Tag Archives: investment strategist

Is it time to hire a property investment advisor?

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The most successful people know that to achieve their goals, they must have a strategy in place. Being a landlord is no exception. If you want to achieve your investing goals, whether that’s owning one property or 5, start with the big picture plan and break it down into annual, monthly and weekly tasks.

If you are new to property investing, you may need to connect with an expert and employ the services of a property investment strategist to help you.

A good property investment advisor will be unbiased. They will not be trying to sell you something. They will give you honest feedback, and develop a strategy that is aligned with your financial goals, your risk profile and also aligned with your current bank balance.

Here are a few things to think about that will help you determine who will be the best fit for your needs.

Most advisors probably have their own investments so start by asking them about their track record. Find out when and how they started, what they like to invest in, how many properties they own, what mistakes they made etc. Finding out this information should provide you confidence and encouragement about their abilities.

Having their own investments is not essential, however. Regardless of whether they do this for themselves, you’ll want to see testimonials of other clients they have helped. Do your research and find out what other people have to say about them.

Investment techniques change over time as markets change. Find out how they recommend structuring investments and the techniques they use for maximising equity and cash flow for their clients.

Hiring an advisor is a big step in your investing success. What tips do you have when choosing the person who is the right fit for your unique situation?

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Invest in your future and buy a rental property this summer

true-property-invest-in-your-future-and-buy-a-rental-property

Will you be taking time out and hitting the beach this summer? The real estate market slows down over New Years so if you are looking to purchase a rental, this could be your opportunity to find a great bargain. If you don’t own and investment property yet, it’s easy to get overwhelmed with so much information out there.

Here are a few points to consider:

What’s your financial situation?

What have you saved for a deposit? What about other sources of money? Make sure that you have at least 10%, and some banks will want more. They also want to know where you work and will love to see that you have a secure job.

If you are relying on a First Home Owner Grant (FHOG), remember that more often than not they are designed for properties that you intend to live in rather than investment properties.

Do your research

What do you know about being a landlord? Do you have an investment strategy and are you clued up on how to evaluate a property to see if it will be a good fit for you? If not, then start talking to people and finding out everything you can about it.

No one does this alone

Outsourcing and delegating are probably the most important you’ll learn. You need a lot of people around you to make a successful landlord – Lawyers, building inspectors, buyers agent, financial planner, a property investment adviser, finance team, etc. Build your team and start putting offers in on properties.

Take the first step

You can have all the knowledge in the world, but it’s worthless if you don’t take action on it. Buying a house is a big deal, whether it’s your first or fifth one and you might experience ‘analysis paralysis’ at some point. You spend all your time researching but don’t have the confidence to take the plunge and do it. This is when your team will help you take that first step.

Are you going to invest in your future while everyone else is at the beach this summer?

What type of property is best for investment?

True Property -What type of property is best for investment?

When thinking about what to invest your hard-earned money in, you want to pick something that will get you the most ROI. Everyone wants to make money from their investment. When you have made the decision to invest in property, the next question is “Should I invest in a house with a backyard or a one bedroom apartment?” The answer is never a simple ‘yes’ or ‘no’, but rather ‘it depends’ – it depends on the property, it depends on your budget and it depends on the location.

Investing in a stand-alone house

Houses have better potential for growth. Land will always appreciate and there is more land attached to houses than apartments. Land is also in short supply. In following the principle of supply and demand, this means that good growth follows.

There is also a greater capacity for development. It is possible to increase the market value of a house through decorating, landscaping, extensions and remodelling. The same scope for improvement is not present in an apartment. And there is potential to sub-divide, cross lease or sell a well-located property as land becomes more sought after.

Investing in an apartment

Apartments have cheaper maintenance costs than the upkeep of a rental home. They are easy to rent with the draw of inner city living, transport efficiencies, easy care lifestyle.And there is less investment capital required when compared to a house.

Which one suits your investment portfolio better, a house or an apartment? Some new investors think that choosing a house is ‘essential’ in building their investment portfolio. This is not the case. It depends on your investment strategy – how you want to invest and what you plan is with the properties. You may find that you can build a portfolio faster with apartments than what you would do if you concentrated on houses alone.

What is your investment strategy? Will you buy houses or apartments for your portfolio or a combination of both?

Consider buying two properties: One to live in and one as your investment

There are many ways to get into the property game, either on paper or physically buying a property, but sometimes it’s hard to get a down payment for an investment property. This is especially true if you want to buy a primary residence for yourself too. So what can you do?Have you ever considered buying two properties and living in one and renting out the other?

By buying a home to live in and an investment property at the same time, you can effectively leverage equity and hopefully get a tax benefit at the same time.

It’s important to to get tax advice from a qualified accountant before going ahead with this scenario. You never know what traps there may be within the deal, and it will depend on which state that you live in Australia. It’s likely however, that most accountants will advise that the interest on the investment property will be tax deductible, whereas the interest on the owner occupied property is not. It is important therefore, that you structure the loan in the correct way. For example, securing a ‘Principal & Interest’ loan for the investment property and a possibly an ‘Interest Only’ loan for the investment property.

The idea of purchasing two properties in this manner, is to reduce the non tax effective debt on the owner occupied property, while keeping the tax effective debt at a maximum on the investment property. To make this happen you need excellent advice from a broker and/or an accountant who has experience in these situations.

The main benefit of this investment property/owner occupied property scenario is: by purchasing together, you have an advantage of leveraging equity in the owner occupied property, to borrow funds for the purchase of the investment property, while maximising the tax effectiveness.

Again, if you like the idea of buying one and renting out the other, do you homework. Get excellent advice from your team and speak to others who have recently undergone the same purchase scenario. It’s all well and good to speak to someone who did this five years ago, but with changes to tax laws, borrowing criteria and stamp duties, it may not work out in your favour any longer.

Have you structured a purchase like this or know someone who has? What was the outcome?

Tenants – Finding the good ones.

Tenants - Finding the good ones.We’ve talked about finding good tenants many times but it’s certainly worth repeating. I cannot stress enough how important it is to make sure you find the best tenant possible. The best tenant is the one that causes you the least amount of headaches and puts money in your account. It shouldn’t be too hard right?

Well it depends on you. If you are committed to working hard in looking for the right tenant you will be rewarded handsomely. But, if you just want to get someone in quick and don’t want to have to deal with it, then you are likely to be shooting yourself in the foot.

If you are in the latter group  – you don’t want to deal with paperwork and commitment it takes, then I strongly suggest that you find a reputable property manager. They will take the hard work out of owning an investment property.  All you have to deal with is us – the property management team – and we deal with all the bits and bobs.

So, how do you find good tenants?

Keep in mind that tenants who have a spotty past or bad credit are often inclined to look for properties where they know the landlord is self-managing  – especially a new landlord.  New landlords haven’t seen it all before, whereas a longterm landlord or a property management firm have seen all the tricks and know what to look out for.

So if you are more a DIYer and want to get good tenants, then let me give you a couple of pointers.

1 – The Rental Application

The application is critical. You get a sense of where that person has been, and who they are.  it is vital that you follow-up with the references and work history, but there are a couple of other areas to look at :

– Blank spots. Have they filled in their birthday and any identifying information like their driver’s license number? If they haven’t why not?

– If they are vague with answers such as “Don’t remember” that’s not good enough

– Can you read it? If they are a doctor then maybe they can get away with illegible handwriting, otherwise you really need to be able to read what they’ve written.

If it’s not filled in fully – hand it back!

2 – Verify, Verify, Verify

Consider undertaking a social media search of their Twitter feed, Facebook and a general Google search. This helps to get a sense of who they are. (Make sure if you do this, that you do not discriminate against applicants in any legal sense.)

Verify their rental history and work history. Yes there is always a chance that they have used a friend as a reference, but by combining all the accumulated information, you will be able to determine if they are genuine.

3 . Who else?

If other adults are planning on living in the property, get their name on the application along with a photo ID. The primary applicant maybe above-board, but others who plan on living there may not be.

By screening your tenants thoroughly you will get a sense of who they are and what they are about and you will feel more confident in electing the right tenant. Of course there are no guarantees, but at least you will be secure in the fact that you did the best you could.

Do you have anything that you specifically look for when you are screen tenants?

Ask Your Property Investment Mentor these questions

KONICA MINOLTA DIGITAL CAMERA
Is Ernie the Emu the right mentor for you?

One of the biggest factors in being a successful property investor is having a strategy. The most successful investors have a plan and stick with it. But how do you develop that plan? If you are new to property investing then you will likely need to employ the services of  someone who actually knows – A property investment strategist  or mentor.

This is where it can be a little overwhelming, because how do you know if this is just a sales person pushing their inventory, or someone who really is there for you?

A true property investment mentor is someone who is unbiased. They will not be pushing anything in particular. They will give you honest feedback, and develop a strategy that is in line with your financial goals,  your risk profile and also inline with your current bank balance.

So here are a few questions that will help you determine who is the real deal, and who is really just trying to sell you something.

  1.  How many investment properties do you own? You want them to walk the walk. Find out when and how they started, what they like to invest in, how many properties do they own, what mistakes they made etc. Finding out this information should provide you confidence and encouragement about their abilities.
  2. Have they invested in the property/ areas that they are suggesting you invest in? If they have  skin-in-the-game, then it will make you feel more confident. On the other hand if they are not investing in the apartments they are suggesting, then it may be a red flag since they are not taking their own advice. Find out why they haven’t invested.
  3. What is their current Investment strategy? Has it changed over time? What growth have they achieved? The strategist should be confident enough to share their strategy with you. They should also be happy to tell you what their cashflow/capital growth is, of course they probably won’t show you the paperwork to prove it, but you should be able to determine if they are telling the truth. The key here is to find out how they structured and financed the investments, and the techniques they used for maximising their equity and cashflow. Find out also, who  they have on their team – on their personal investing team. If they trust certain professional people (property managers, lawyers etc) you will want to use the same, or someone they recommend. Be wary if they are pushing a certain accountant, lawyer, property manager etc.  If the mentor will only provide you a strategy based on you using the ‘in house team’ you may want to think twice. Or ask more questions why.
  4. Speak to long-term clients. Ask to speak with actual long-term clients and not just read testimonials. You want to find out if the mentor is the real deal for other people. Ask to speak to clients  who started out in a similar situation to you, this will provide more information and confidence. You will also find out your mentor’s weaknesses (everyone has them).

So do these questions help? Do you think by asking these questions you would feel more confident  in selecting the right mentor?