This same philosophy extends to our selection in Residential Investments.

Each client will have different criteria that will determine what type of property and to a degree what location they should invest in.

Only after detailed analysis of our clients situation has been completed do we seek out appropriate property for our clients. This means the proeprty that we show our clients is sourced for them and their specific long term goals.

So we do not sell property only in Auckland however for many people there are strong arguments to invest in New Zealands largest city.

In economic terms, New Zealand is a relatively young country particularly in relation to its population density, the way people live and the transport infrastructure – but in the new millennium this is changing.

Auckland is following in the footsteps of her sister-city, Sydney in Australia, where in 1970-2001 similar growth and expansion occurred. This resulted in a exponential growth of apartments, townhouses, terraced housing and semi-detached dwellings.

As Auckland has matured it has now begun to exhibit the same growth characteristics as Sydney with a significant increase in volumes of medium density housing.
Key factors driving this growth are:

* Between 2001 and 2026 there will be, on average, 22,260 more people living in Auckland each year, so that by 2026 there will be 556,500 more people living in Auckland
* By 2021 the number of households will have increased by 420,000
* Auckland Regional Council has closed the suburban boundaries of greater Auckland, so less vacant land is available for residential development
* Renters will account for 42% of the Auckland residential property market by 2016.
* Households are becoming smaller with one person and couples without children households becoming the dominant family type.

(Source: Auckland Regional Council and Statistics of New Zealand)

* Tax
* Asset testing regime
* Asset protection
* Education
* Succession
* Relationship property

Tax

Family trusts can be taxed in one of two ways:

First, any income that comes into the trust which is not distributed to beneficiaries will be taxed at a flat rate of 33 cents in the dollar.

Alternatively, if the trustees choose they can pass income on to beneficiaries who will pay tax on it at their own rate (provided they are not minors – that is, under 16 years). This means that income going to beneficiaries who have little or no other income will be taxed at 19.5 cents in the dollar which could represent a tax saving for some families. Trusts can be very useful for income splitting in this way, however income from personal services (e.g. wages and salaries) cannot be passed through a trust in this way.

Under the minor beneficiary tax rules, some distributions to beneficiaries under 16 years are treated as being “trustee’s income” despite the distribution and are therefore subject to tax in the trustee’s hands at 33%.

Asset testing regime for rest home subsidies

You may be eligible for a Residential Care Subsidy if your assets are at or below the appropriate threshold for your circumstances:

* For an individual or a couple where both partners are in residential care the threshold is $170,000 (house and car included)
* For a couple where one partner is in residential care you can choose between a threshold of $75,000 (house and car are not included) OR $170,000 (house and car is included)

Both asset thresholds will increase by $10,000 each year.

Gifting at any time may be included as an asset however allowable gifting can be excluded. There are many quite detailed rules that apply to gifting, and it is important that you get good advice regarding gifting and/or establishing a family trust.

You also need to remember that only a small number of New Zealanders live in rest homes (6% of all those over age 65) around 57% of this number have a Residential Care Subsidy. You may want to think twice about setting up a family trust just for this purpose.

For more information regarding the Residential Care Subsidy contact:

Work and Income freephone 0800 999 727
Work and Income website www.workandincome.govt.nz
Ministry of Health website www.moh.govt.nz/olderpeople

Asset protection

Many people in business use family trusts to protect their lifestyle assets in the case of business failure.

This means that, for example, the family home might be placed in trust so that if the couple went bankrupt, they would be able to carry on living in the house, and the house would not be available to business creditors.

However, if the couple shift assets in this way only when they are in financial trouble the Official Assignee can later set aside the transaction.

Education

With the rising cost of private tuition and tertiary fees many parents and grandparents have established a family trust and put in some money for the children’s education. When the children get older income from this money, or the capital itself, can be used to pay for tuition and other education costs.

The family trust can be quite specific about the purposes that the money must be used for and the trust can also survive the parents’ or grandparents’ death so you can effectively enforce that purpose for long periods (if that’s what you want).

Succession

Trusts are sometimes used to pass family assets on to future generations. Sometimes an asset like a farm or other kind of business will be held in trust so that it can stay in the family for several generations. Alternatively, it could mean all the children own the asset, rather than just one, and the income can be shared by all.

Other uses of family trusts include making a benefit available to a child only on a certain occurrence (e.g. on marriage or the gaining of a qualification), excluding a particular child from an estate, or the control of spendthrift children. Looking after the interests of a handicapped child after the parents have died is another specific use.

Relationship property

Often people enter into a relationship or marriage with unequal assets. The partner who has more money may want to protect what he or she has in the event that the relationship fails.

One way of doing this is to hold assets in the name of a family trust, so that there is less likelihood of them being classified as “relationship property” and therefore being available for division on separation.

If each partner wanted to keep assets especially for children from a previous family then separate trusts is one way of doing that. Each partner transfers their own separate property to their respective trust. This means there could be three types of assets – “separate property” for each partner, “relationship property” that the couple acquire after they set up home and the property that is in their trusts.

Similarly, many parents are concerned when their children enter into live-in relationships. The parents know that if they should die and their child received a substantial inheritance the child’s partner could be entitled to a portion of it. One way around this is to have the assets held in a family trust so that the children can have use of the assets (e.g. the use of a house or interest from an investment), but do not own it for relationship property purposes.

Source: sorted.org

For years Professional Investment Services has been proud of the fact that our model is about as close to Blue Chip as a apple is to an orange.

Basically they are both food, the are both fruit as well which is often where the confusion begins. Ultimately though we have totally different underlying values.

We have never been a company to criticise our competition but now when it is perfectly obvious to all concerned how bad this company collapse is we think its really time to tell you how Professional Investment Servces are totally different.

The main point is that if anything ever happened to PIS and you were one of our property investors (remember we have people who invest in all types of investments), your money is totally yours and secure in a property in your name.

Here is how we work. (This is relevan to our property investors only as the question is related to property, the process is idential for other investments as well however you would obviously not receive rent if you did not own an investment property)

1. Firstly we are Financial Planners, this means we only recommend investments that are appropriate to meet our clients goals once we have completed a confidential needs analysis including a risk profile and our advice is made in writing.
2. We don’t hold deposits on your behalf like some companies. All deposits are held in solicitors trust accounts
3. We don’t collect rent from your property and put it into our account. Your rent is collected by you or a property manager who also operates a trust account.
4. We use registered valuations from independent valuers, not estimations.
5. We don’t have high overheads. Chances are that if you have heard of us, it is through a referral, an education course or telephone introduction.
6. We don’t recommend just one style of property. Essentially each clients situation is analysed and based upon your information we recommend the type of investment that is appropriate to you. We have no bias towards on investment or another.
7. We have built our company to operate with the same stringent governance as a financial planning company has. That means that we are solid with most likely the best back end system in the market.
8. We want you to sleep at night and we want to sleep too.

The last point is our whole philosophy. Whilst we want to be profitable, have a good business and be able to have holidays and provide for our children like everyone else, we won’t build a business that is so, ‘sell sell sell’ that we struggle sleeping. None of our Directors are ex bankrupts, and all of us have a good public record.

Life is bigger than just collecting money. That’s why we want you to get wealthy. So that you too can not have to worry about financial matters and can focus on bigger things, such as family, health and maybe giving back to the community.

The following is a list of our services. We are also strategically placed to introduce you to other industry professionals who may be of assistance to you should the need arise.

* Financial Planning

* Budgeting

* Wealth Creation

* Investment Planning

* Cash Management

* Loan Facilities

* Debt Structuring

* Debt Management

* Debt Consolidation

* Insurance Services

* Retirement Planning

* Superannuation

* Stock Broking Facilities

* Tax Planning Strategies

* Estate Planning

* KiwiSaver

* Portfolio Construction

* Real Estate Investment Advice

Our professional fees vary according to the precise nature of our engagement and may be based on:

· a fee charged by us to you for the preparation of a financial plan.

· a fee charged by us to you for the implementation of a financial plan.

· a commission/brokerage, bonuses and incentives from various product suppliers.

· a fee and commission.

The proposed basis of our charges and the details of specific charges will be provided to you at the time of entering into an agreement and after we are fully aware of the nature and scope of our engagement.

The story getting to the media about Blue Chip investors is terrible, but what about the Blue Chip clients? They have already settled on properties that are worth hundreds of thousands of dollars less than what they paid for them and they have no way of paying the mortgages because they are either on pensions or lower incomes.

One of the annoying things for me about the Blue Chip debacle is that they have tarnished the good name of property investing.

For over a decade we have helped our clients select property that is appropriate for their needs and have helped them create many millions of dollars of wealth for their retirement. Property is an excellent vehicle for creating wealth when appropriate and when it is part of a long term fnancial plan.

Unfortunately many people and organisations have used it to create elaborate scams.

With all good scams there is a lot of truth and very good theory. Which is why they work so efficiently, people beleive what is being told to them because most of what they are being told is the truth, it is only in the detail that things start to get murky.

And thats where the Blue Chip saga rankles! They took a fantastic product and combined it with some very well known and fundamental financial services products to create something that looked just fantastic.

This is one of the ways they sold property. (Article from the NZ Herald)

Blue Chip sold investors apartments – many not built – via numerous methods and schemes.

It even engaged in “apartment futures” trading using a daredevil method it called Premium Income Product.

Here, the mainly older investors entered agreements with Blue Chip to buy an apartment at a guaranteed price at a future date.

But in a high-risk exercise, Blue Chip was to sweep in just as the unit was being finished – and buy the place back, paying the elderly a profit and netting the gain expected to automatically accrue between when the place was planned and when it was finished.

The older investors are now the ones left to buy those places.

Without Blue Chip, developers are fully expected to hold those investors to the terms of the original contract, forcing one Waihi couple to face parting with $1 million for two apartments in the Stadium development, rising in Auckland’s Quay Park.

A distraught older woman called the Herald, astonished to find she had unwittingly become an apartment futures trader – set to buy Stadium apartments for $450,000 each, when Blue Chip was meant to buy them back from her just before the structure was finished.

Barrister Daniel Grove put her in touch with a group of 20 other “apartment futures traders” at Stadium, all attempting to escape the deal they never expected to occur.

source: Anne Gibson – NZ Herald

My advice to those investers is to go and see a financial planner!

My experience at the moment is that the people advising these clients are providing bad advice. Advice such as just hold on and ride it out, or just wait and see what happens, or there is money coming from the liquidators.

This advice is dangerous.

Go and see a financial planner, someone who understands lending, real estate and financial planning so that they can help you work out a strategy to exit these deals (if that is appropriate) without loosing too much money.

You can call us for a free reveiw of the situation. We will let you know in writing our advice is and if we can help you.

Terry Rota

akl@nzpis.com

093033305

(Terry Rota is the head of the Advisory panel for the Financial Gain Group of companies and is the director of Financial Planning practices, mortgage broking firms and the principal of a Real Estate Agency.)

The survey for February showed the median rental rising 3.4% to NZ$300 a week from NZ$290 in November. The biggest rises in Auckland were in the North Shore, where the median rent rose 11.1% in the last year, while Waitakere rose 8.3% and Manukau rose 6%.

Rents in Invercargill rose 18.7% and were up 15.3% in Lower Hutt. Napier rents rose 12%.

The prospect of falling house prices and higher mortgage rates appears to be forcing many landlords to consider rental increases to bring yields back up to acceptable levels in the absence of capital gains.

Source – INTEREST.CO.NZ

Image?

So the question that everyone is asking now is this…

“How will the CBD Apartment market fare throughout the property slump of the next few years.”

Interestingly the CBD Apartment market looks set to prove to be one of the least volatile or vulnerable markets during this property slump in spite of the oversupply of apartments which remains apparent.

Yes that’s right one of the least volatile or vulnerable markets because the values of CBD apartments have already experienced a major correction over the last few years of 50% in some cases (NZ Herald 6th March 2008 )

So what does this mean for CBD apartments? Will values fall from current levels?

Evidence suggests this markets trends are now relatively positive, not that it wont still suffer to some degree whilst the oversupply situation remains. However we expect it to suffer only a limited further downside, in part due to the relevant speed of this markets recent further deterioration. It is most likely this market will suffer less than most other suburbs of Auckland .

Source: Kieran Trass

Stopping full time work permanently may seem like such a distant dot on the horizon – there’s always something on, mortgages to pay, children to rear and then get through university – but life may be slightly dull – the state pension may not keep you in the habit to which you are accustomed.

A single person has $277 a week to live on and a couple has $426 a week – not much left over for holidays.”The whole idea about retirement planning is to develop enough other assets that in the future can generate a regular income [rent, dividends, interest] that will replace your work income,” says Spicers Wealth Management senior financial adviser Jeff Matthews.

Goal setting in writing

Ideally you should start retirement planning in your 20s, but most twentysomethings have other things on their mind. Not many in their 30s give it much mind space either but by the time your 40th birthday comes around, it should be a “real wake-up call”, says author of Twenty Good Summers and wealth coach Martin Hawes.

The first step all financial advisers will ask you to take is to set out some goals.

Do you want to retire when you are 65 and go and live on a Greek island or do you want to work part time between 60 and 70, then sell the family home and take up painting in the Bay of Plenty?

Write down whatever these goals are – you have a much better chance of them happening that way, says Hawes.Then, comes the hard part, you need to crunch the numbers – how much do you think you will need to live on in 20 years time?

You can either go to the excellent Sorted.org.nz for an inflation adjusted calculator or, if you feel you need the reassurance of an expert, go and see a financial adviser. They do this for people every day. All the experts agree that to eradicate debt is the first piece of action after the goalsetting plan. “Pay off the mortgage – you can’t earn anything more in another investment that is risk free and it’s tax efficient,” says Susanna Stuart, financial adviser at Stuart + Carlyon.

Start as you mean to go on

It’s what you do at the beginning of your working life that matters, says Spicers’ Jeff Matthews. He recently met up with some well-off Americans visiting Auckland on a cruise ship who were all patently enjoying their retirement in some luxury. They all had one thing in common – they had been putting money away their whole working lives into various pensions, military, corporate pension funds etc. In some cases they had several pensions on the go. On top of this they had investment portfolios with the spare cash they had after they had paid their mortgages off.

“It was a three or four-legged approach rather than a one-legged approach,” says Matthews.You can always justify why you can’t set up a pension, he says. “People pay rent, mortgage, gym membership, coffee everyday but never put money aside – there’s hardly any money left so why should they bother?”It’s a mindset of getting people to pay themselves first,” he says.

Changing trends in retirement

If you are 65, and you are a woman, your life expectancy is 85. As John Nelson, co- author of What Colour is Your Parachute: For Retirement says, you may easily live more years than it took you to get through school.

People are living for longer, and need income producing savings.Retiring cold turkey is perceived as too big a change for people to cope with and unnecessary.

It is better to discuss a phased retirement with your employer so you get used to having some free time. Employers are becoming far more amenable to employing people in their later years and value older staff’s expert knowledge.

People are working for longer in many cases because they want to.The introduction of the voluntary work-based savings initiative KiwiSaver, with tax incentives is something which the Government hopes will help people be better prepared for retirement.

A good idea before you leave fulltime employment, is to have a house maintenance expert in who can tell you what costs to your house you will have to pay in the next 10 years. It might be a new roof or a deck needs replacing. You don’t want any nasty surprises when there is no salary coming in any more. It’s also wise to buy some near new appliances which will last you well into retirement.

A lot of people also invest in a late model car. A lot of people downsize from larger family homes to smaller apartments or units. It does depend on what the property market is doing. One of the best ideas at the moment if you are retired, is to rent and put the proceeds from your house into an income producing savings account.”Renting at the moment is the bargain of the century. You get such a big capital asset for such a small amount of money,” says Martin Hawes.

Home Equity Release

Babyboomers are moving into retirement age, and this SKI (Spend the Kids Inheritance) generation is going to grow. By 2021 the over-50s market will grow by 27 per cent, according to advertising network Senioragency. They have worked hard and they intend to enjoy themselves. They figure they have lavished everything on their children growing up from braces, to holidays to tertiary education.

One of the new financial products the SKI generation are more than happy to factor into their lives later on, is Home Equity Release. Home equity release finance allows asset-rich, cash-poor to pay for big items.

According to the Consumers’ Institute, a “reverse” mortgage is just that – a mortgage where you don’t make payments until the end of the mortgage period(which is usually when you sell your home or move out). The mortgage is secured against your home and you remain the legal owner until you sell. Interest and fees are added, so the loan balance increases.

Cautious financial advisers tell their clients to use Home Equity Release as a last resort, certainly not to go round the world in their early 60s with it but wait until later.”The longer you can leave it the better,” agrees Hawes. But as we are only here once, you’d better get on with it.

NZ Herald

5:00AM Friday March 14, 2008
By Gill South

This same philosophy extends to our selection in Residential Investments.

Each client will have different criteria that will determine what type of property and to a degree what location they should invest in.

Only after detailed analysis of our clients situation has been completed do we seek out appropriate property for our clients. This means the property that we show our clients is sourced for them and their specific long term goals.

So we do not sell property only in Auckland however for many people there are strong arguments to invest in New Zealands largest city.

In economic terms, New Zealand is a relatively young country particularly in relation to its population density, the way people live and the transport infrastructure – but in the new millennium this is changing.

Auckland is following in the footsteps of her sister-city, Sydney in Australia, where in 1970-2001 similar growth and expansion occurred. This resulted in a exponential growth of apartments, townhouses, terraced housing and semi-detached dwellings.

As Auckland has matured it has now begun to exhibit the same growth characteristics as Sydney with a significant increase in volumes of medium density housing.
Key factors driving this growth are:

* Between 2001 and 2026 there will be, on average, 22,260 more people living in Auckland each year, so that by 2026 there will be 556,500 more people living in Auckland
* By 2021 the number of households will have increased by 420,000
* Auckland Regional Council has closed the suburban boundaries of greater Auckland, so less vacant land is available for residential development
* Renters will account for 42% of the Auckland residential property market by 2016.
* Households are becoming smaller with one person and couples without children households becoming the dominant family type.

(Source: Auckland Regional Council and Statistics of New Zealand)