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Meet The Property Philosopher

Meet The Property Philosopher

Building expertise and the ability to learn and pivot has served a young man well in his drive to accumulate an impressive portfolio, writes Joanna Mathers. Photography Kate Ryan.

By: Joanna Mathers

8 March 2024

Michael Wilson with his wife, Jade, and sons Max (3) and Dustin (2).

‘By the time you hit your 30s, you should be experienced and smart enough to realise job security doesn’t exist. It’s not only your responsibility, but your moral obligation to put some measures in place to protect yourself and those around you.”

Michael Wilson is a property philosopher. The 32-year-old has been in the business of property for more than 10 years and has experienced the “ups, downs, stresses, euphoric wins and gut-wrenching losses” associated with it. Through this, he’s developed deep insights into how the image of the successful property investor is flawed – how this public face is “the tip of the iceberg”.

“Most people who aren’t actively in the game, or haven’t been in the game, don’t realise the amount of sacrifice, risk, time and stress involved.”

His current success is its own “iceberg”. There have been stutters, stops and starts, but his ability to pivot and generate new opportunities has led to exceptional results for this determined young investor.

Wilson believes it’s a moral obligation to provide for your family.

The Big Talk

Wilson grew up near Hinuera, halfway between Tirau and Matamata. His parents were dairy farmers, and one of his dad’s sayings went along the lines of “cows are one of the only assets that give birth to more assets every year”.

He was clever with his hands as a teenager, designing, building and selling furniture. And when he was around 20, his parents sat him down and asked him what he planned to do with his life going forward.

“As per most young, dumb, inexperienced 20-year-olds, I had no idea,” he recalls. But they pushed him, asking what he enjoyed doing and what he felt he was good at.

“I remember not having much of an answer to this. Thinking ‘I just enjoy having fun, going to parties, and drinking a lot’.”

Then they asked a question that possibly changed the course of Wilson’s life: “Which one of your friends is doing well in life, seems to have their life together? And is doing something you might like to do?”

“I could only think of one person. I said to them, ‘Tim owns three houses and seems to be doing pretty well. Maybe I could do that’!”

They went on to ask how he planned to make money for property. Remembering the furniture he made as a teenager, he figured that a building apprenticeship could work well. “I started looking for an apprenticeship job, but it took a while to find one,” he says.

After his big conversation, Wilson had a new focus. He began to read books like Rich Dad, Poor Dad by Robert T. Kiyosaki and Sharon Lechter, and property investment books from the United States. As he explains, over the next few months, “things were starting to click in my mind, and I would spend hours at home looking up properties for sale online and assessing the numbers”.

BRRRR Strategy

In 2013, Wilson landed a building apprenticeship in Te Awamutu. His boss was a clever guy, who provided him with the chance to watch a range of business and property deals, the success of which reinforced his commitment to property.

After years of research, Wilson decided a BRRRR strategy was for him, and started saving towards his first property. The plan was buying properties that were cashflow neutral, with a DTV (debt to value) of 80 per cent, not including the deposit.

This would enable him to continually recycle that first deposit (at the time investors were allowed to get a loan of up to 80 per cent of the property’s value).

And so, by the age of 21, Wilson and his girlfriend (now wife) Jade owned their first rental, a classic standard three-bedroom brick home on 1000m2 section. And they went on to buy two more properties within that same first year.

Wilson’s idea had been big and bold, but it didn’t factor in serviceability.

“I went back to my bank to get approvals for property number four but was told I was maxed out and needed more income or to pay off debt to meet the servicing calculations to buy the next property,” he says.

“We became stuck and realised that there were three things we could do: wait for the rents to go up, values to increase; give up and say this is too hard; or change strategy and keep pushing forward. We did the latter.”

Spec homes have been a key strand of Wilson’s investment strategy.

Spec Homes

This was 2015 and he was nearing the end of his apprenticeship. He’d been watching how developers and builders were creating wealth using different strategies; and he had the skill to build houses.

He figured he’d try his hand at a new strategy; building spec homes to sell – he would do this for the next five years. And his focus changed from investing in property through buy and holds, to building his new company, Wilson Designer Homes.

“This allowed me to make money from land, spec homes, and developments,” he says.

Wilson and his brother put cash together and built their first spec home, which sold in 2016. “It went really well. We made around $110,000 net profit. I was blown away by this and went deep into thinking, ‘How can I do more of these?’”

Wilson’s aunt and uncle had done large developments in the past, so he contacted them and proposed a deal to go in together on spec homes.

“From here, between myself, my brother and my uncle and aunty, we completed around 13 spec homes over the next three to four years.”

Moment Of Epiphany

But in 2020, Wilson had an epiphany. He realised that if he had stayed on the path of owning rentals (maybe buying one or two more) and staying in his day job he would likely have accrued a similar net worth “without having slogged my guts out and taking on mountains of risk”.

It was time to diversify. “I figured I needed to start splitting my investing, funds and time into a mixture of buy-and-holds for long-term wealth creation, while still going hard with specs, flips and developments to fund my lifestyle and future long-term investments.”

He decided to start buying rentals again. Although this decision coincided with the removal of interest as a taxable expense, he was in the unique position of being able to build for cost, and then pivot towards using new builds as rentals.

It was, in his words, “a euphoric and challenging time”. Covid put everything on hold, then post-Covid, the market ran red hot.

“I remember when you couldn’t even buy land because the market was so hot,” he says. So, he worked out a different way to build his portfolio – making lists of developable properties and going letterbox dropping or door knocking.

“Sometimes I got the door slammed in my face or yelled at for being a greedy developer,” he says.

By this stage he had built around 30 properties, including 12 builds for clients. They bought existing properties, including a unit, which they still own, and a house which they tenanted and then sold.

“Additionally, we bought a commercial building and completed two one-into-three subdivisions and a one-into-four subdivision.”

New Pivot

Now, with a new government promising interest deductibility, and what appears to be the peak of interest rates, he says he is pivoting again.

“Lately we have only been completing small portions of the current developments to cope with the lack of funding, high interest rates, and risk of not selling once complete where the interest cost kills the margin,” he says.

They are looking for higher yielding and alternative investments, including a boarding house they have just completed.

It cost around $650,000 to renovate, and once tenanted they are expecting a return of an impressive 13-14 per cent.

“We had it valued as a normal house and it came back at $1.62 million. Once we get the new valuation based on a cap rate, I suspect it’ll value around $1.8-$2 million.”

Wilson has been uniquely positioned to create wealth via property. His building expertise and ability to pivot has led to an impressive portfolio of 12 properties, valued at the $9 million mark.

And he has no plans to stop. “Sometimes it can be challenging investing and staying motivated, but I have always kept motivated through meeting new people in property and discussing creative ideas to invest and keep pushing forward making New Zealand a better place for everyone.”