Steve’s Story

Auckland apartment investment properties can be a smart place to put your hard-earned money—as long as you have the right professionals and resources to help you make informed decisions.

Take a few moments to read the following first-hand account from an investor. Unfortunately, he learned the hard way that some professionals are more interested in turning a profit than guiding a client through a major financial decision.

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Steve’s Bluechip Experience:

” In early 2007, BlueChip did their promotion with me: how they were an investment company specializing in property, the whole negative gear for 4 years then sell, etc.

They had guaranteed rents and buyback offers etc. and it seemed pretty good. The Internet showed no bad stuff; accountant and lawyer had no problems either.

The loan was split into two sections, 20% with one bank and 80% with another.  I organised these, the 20% was ok but could not get the 80%.  The deal fell through.

Towards the end of 2007 (Sept/Oct) they rang me again with another place, one of two freehold properties in Beaumont Quarter.  Note that I had stated I did not want leasehold.

They basically converted the documentation from the earlier deal.

Although I asked, I never got to see the title, appraisals or anything else prior to settlement.  Being a novice you just assume that they are on your side and doing the best for you. As settlement approached everything became urgent and all the other stuff got left behind.  Paid $465K + fees/expenses for a total of approximately $490K.

After settlement, although tenanted, no rent was paid against my mortgage.  I was told they were changing computer systems, just a glitch.  Strung me along with various excuses for nearly two months, at which time I demanded payment be made directly to me.  Found out it was being rented for significantly less than the guaranteed value–$450pw instead of $550!

Also at this time I found out that the 20% loan organized in early 2007 had been drawn down and placed into a BlueChip account.  Luckily this was used when I bought Beaumont, but I had had to pay all the interest accrued to it.  Also they had double dipped and charged me their $16K fee twice.

Rumours of trouble started in early 2008.  I ignored them because I still believed my property was a freehold.  Ultimately of course I found I had been lied to – directly to my face. Unbelievable.  So I actually had a leasehold.

In April 2008 the Beaumont Ground Rent went from about $2000pa to $18000pa due to scurrilous wording in the agreement.  This was challenged in court (the lawyer made a fortune!) and reduced to $12000.  Even so, this is a fair percentage of my income.

The main problem with the ground rent increase is that it killed the apartment values—dropped from about 460K to about $100K.  It completely inverted–I cannot sell because I would end up with a huge debt with no rental support.

I was servicing about $490K at about 9% plus $12K ground rent plus about 5K body corporate, rates, water etc.  My cost is $1200pw.  I collect $450pw in rent. The difference comes from the tax rebate—and out of my salary!

The only thing that saved me was the tax rebate set against your other income.  I would have been dead if not for that. An aside: Because all property investors are filthy rich, the government in its infinite wisdom is taking away this tax refund on 1st April – retrospectively.

The stress of it all was too much for my wife, we separated late 2008.

So I now live in a shoebox, eating badly and living day to day, waiting for April 1st “.

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We’ve heard horror stories like this over and over again, which is why we launched the Auckland Apartment Advice Bureau (AAAB). It’s your resource center for professional, reliable, and unbiased Auckland property investment information.

Don’t become another investor horror story. AAAB offers the information and advice you need to maximise profit—instead of losing your shirt. You can also learn more about building a property investment strategy by scheduling a consultation with Auckland apartment expert Ben Turner.