. Consider meeting a financial adviser to help you determine whether investing in property is a realistic option for you.
CONSIDER YOUR RISK TOLERANCE: Property investment can be a risky venture, so it’s important to assess your tolerance for risk. Are you comfortable with the potential for market fluctuations or unexpected expenses? If not, property investment may not be the right choice for you.
START SMALL: If you’re new to property investment it’s a good idea to start small. Consider investing in a single property or a small portfolio of properties to test the waters and gain experience.
CHOOSE THE RIGHT LOCATION: Location is a key factor in property investment success. Look for areas with strong job growth, good schools, and a solid rental market. Consider working with a real estate agent who specialises in investment properties to help you identify the best locations.
BE PATIENT: Property investment is a long-term strategy, so it’s important to be patient. Don’t expect to see significant returns overnight. Instead, focus on building a solid portfolio over time.
HAVE A PLAN: Before investing in property develop a clear plan outlining your investment strategy, financing options and goals. Having a plan in place will help you stay focused and make informed decisions.