"A good advisor will try to look holistically and think a couple of steps ahead"
New opportunities are sprouting up in New Zealand's property market amid an increasingly inconsistent economy, says one adviser.
That might seem counterintuitive with a backdrop of persistent headwinds, such as higher levels of unemployment, rising costs of living, declining property values, difficulties borrowing capital and slower bank turnaround times. But there are tailwinds too — and opportunities for advisers — if they know where to look for them.
"The property market is still a little bit up and down, a little bit patchy," Craig Pope (pictured), owner and mortgage adviser of Wellington-based Craig Pope Financial, told New Zealand Adviser. "But there's also been a little bit more activity lately."
One example, he said, is amongst existing borrowers.
"People might be looking to refinance to get a better deal, or get the cash back that the banks are giving out to people again," Pope said. "As an adviser, I get a lot of business from people downsizing, or upsizing their houses, or refinancing. A big part of my business is people trading up, trading down, moving sideways, refinancing. You're farming your existing client base and reviewing existing people's mortgages more to try and keep the wheels turning."
But that doesn't mean Pope hasn't been servicing first-time homebuyers as well. In fact, he said the combination of low-deposit lending, falling property prices and current supply of homes on the market is good news for new entrants.
"They have choices," he said. "So as an adviser, you're hunting for a few more first-time buyers."
Tips for advisers
With borrowers increasingly turning to advisers for help with financial needs, it makes sense that they're busier than ever. But a growing number of advisers in the market has also created more competition.
As a result, Pope said he's doubled down on marketing and outreach efforts in order to find potential clients.
"I've spent a little bit more time looking at different ways to do marketing," he said. "Whether it be a little bit more active on social media, making sure you're doing regular newsletters to your database using Google Ad words. It could also be radio. Just being a little bit more creative with your marketing. But I guess it's tricky, because there are a lot of one man bands out there in our industry and it costs money to advertise."
But most importantly, Pope said, advisers need to have the skills to determine what is best for each client.
"We [advisers] need to know the basic numbers," he explained. "It's money in, money out. How much is this property going to cost me versus the rental return? What are the expenses on that property? Is this going to stack up? Can we borrow money? And then, of course, you're weighing up the location. Are you buying something that might have a good rental return, but not such a good area for growth? Or somewhere that's a little bit more volatile?
"Sometimes when [people] are looking to buy, that's a good time to re-look at their existing structures to make sure that things are set up correctly," Pope said. "I've had a couple of investors recently who have bought houses and we might have looked at their existing setup and just changed things to be more tax effective. It could mean a restructure of existing debt. It could be making sure that we split the lending with different banks where we can make sure the banks don't have any more security than they need.
"A good advisor will try to look holistically and think a couple of steps ahead to what their bigger goals are going forward, rather than just the here and now," Pope said. "So just trying to think strategically and spread the risk so that, if possible, no one bank has a hold over all their properties. Being a good adviser means trying to look two steps ahead."