Investor, property coach, and author Steve Goodey views a traditional salary not as a final destination, but as seed capital for the pursuit of real wealth through investing. With nearly 30 years of experience in trading, renovating, and flipping properties, Goodey has navigated multiple market cycles to build a portfolio primarily based in Wellington.
The Foundation of a Property Career
Goodey’s entrepreneurial drive began in childhood with newspaper runs, milk runs, and mowing lawns. At 17 years old, he co-purchased a classic Kiwi Beazley box in Makarini St, Paraparaumu, for about 80k, contributing 10k while his parents provided 70k.
His strategic approach was further shaped by the book Rich Dad, Poor Dad, given to him by his cousin, Mike. The text taught him the fundamental difference between appreciating assets, such as houses, and depreciating assets, such as cars.
Navigating the Property Ladder
Goodey reached a milestone of one million dollars by the age of 32. However, he notes that the path to wealth often mirrors a personal life cycle, including periods of slower growth. He describes the first home he lived in as the fourth property he owned—a cramped two-bedroom flat where space was so limited that laundry had to be hidden in the shower.
Regarding the challenges facing Millennials, Goodey suggests that new buyers must accept that their first home will not mirror the properties their parents own. He describes property as a ladder with a bottom rung, noting that he often bought properties from retirees, which he jokingly called Beryl houses.
Market Cycles and Economic Outlook
Goodey describes the property market as a cycle, noting a serious boom prior to Covid. He attributes a subsequent double boom and double bust to government spending, which he claims extended the recovery period to closer to 1500 days, rather than the typical 700- or 800-day recessionary period.
He currently characterizes the national economy as a two-speed system. According to Goodey, most of the money is concentrated in Auckland, while the most significant cash flow is found in Christchurch. He notes that the National government has shown a reluctance to spend money in Wellington.
While rents and values in Wellington have dropped, Goodey emphasizes the distinction between equity and cash flow. He maintains that as a long-term investor, a drop in property value from a million dollars to 800K is acceptable as long as the rental income remains steady.
Future Projections
Based on current economic conditions, Goodey believes the market is not going to recover this year. He suggests that investors may need to continue focusing on cash flow over equity while waiting for the cycle to turn upward again.
Frequently Asked Questions
How did Steve Goodey start his investment journey?
Goodey began with small jobs like mowing lawns and newspaper runs, and co-purchased his first property at age 17 in Paraparaumu for about 80k.
What is Goodey’s advice for Millennials struggling to buy homes?
He advises Millennials to realize that their first home will likely not be the same as the one their parents live in, emphasizing that property is a ladder and they must start at the bottom rung.
What is the difference between equity and cash flow in a downturn?
Goodey explains that while equity (the total value of the property) may drop—for example, from a million dollars to 800K—the investment remains viable for long-term investors as long as the cash flow (the rent) continues to reach in.
Do you believe the current property market requires a different strategy for new buyers than it did 30 years ago?
