Jonathan Bidmead went from $17 per hour store man to self-made multimillionaire, making the leap he said after realising the smart money was in real estate.
Investing only $4000 of his own money, he has now built up a portfolio of over 20 property units worth more than $12.5 million and generating almost $400,000 annually.
But he says he doesn’t agree with the Reserve Bank insisting on ‘prohibitive’ deposits from first time buyers and landlords, in a low-wage economy such as New Zealand.
Such an imbalance, Bidmead argues, poses a threat to social welfare and the economy.
“I make a clear differentiation between property speculators/traders– the ones who are driving up real estate prices – and mum and dad landlords, who are in it for the same reasons as first time home buyers.”
He says the Reserve Bank’s move to increase the LVR ratio to 40% ‘misses the mark completely’.
“There are very few property investor/landlords in the market currently. The speculator traders contributing will not be affected by the increase.
“To protect the few at the expense of the many is folly indeed. The Reserve Bank will only hurt more people and distort the property market by interfering.”
Bidmead is the author of The Invisible Millionaire - A Guide to Real Estate Wealth set to be published on August 2.
"Most millionaires in our midst are invisible,” he told the NZ Herald in an interview. “Many people would be surprised as to who the real millionaires are, as opposed to those who may drive prestige cars and live in the right suburbs," he says.
Barfoot & Thompson managing director, Peter Thompson, said yesterday in a Westpac
property update that he would have liked to see the Reserve Bank reduce the deposit requirement for first home buyers at the same time it announced the new LVR restrictions.
“The time is right for this group to receive some special assistance,” Thompson said, but he supports the approach the Government and Reserve Bank are taking, referring to the numerous measures gradually introduced over the last few years.
“During the past three years we have seen the imposition of minimum deposits, the fast tracking of land for housing, specific regulations relating to investors and non-residents, changes to the rules and regulations around resource and building consents, and in Auckland the rejuvenation and intensification of communities made up of old State houses.
“To those that say ‘and such measures haven’t worked’ the answer is ‘nor have the draconian measures they are advocating in other countries’. Britain, Canada and Australia are faced with the same challenge as us, and they have introduced or already have some of the draconian measures being advocated. Yet they are no closer to finding the silver bullet than we are.
“Hopefully, the tabling of the Auckland Unitary Plan will act as something of a safety valve, and release some of the intensity from the debate around rising house prices.”
He said it’s important to remember that the majority of houses currently being bought and sold are involving those who view it as their home.
“Those that are selling are likely to have made many sacrifices over the years to acquire the home of their choice, while those about to buy are likely to be as prepared to make similar sacrifices in the future. For them price is secondary to it being their home.”