Nicol, who owns dozens of properties and advises clients on investing in property, says the perception that landlords are making large amounts of money from their rentals is often far from reality.
“I do feel bad for the mum and dad investor – they’re probably topping up that property. They probably don’t have a whole lot of cash. They’re probably stressing because the value’s gone down,” he says.
In fact, he goes a step further. “They are subsidising people’s rent because they’re topping up, and they’re putting their assets on the line to be able to get ahead.”
However, he is quick to acknowledge it’s not an act of charity. “It’s not because I’m doing it to get into heaven, I’m doing it because I want money later on.”
Perhaps surprisingly, Nicol is also comfortable with having to pay tax on that future gain.
“I actually think there should be a capital gains tax. I’ve got no problem with that. I could stomach that a lot more than paying more tax from a week-to-week basis.”
The New Zealand property market has experienced one of the deepest and longest property downturns in modern history, and reports that property investment is dead have been rife.
Nicol says while he understands why some people have concluded that he still has faith in it as an investment option.
“Property’s not the solution for everyone, but for most people in New Zealand, they don’t have a lot of cash. They don’t have hundreds of thousands of dollars in the bank, but what they do have is equity.”
He says those who can access that equity and have the stomach for it should not dismiss it. “If it’s not property investment, what are you going to do for your future self?”
Watch or listen to the full episode of The Prosperity Project for more.
The Prosperity Project is hosted by Nadine Higgins, an experienced broadcaster and financial adviser.
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