In my experience, I find two of the main things that prevent people from making solid, capital growth on their investment properties are:
1. Not Doing Enough Homework
Making unwise decisions, based on heart not head, on properties that, to the professional eye, were always lemons.
2. Doing Too Much Homework – Analysis Paralysis
Being overly nervous or analytical and never making a decision.
The best way to overcome both of these is to educate yourself and build your own Power Team who you can trust to work for you and you alone.
A little planning goes a long way and nothing will give you more confidence than knowing your stuff!
Your Power Team
In your power team you will need to have:
- Mortgage Broker
- Financial Planner
- Buyer’s Agent
- Solicitor / Conveyancor
1. Mortgage Broker
Your mortgage broker will gather up your financial documents such as tax returns, pay slips, assets, debts and so forth and put your application forward to a bank that they feel has the best deal to suit your needs. Once this is processed, they will let you exactly how much you can borrow. Find a Mortgage Broker who is knowledgeable and savvy about building a property investment portfolio.
2. A Financial Planner
Your financial planner will help you understand your financial goals and how to achieve them by: providing strategy and cash flow options; advising on insurances that you will need to safe guard your strategy, such as Income Protection and much more.
Many Financial Planners are share market centric so find one who is pro-property – there are many good ones out there.
Your accountant will advise on whose name the property should be bought under: yours; yours and your partners; your companies; a trust; superannuation etc. Accountants will also advise on the best purchase to suit your individual tax situation.
4. A Buyer’s Agent
Once armed with your strategy and budget, your Buyer’s Agent will find you the best possible property for long-term, capital growth, highest yield or a combination of both – depending on what your strategy is.
For an investment property a Buyer’s Agent should buy a property:
- At market value or preferably, slightly below (don’t be swayed by “bargains”. What’s a bargain now will still be a bargain in 10-years time).
- In an area that has proven long-term, capital growth
- With a twist – a high demand area, character, special features
- With parking
- To manufacture capital growth by adding value through extensive renovations or even a “tart up”! First impressions are hugely important to the rental and sale price of a property.
5. A Solicitor / Conveyancor
The difference between a solicitor and a conveyancor is that a solicitor covers all areas of the law while a conveyancor focuses on property.
Many people like to use their family solicitor or feel that a solicitor is more experienced but they can often be held up in court when you need fast, contractual changes. Conveyancors tend to be equally knowledgeable but more available – this is crucial when trying to quickly get the perfect property off the market.
A solicitor / conveyancor will go through the contract for sale and advise if you are buying the property as advertised; check for any strange anomalies; check that the person who you’re buying it off actually owns it and so forth.
If you want to build your Power Team I’d be happy to discuss options with you and share some contacts!
For more information, call me, Elaine, on 0412 362 133