A Tale of Two Property Investments

Property Investment Advice

Michelle and Gary have decided that they want to achieve financial independence. After getting their finances in order, they see an independent financial planner. They decide together that an investment property would suit their circumstances and objectives. The planner prepares with them a comprehensive plan which deals with their cashflow, investment plans and risk mitigation. They also see their Accountant, who advises them on how to structure an investment and reduce their tax.

After seeing their financial planner and accountant, Michelle and Gary consult a good mortgage broker. They are able to compare numerous finance options, and select the best lender for their plans. The broker helps them to get pre-approval, and they're now ready to buy an investment property.

Michelle and Gary realise that they don't have a lot of experience buying investment properties, so they see an independent property adviser and buyers agent. They help them find a high-quality property in a great area, and help them to negotiate to get the property at the best price. Together with a conveyancer,  they help Michelle and Gary purchase the property and find good tenants.

Because Michelle and Gary bought an attractive property in an area where there is strong demand but limited supply, property prices and rents start to increase. With growing equity and well-managed cashflow, they are soon ready to look at purchasing another investment, or start paying down debt on their current one.

Rachel and Stuart are also thinking about what their finances are going to be like in the future. They've always liked the idea of investing in property, so they decide to buy one. They head to their bank, who says they can borrow a lot of money.  They offer the basic home loan package to Rachel and Stuart, who not knowing any better, take it.

After seeing their bank, Rachel and Stuart see an ad for a seminar offering little-known strategies for property investment . They sign up quickly to get their free tickets and head along to the seminar. Impressed by how successful these strategies have been for clients in the past, and realising they need to act urgently to secure their future, they sign up for an off-the-plan apartment on the day.

Unfortunately, after paying the deposit, Rachel and Stuart realise it won't actually be built for another two years. Worse still, while their apartment building is being built, many other similar building are being constructed in the same area. When the time comes to settle on their new unit, it is valued substantially under the purchase price they agreed to. They have to pull more money out of their savings just to buy their property and avoid losing their deposit.

Because so many other investors have bought similar apartment in the area, there is a battle to find tenants, and so the rental yield is much less than expected. Combined with high body corporate fees,  the property is taking a big chunk out of Rachel and Stuart's cashflow, and they realise they can't afford to keep the property.  With so many apartments in the suburb, prices have stayed low, and Rachel and Stuart lose more money when they sell the property. They vow never to invest in property again.

What kind of investment experience are you after? Do you want a smooth and professional experience that maximises your returns and minimises your stress? Or are you after something for nothing, hoping that everything will work out ok? No-one likes spending money needlessly, but you can get a highly competent and independent team of professionals on your side for between 2-3% of the cost of the average property investment.