Do you have your very own Property Investment team? Successful property investors treat property investing like a business, and surround themselves with highly skilled qualified professionals. These subject matter experts provide guidance to investors helping them to not only build and execute strategies to build wealth, but also to manage against risk.
Many potential property investors go straight to “lets buy a property” and do not take the time to engage the right people and set up the correct foundations. This can often result in outstanding mistakes and failures, demonstrated by the fact that approximately 75% of investors fail to acquire more than one investment property.
Take the time to build your own Property Investment Team, and maximise your chances of building a successful property portfolio and achieving your long-term financial goals. Read more to learn more about the ‘must have’ members of your team.
Qualified Property Investment Advisor (QPIA®)
A Qualified Property Investment advisor is an ideal place to start for those looking to navigate their way through the property investment maze. A QPIA® will work with you to understand your current position, provide some education on property investment (Clearly explaining both the benefits and the risks), and build you a tailored strategy that will help you on your way to achieving your goals. A good QPIA will likely also have a network of trusted partners (such as mortgage brokers and solicitors) that they will be able to recommend to you. Whilst many claim to be property investment advisors, look for those carrying the QPIA certification. QPIA’s have a level of formal property training, are required to complete compulsory professional development and are bound by the Property Investment Professionals of Australia (PIPA) strict code of conduct.
A QPIA may also be a licenced buyers agent. However if your QPIA is not a buyers agent, you may wish to engage one. A buyers agent will assist you purchase an investment property that fits your strategy. A buyers agent will use data and insights to isolate an area/ suburb that shows best fit to strategy, and then conduct further on the ground research to uncover suitable options. With your agreement, a buyers agent will negotiate on your behalf to secure the property for you. A buyers agent will work exclusively for their client, will have a better understanding of what constitutes and ‘investment grade’ property, and will be able to secure the property at market (or better) price.
Experienced BA’s have established relationships with Real Estate Agents, and as such, often have access to properties that are yet to hit the open market, as well as ‘off-market’ deals. In addition to their expertise and ability to find the right property at the right price at the right time, BA’s can be a convenient solution for time poor investors.
Ensure your buyers agent is licenced in the State / Territory they are sourcing properties in, and a registered member of either Property Investment Professionals of Australia (PIPA) or Real Estate Buyers Agent Association (REBAA).
Also ask to see examples of properties the buyers agent has been able to secure, and how these properties were able to meet the client brief.
Whilst property investment is about bricks and mortar, it is also a game of Finance, as most investors rely on borrowed funds to fuel the acquisition of their property portfolio.
A property savvy mortgage broker will help an investor build a holistic lending strategy, as opposed to just sourcing a single loan approval, often thinking two or three purchases down the track, to ensure each new lend fits into the bigger picture.
With lending criteria being so fluid in recent years, a good mortgage broker will have their finger on the pulse in terms of the latest assessment calculators used by lenders, and will be able to find the lender most suitable to your personal situation.
A broker will also be able to explain the myriad of loan products available in the market, helping you understand your options and choose a loan type that best fits your personal circumstances and property investment strategy.
In addition to their expertise, a broker can also be a convenient option, looking after a significant amount of application administration on your behalf, at no cost to you!
Be sure to engage a mortgage broker who specializes in property investment, and understands what it takes to build a property portfolio. The better property investment brokers are often investors themselves, so be sure to ask them about their own property portfolio.
Accountant/ Tax Advisor
A key member of your property investor ‘team’ will be your qualified tax advisor or accountant. Prior to any purchase, an accountant can provide you with ownership advice, ensuring the structure is aligned to your strategy from day one. Whilst you hold your investment properties, the accountant will play a key role ensuring you minimise tax and maximise cash flow by claiming all relevant tax deductable expenses and depreciation. At the point in time you wish to divest your properties, the accountant can guide you on capital gains tax. Finding an accountant who specializes in property can be advantageous.
A solicitor will represent you (as the buyer) throughout the sale process, ensuring the title transfer process takes places smoothly. The solicitor will carry out due diligence checks to ensure your best interests are represented. This includes but is not limited to contract reviews, title checks and approvals. The Solicitor will also liaise with your lender, ensuring funds are available for settlement, and all Government charges (Stamp Duties) are paid.
Whilst a conveyancer can be used for most straight- forward property transactions, solicitors are required for more complex scenarios requiring additional contracts, or where the purchaser is seeking guidance on ownership structures, such as trusts. Solicitors can also assist with estate planning matters, recommended for all property investors
Quality property managers are a must have member of your property team! A common investment mistake is trying to self –manage properties. As with many aspects of property investment, property management is a specialised and complex under-taking, save yourself the effort and headache, and hire a professional! Key roles or the property manager are to:
- Recruit and retain tenants
- Collect rents
- Conduct periodic inspections to ensure property is being suitable maintained by tenants/ advise you of any maintenance issues
- Facilitate repairs/maintenance
- Ensure rents are kept at market value
Good property managers are critical to minimizing the risks associated with tenants and therefore minimize costs and stress to you. There is often a large variance in both the costs and performance of property managers. It is therefore important not to recruit property managers on cost alone , lower fees can sometimes translate to lower levels of service and performance, which may end up costing you money (vacancies, the wrong tenants, lack of maintenance, lower than market rent etc) over the long term. Consider the experience and reputation of the prospective property manager, and be sure to seek references from current clients.
Depending on property type and age, an investor may be entitled to claim depreciation deductions. Upon inspection of the property a Quantity Surveyor will supply the investor with a report that details all claimable deductions. This report can then be supplied to the accountant, and used when submitting yearly tax returns.
Whilst there has been changes to property investment depreciation legislation in recent times (2017), there are still sizeable deductions available to many investors, which can significantly maximise cash-flow. Many investors leave ‘money on the table’ by not engaging a Quantity Surveyor and claiming entitled deductions.