Property/financial advisers necessary?

Hi everyone
I'm just new to the forum and have very much enjoyed reading all of the great info on here.
Looking to develop a property portfolio and was just wondering if its advisable to get a financial planner/ investment advisor involved from the outset? One that specializes in the property area? Or do you just go with assistance from professionals or accountants, conveyances, brokers etc when you need them ie at tax time?
There is an element of having an amount of $ from an inheritance that will assist in starting in this journey, so would this make a difference whether I should seek professional advice now as I'm starting out or not?
I had an IP about 10 years ago so am not brand new to this, but am definitely more confident on the "bricks and mortar" side of things (finding a property, dealing with agents etc) than I am on the more theoretical side of things, such as the best strategies, growth vs cash flow etc, but I am reading everything I can get my hands on so slowly gaining more knowledge in this area too!
If getting an advisor of some description would be advisable, how best do I find a reputable one - referrals? Any one know a good one based in Adelaide?
Thanks in anticipation
Sarah

 

Hi @sarhil - no need for a property advisor. Not sure what that is ? I see "Advisors" as those selling off the plan properties. However you could look into hiring a buyers agent (BA) to help you through the process.

Best would be to spend some time on this forum & on Somersoft (predecessor forum now archived but available online).

Also start with some books including Jan Somers - Building Wealth through Residential Property..

Work out where do you want to see yourself with property in the next 5 years, 10 years, 15 years etc. It's hard to determine though, so figure out what does your life look like in 5 years? Property is only a vehicle.

 

You'll find that financial advisors generaly don't advise on property for numerous reasons. Those that do usually don't do it well, but there are occassionally expeptions.

Good accountants and brokers are incredibly useful in building a property portfolio but they don't have all the answers.

In reality there really isn't such a thing as a 'property advisor'. Certainly there are people who have some training around it and promote themselves as such, but their real value is in their own experiences which doesn't come from a piece of paper.

There's plenty of fantastic books to read and people to talk to. This forum is one of the best resouces for meeting experienced people and getting great advice. You might have to dig for it though. Property investing is something where you ultimately need to make your own decisions.

If you want to talk to someone directly in Adelaide, start with @Corey Batt. Experienced investor and a great mortgage broker. More importantly though, keep reading the forums and asking questions.

 

re Adelaide

Also talk to DT and DaveM . Both are quite knowledgeable about the Adelaide .

DT will do inspections and is a Property manager , in fact he can be so efficient he'll see the property before you ask him too .

Dave M is a BA in Adelaide .

If you come in to the chat room and hang around for a while , they're almost always there and are always happy to chat .

There are several loooong Adelaide threads which are worthwhile reading if you want to know more about the market there though there are sections to skip over .....

Cliff

 

Hi there

By reading this forum its a great place to start. It will provide you on info and strategies to use from experts themselves and importantly what to look for in buying a property. When you start the process, first point of call will be a broker, he/she will determine your borrowing capacity (i.e pre-approval for a loan) - from there you can understand your purchase price. The search begins, wither you will do this yourself ---- with a heap of internet searches and visiting properties or engage a property professional to assist you with that search. Importantly - keep an open mind. That is - make sure your best interests are at heart - Due diligence on the person and the property. Some recommendations are included above, but just be patient with the process....

Cheers Ivan

 

Definitely agree on this part

Yup, worthwhile doing this to get some background information.

 

Luckily there's a fairly active Adelaide group of investors on this forum who have been around for years - so you'll find a lot of information on the forum. There's a meetup actually next Wednesday night for drinks and a meal in the CBD which you're welcome to come along to:

SA - Adelaide meetup Wed 24th Feb

As per above, financial advisors will generally steer clear of specific investment strategies for property - as it's an asset class find difficult to advise on. Picking the brain of members on this forum is great in seeing what strategies are commonly used, where the successes are and what pitfalls may arise.

 

Hi Sarah,
I've seen people who've gone to financial advisers lose everything, so I'm am skeptical of them. I was almost one of them. One adviser told me my portfolio reminded him a someone driving a Ferrari without a seatbelt on. He suggested I sell a few properties and put it into shares. That was early 2008. Had I done so, who knows where I'd be today. Instead, I bought more property and haven't looked back. Of course, they are not all bad.
You sound like you're on the right track. Just keep reading all you can.
My strategy is boring but it has worked for me. Capital cities equals capital growth. One could increase cash flow by buying well, "renovating" and bumping up the rent, and holding for a while. It's all about debt management over time. Hope this helps.

Giuseppe

 

Hi Sarhil,

Peter is somewhat correct in saying there's no such thing as an official property adviser as with other adviser roles. This is because property investment as a financial product is not regulated by ASIC under the Corporations Act and therefore a licence to provide advice in relation to property investment isn't required.

Having said that, our business is a corporate member of the Property Investment Professionals of Australia where we must abide by a Code of Conduct. They also provide a course to become a QPIA (Qualified Property Investment Adviser) which is a significant undertaking along the framework of a financial adviser course. PIPA lobbies to have property investment regulated like any other financial product and expects if and when it happens that any property adviser will have to complete a course to provide advice and have framed that course accordingly.

You can read more about PIPA at www.pipa.asn.au and I would strongly suggest you only take advice from those who are impartial, fee for service and not trying to sell you any product of any sort. Finding a QPIA or speaking to those who have already grown a successful portfolio is definitely the best place to start as has been suggested.

Good luck with your investing journey!

 

If your plan is to buy multiple properties then you need to plan this carefully so as to maximise serviceability (mortgage broker advice) and to structure things so that they are tax effective (tax agent or tax lawyer advice). You may also need legal advice on that inheritance (post death testamentary trust??), how to legally own properties and some strategies for the future (legal advice from a lawyer).

Property advisers can assist with where to buy and what to buy. If you are going to get property advice then make sure the adviser is a PIPA member.

 

The key is to learn by doing. Identify a strategy for yourself from the myriad of strategies discussed here.Then identify the steps you need to take to start investing and create specific time-based goals so that you move forward. 6 months is a reasonable and realistic time-frame to get started.

A risk management mindset is also important at all phases.

The following general time-frames worked for me for buying my first IP last year.

• 2-3 months of self-education ( via somersoft / property chat, meetups, seminars, books / magazines )
• 1-2 months analysing locations
• 1-2 weeks to get ducks in a row for finance pre-approval
• 2-3 months buying phase
• 1 month post-settlement renos and finding a tenant

These activities overlapped at various points.

In this process I engaged with an accountant, broker, trust advice, solicitor and buyers agent. I also dealt with the following to manage some of the risks for the purchase - building & pest, electrician ( safety issues in B&P), plumber ( gas safety issues in B&P ), handyman ( safety repairs and other renos ), property manager ( to find a quality tenant and manage the property going forward ).

From the decision to buy an IP ( approx February 2015 ) it was around 6 months to settling on an IP, completing minor repairs/renos and getting a tenant in ( approx July 2015 ).

 

@wombat777 great post and logical order of things. Enjoyed it.

 

Thanks for the kudos @Leo2413 .

Adding to the above, I was averaging about 10hrs a week investigating, researching, reading in addition to time on the forums. This lifted to about 15 hrs during the buying phase, even though I used a buyer's agent.

The following is a great list of analysis criteria from a seminar I went to late last year.

7 market indicators

1. Development
- Major infrastructure investment ( look out for early govt planning )
- Transport
- Medical
- Education
- Employment
- Retail
- Where are jobs being created

2. Existing infrastructure
- Already a major hub ( Transport, Medical, Education, Employment, Retail )
- Not a backwater

3. Supply & demand
- Tight supply of housing relative to demand
- Below 3% vacancy rate ( preferrably below 2% )
- Tight land supply
- No immediate threat of land supply or risk of thousands of units

4. Affordability
- Affordability ( near-neutral and +Ve cashflow, if negative no more than $50-$70 impact to back pocket per week )
- Price points of suitable properties
- Likely yield - 5%+ ( preferrably > 1 % point above IO interest rate ). Better if dual-occ
- Suitable congruent match for long-term hold
- Low holding costs

5. Timing
- Relative to past and potential future growth
- Capital growth in recent years
- Indicators for market movement
- market just starting to rise ( to buy when best value is there )

6. Population Growth
- Security of long term buy and hold market
- History of population growth

7. Market Trends
- State and national trends that will impact this market
- Government incentives
- Changing investment laws
- Lifestyle trends - e.g. grey tsunami out of Sydney, growing foreign investment

 

@wombat777 Thanks for that quite succinct summary. I have just printed it off and about to put it in my folder.

Its fantastic.

 

What worked for me once an area had been selected was to filter searches towards preferred land and house size. I would then look at yield and cashflow including my own guesstimate of depreciation. This was to rule properties in and out of a shortlist.

I would then look at more difficult factors such as potential growth based on specific location and also future potential. Softer factors such as desirability of the property for a tenant also came into play compared to others in the area, capturing dot-points in a shortlist spreadsheets which included comparison of the numbers.

I used this process to get the buyer's agent to investigate specific properties based on my prioritisation. The BA also feed me with potential properties but I did spend a great deal of time trawling real estate listings. For me the buyer's agent was there for on the ground discussions with real estate agents and as a sounding board on strategy as well as benefits of individual properties.