Many investors are asking, “what’s the right type of investment for  this new era?” After all you’d have to be living under a rock not to  realize that our property markets will be very different in 2011.

If having survived the last few years of turbulent times in property,  finance and the economy has taught us anything, it’s that we need to  start taking a different approach to money, how we value it, procure it  and use it.

So back to the original question – <em>what’s going to be the best investment in the years ahead?</em>

One thing is certain: If somebody tells you they have found “the  perfect investment” be very skeptical and ask lots of questions, because  chances are they’re trying to sell you something you just shouldn’t  buy, After all there is no such thing as the perfect investment.

The things I look for are:

•    liquidity (the ability to take your money out by selling your investment);
•    securable (the ability to borrow against your investment);?
•    easy management;?
•    strong, stable rates of capital appreciation;?
•    steady cashflow;?
•    a hedge against inflation; and?
•    good tax benefits.?

When you look at the major asset classes, you will recognise that not  many fit the bill when it comes to all six of these criteria.

Michael Yardney uses a couple of terms when describing what he thinks of as the 2 main attributes an investment should have…

<em>The  instability of our world economic markets and the fickle nature of our  local markets means that you’re going to have to invest in assets that  are both powerful and stable.</em>

<em>By  powerful, I mean that to act as a hedge against inflation they must have  the ability to grow at high, wealth producing rates of growth. In other  words, you’re going to have to be able to leverage or borrow against  them.</em>

<em>By stable, I mean your investment should grow in value steadily and surely without major fluctuations in value. </em>

<em>Many  investments are powerful and many are stable, but only a few are both.  Prime residential real estate is one of the investment vehicles that has  both power and stability in spades.</em>

Now that doesn’t mean it’s perfect, because property is not as liquid  as many other investments. It can take months to get cash out of your  property portfolio, if you sell your properties.

You may be able to get cash out quicker by borrowing against the  increasing value of your property, but even this can take a month or so  to organise.

While some might see this as an issue, that relative lack of  liquidity is one of the virtues of property as an investment vehicle.

Why?

Because the only way for an investment to achieve liquidity is to  relinquish some of its stability. If it is liquid (easily sold like  shares) it is more likely to have wide, more volatile fluctuations in  value.

By the way some types of property are more stable than others…

I like investing in capital cities and major towns where there is a  large population base, which means there will always be buyers and  tenants for my property (if I own the right type of property.)

Now here’s another way of looking at what makes a good investment…

Many financial planners recommend ‘when-to’ investments, which means  you have to know when to buy and when to sell. Timing is crucial with  these investments: if you buy low and sell high, you do well. If you get  your timing wrong though, your money can be wiped out. Shares,  commodities and futures tend to be ‘when-to’ investments.

I would rather put my money into a ‘how-to’ investment such as real  estate, which increases steadily in value and doesn’t have the wild  variations in price (if, and only if, you buy the right type of  property.) Yet is still powerful enough to generate wealth producing  rates of return through the benefits of leverage.

While timing is still important in ‘how-to’ investments, it’s nowhere  near as important as how you buy them and how you add value.

‘How-to’ investments are rarely liquid, but produce real wealth.

Most ‘when-to’ investment vehicles (like the stock market) produce  only a handful of large winners but there tends to be millions of  losers. On the other hand, real estate produces millions of wealthy  people and only a handful of losers.

Having said that if you also get the timing right with property  investment, if you buy at the right time in the property cycle, it can  massively accelerate your investment returns.

And with a new stage of the property cycle upon us, this stage will  create a new group of property multi millionaires. But if history  repeats itself, and it surely will, many investors will get it wrong.

In fact most property investors, won’t ever develop the financial independence they deserve.

In part because you can’t just buy any property today and hope it  will make a good investment – the markets are being very selective.

And you can’t just listen to anybody’s advice… you know those who say  come to my weekend seminar and you won’t ever have to go back to your  job, or you’ll be able to retire by the end of the year.

However, there are great opportunities out there NOW!

If you want to be one of the successful property investors and  benefit from the opportunities 2011 will bring then start the ball  rolling and set up an initial meeting where we will see if we can help  you, if we can we will let you know how and if we can’t we will let you  know that too.

thanks to <a href=”http://hotpropertyinvestments.co.nz/what-to-invest-in/” target=”_blank”>Hot Property Investments</a>

Property values in the Wellington region were down 1.4 per cent on last year, a big improvement on the 4 per cent annual fall in July.

The average sale price for the region rose slightly from $429,571 to $431,614. But despite the increases, values in Wellington were still 7.3 per cent off their peak in 2007.

Pieter Geill of QV Valuations said a continuing shortage of listings had sparked renewed interest in property. “It is very hard to say if values will continue their upward trend in Wellington. An influx of listings in spring could very well see the market rebalance away from a seller’s advantage.”

Job losses in the public sector could also have an impact, he said.

Nationally, the August values were a sharp improvement on the same period in July, when prices were 5 per cent lower. The national average sale price also rose, to $385,426 in August from $382,758 in July.

Nationwide, values recovered to 1.9 per cent more than they were in April, but were still 7.9 per cent below their peak.

QV valuation manager Glenda Whitehead said confidence appeared to be returning to the market, with solid sales activity in August. But she cautioned that the pickup had been expected as more properties came on to the market.

Houses in all the main centres have increased in value in the past three months. Auckland and Christchurch were both 1.9 per cent below the same time last year.

Most of the provincial centres have also shown less annual decline than was reported last month.

It seems homes are the most affordable they have been in four years but they are still unaffordable for many and tightening lending criteria by banks isn’t helping.

This is the conclusion of the December Home Loan Affordability report from financial information website www.interest.co.nz, released as banks slash mortgage rates further.

To own the median home (by house price) you will now need 59.6 per cent of the average after tax income to service the mortgage. This is down from 63.8 per cent in November.

This is the best it has been in four years.

Most lenders like to see the amount of money committed to a home loan as being less than 40% of the combined household income before tax, so this new affordabilty level should see many new kiwi’s able to own their own home.

The improvement in December was created largely by lower interest rates after the Reserve Bank reduced the OCR by 150 basis points. Most commentators expect the reserve bank to cut the OCR another 100 basis points to 4 per cent on January 29.

Tighter credit criteria and demands for higher deposits will most likely prevent a rebound in the housing market in the near future however this opens a world of opportunities for people looking to invest into real estate.

Professional Investment Services (powered by Financial Gain) as you know, is also owned by myself and this enables me to provide services for people wanting to invest in real estate using a financial planning model.

The lower interest rates also provide a fantastic opportunity for people to take stock of their current home loans and perhaps break existing fixed loans to get cheaper interest rates or lock in at some of the great low rates for longer terms. At LOANZ Limited we are able to help you establish if breaking your loan is a feasible option, visit us at www.loanzlimited.com

As the financial turmoil that has hit the world prevents others from acting, I believe it is a fantastic time to set yourself up for retirement with prudent planning and careful investing.

I also believe it is a time where a carefully planned property investment will help you achieve your long term financial goals in an easier and more efficient manner.

Most people focus on property as a vehicle for getting rich or should I say building wealth but how does it compare when we start to use it as our retirement income stream.

Your requirements in retirement are very different to the ones you had while you were working so will property do the job as your retirement income provider?

It all depends.

For most people the options are as follows.

1. Own enough property when they retire to live happily ever after
2. Sell most of their property holdings to leave a couple of properties debt free that will supplement their income from the government
3. Sell all properties and invest in another asset class to provide the income required in retirement

Most people will not work hard enough and invest wisely and long enough to be in the first category.

Category number one is really the best of all however to be in this category you need to start investing in property at least 15 to 20 years before you retire.

Of course you can do it quicker however this would now be defined as speculating in the property market rather than investing.

Getting back to the story….

Property provides you with two ways of creating wealth 1. Rental Income and 2. Capital Growth

It is the fact that real estate provides these two areas that makes Real Estate the fantastic investment for creating wealth that it is.

When you retire however you do not need quite as much growth however and you definately need more income so does property still fit the bill.

As an asset class yes.

You may need to reassess your prejudices against certain types of property however as you look for property that provides more income and less potential for capital growth.

For example I own waterfront property on the Gold Coast of Australia which only yields me approximately 2%. In auckland on the other hand I have property that yields over 10% so in retirement when I need the income It would make sense to sell the Gold Coast property and invest in the Auckland property as this will maximise my income.

The fantastic thing about investing in the Auckland CBD is that currently it is very undervalued so you still retain the potential for capital growth.

Now thats what I call having your cake and eating it.