Question: I am 35, married with three children and looking at my first investment property as a long term investment. I am self employed with an annual profit/income between ourselves of $250k distributed through our trust. We own our Home worth approx $450k with no mortgage & no other debts. Self Employment with dependants brings a level of uncertainty but I would be interested in your thoughts on where to start with an Investment Property. I have a deposit of $120k & have pre approval of $400k but I know I could access more if I was to use my PPOR as security. With this information, would you think a buyer’s agent could be beneficial?
Answer: I have great respect for a buyer’s agents, and where you are perhaps looking for an owner occupied property or you have identified the exact location of an area where you wish to buy, they can be of use to negotiate for you or to advise if the property you have selected is suitable for your needs from a physical point of view.
From and investment perspective though, I must point out that buyer’s agents are rarely qualified investment property advisers and therefore you should not be seeking their assistance with a view to being advised about the best place you should buy and the right kind of property for your personal financial needs.
You seem to be in the right financial position to get started on property investing, but there is still much to be done. Firstly you have to know your own risk profile so you know what type of property to buy. Then you need to have a strategy in place whereby you have a good idea of how many properties you can afford, the time frames in which you will buy them and then whether the bank will allow you to fulfil that strategy.
After all that you’ll be at step one which is where you need to learn what makes an area right for investing, and so you need some good education about how to research, and how to recognise the growth drivers which make a property a sound investment.
Choosing the property comes last, along with negotiating a price and securing the deal. Once you get to there, and as long as you have been diligent in applying yourself to getting this right, I feel that all a buyer’s agent can do for you is negotiate. They will charge a fee for that, usually in excess of $5,000. Few buyer’s agents will be able to work nationwide for you, and the facts are that the area you ultimately choose could be in any part of Australia.
You need to consider whether it may be better for you to attend a good negotiation skills, and seek out the services of a QPIA® (Qualified Property Investment Adviser) to put together a strategy which is right for your personal circumstances. Property selection can be relatively easy once you get to that point and as long as you have the right inspections done then you don’t need to go and look at it yourself.
And if you do all of that, then you will also become an astute property investor in your own right. You will then be able to help yourself, and this is the best situation that you can possibly be in.
- Answer provided by Margaret Lomas
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