All Topics / Help Needed! / Property Investment Company’s?

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  • Profile photo of BigAJBigAJ
    Participant
    @bigaj
    Join Date: 2012
    Post Count: 15

    Hi there,

    My girlfriend and I have quite a bit of money to invest and we have decided to invest in property. Though its proving abit difficult given how busy we are.

    I am completely lost and dont know where to begin.

    I myself work two jobs whilst my girlfriend studies full time and works every day shes not studying.

    Not only that, I know nothing about investing, property or finance.

    So at this stage I have been looking at a few company's that do alot of the hardwork for you.

    So far we have had a consult with this company-

    http://www.residentialinvestment.com.au/

    and have just come across another-

    http://www.propertyinvest.com.au/

    I know theres others out there such as oZinvest and Ironfish ect…

    So what I was wondering, is there anyone that has had any experience with any of these company's or know much about them?

    I am a little scared they might be a bit biased in the land/house packages they try to offer.

    Or for someone in my position, would it be worthy to use one of these company's for a bit of guidance?

    Thanks

    Profile photo of Mezma3Mezma3
    Participant
    @mezma3
    Join Date: 2011
    Post Count: 6

    Hi BigAJ,

    Welcome to the forum.  We can definately relate to your situation. My husband and I had been itching to invest for quite a few years now.  We purchased our PPOR 4.5 years ago and as much as we would have liked to start investing sooner but we didn't really know where to begin.  We started reading investment magazines and books and we started religiously looking through the forums to obtain information from those who have a wealth of experience to share.  We both work full time and I am also completing a degree part-time so doing the hard yards ourselves seemed like a very daunting task. Like yourself, we thought the simplest solution would be to find a company that would do the work for you.

    Before we even looked into narrowing down the areas of interest, we sat down and made a list of what we were aiming to achieve and how we were going to do it based on our personal situation.  Then we made a list of criterias that would hopefully lead us to where to look.  We originally set out to pick up something local, in Melb and also looked at 2 regional areas in Vic because we felt that it would be easier especially when you're starting out.  After doing further research, our interest was diverted to Brisbane.  4 months went by and we got to a point where it felt like it was consuming too much of our time.  So we decided to meet with an investment group in Melb because we thought they would have the answers for us.  How wrong I was.  

    The first meeting with the group consisted of them telling us how they will do everything for us from picking the location, the property to organising the finance and arranging the accountant.  They kept emphasing how little it was going to costs us and that their current clients have come back for the second, third etc property.  Not once did they ever ask us about what we thought, their whole sales pitch was all about how people fail because they do it on their own and they don't have the experience that this type of company can provide.  They few a threw options on the table in regards to the areas we should be investing in and then followed up by saying that they only offer brand new houses through their direct developer because they receive generous discounts because they buy so many properties for their clients.  

    We left the meeting knowing that we weren't any closer to where we wanted to be and we felt very uncomfortable about the whole process.  We kept receiving calls in the days that followed whereby the company urged us to act as quickly as possible as they had received word that the developer was about to increase the price.

    After that meeting, we decided that the best option for us was to do it on our own, even if it was going to require more time and energy.  We made quite a few express trips from Melb to Brisbane and as exhausting as it was, when we found the house we had been looking for, it was worth all the hours it took to find it.  We are now 17 days away from settlement, which we are absolutely thrilled and excited about.  

    We are by no means experienced investors and we have so much more to learn but we relate to your situation because when you haven't done it before, you always worried about what can go wrong.  It seems easier for someone to give you the answers but they might not be the right answers for you.  If you decide to go through an investment company, ensure that what they are offering is in line with your requirements and always question what their motives are.  Otherwise, if you decide to do it on your own, find yourselves a good broker (they are worth their weight in gold and we would gladly recommend you someone who is a regular on this forum), a good accountant and the people on this forum have a wealth of information which you don't pay a cent for  

    Wishing you all the best.

    Mezma3        

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi Big AJ

    Firstly welcome to the forum and i hope you enjoy your time with us.

    Certainly property investing can be adictive (trust me i bought 40 properties in 14 years) but half the battle is buying the right type of property. That is not say that a house is better than a townhouse is better than a unit but more to say that it is what suits your needs and risk exposusure.

    One of the biggest issues with Companies you have listed is the question is what they are selling the right property for you or for them. Most of them offer house and land packages or land because it is very difficult to get a true valuation on the property and to see whether you are paying more than you should be and the balance is going to them by way of a commission.

    Do any of them list or promote a 5 year old Townhouse in a good growth suburb – No and the simple reason being is the mian they are not Licensed Real Estate agents and therefore if they were they would only be able to earn a given commission. Secondly you would be able to compare prices from one Townhouse to another or one unit in the block to another and they dont want you to do this.

    They will tell you that Bank valuers down valuer their properties on the instruction of the lender and to expect the property to come back at less than purchase price. You know it is worth more and you can revalue in 6 months time.

    Well sorry that just isnt the truth.

    Lenders do not instruct valuer to downvalue and a valuation is carried out merely to assess the lenders risk.

    What makes me laugh with these organisation is they all seem to have someone on hand when you go to their office.
    You are chatting to the person giving the demonstration or sales talk and wow our Solicitor who can witness you signatures has just walked in or heh there is the in house finance broker over there in the corner and he can help you fill out those cross collateralsied loan applications.

    Heh what the heck it is only money and well throw you house in as security for the first couple of loans and then you dont have to put any of your own funds in and well as i said before we know the valuer will down value the property but that sweet we can still get the deal over the line for you.

    Yes time maybe something that you have a little off but my recommendation would be 2 fold:

    1) Either look to engage a Buyers Agent someone who is acting for you and who can quote an amount up front for his / her services. You know what it will cost and as long as you feel what they come up with plus their fees is still a good buy you have someone do all the leg work.

    2) Alternatively locate an area do a bit of reading on it and then call a couple of real estate agents and tell them to come to you with what they have listed. You can look through the properties and short list anything you want to have a look at. Give them your parametres up front i.e I want a 3 freehold bedroom Townhouse no older than 6 years old with single garage parking.
    You will be suprised what you can learn from a good agent. Yes sure they have a job to do and yes the earn a commission but let them start the process off by doing some basic legwork for you.

    Get your Mortgage Broker to have you loan structure in play so you are ready to jump as soon as you find something and try and obtain a copy of the valuation. Not always possible but with many lenders you can even if you cant get hold of the valuation work out what the lender valued the property at. If not your Broker can always find out.

    As i said in the opening paragraph remember you want to buy what is right for you and not what is right for the investment organisation to sell to you. They market new property for a variety of reasons but in the main it is because of the healthy commissions that can be earned and difficult to detect.

    As Mesma mentioned the forum can be a wealth of free information.

    Cheers

    Yours in Finance

     

    Richard Taylor | Australia's leading private lender

    Profile photo of Andrew_AAndrew_A
    Participant
    @andrew_a
    Join Date: 2003
    Post Count: 392
    Qlds007 wrote:
    Hi Big AJ

    Firstly welcome to the forum and i hope you enjoy your time with us.

    Certainly property investing can be adictive (trust me i bought 40 properties in 14 years) but half the battle is buying the right type of property. That is not say that a house is better than a townhouse is better than a unit but more to say that it is what suits your needs and risk exposusure.

    One of the biggest issues with Companies you have listed is the question is what they are selling the right property for you or for them. Most of them offer house and land packages or land because it is very difficult to get a true valuation on the property and to see whether you are paying more than you should be and the balance is going to them by way of a commission.

    Do any of them list or promote a 5 year old Townhouse in a good growth suburb – No and the simple reason being is the mian they are not Licensed Real Estate agents and therefore if they were they would only be able to earn a given commission. Secondly you would be able to compare prices from one Townhouse to another or one unit in the block to another and they dont want you to do this.

    They will tell you that Bank valuers down valuer their properties on the instruction of the lender and to expect the property to come back at less than purchase price. You know it is worth more and you can revalue in 6 months time.

    Well sorry that just isnt the truth.

    Lenders do not instruct valuer to downvalue and a valuation is carried out merely to assess the lenders risk.

    What makes me laugh with these organisation is they all seem to have someone on hand when you go to their office.
    You are chatting to the person giving the demonstration or sales talk and wow our Solicitor who can witness you signatures has just walked in or heh there is the in house finance broker over there in the corner and he can help you fill out those cross collateralsied loan applications.

    Heh what the heck it is only money and well throw you house in as security for the first couple of loans and then you dont have to put any of your own funds in and well as i said before we know the valuer will down value the property but that sweet we can still get the deal over the line for you.

    Yes time maybe something that you have a little off but my recommendation would be 2 fold:

    1) Either look to engage a Buyers Agent someone who is acting for you and who can quote an amount up front for his / her services. You know what it will cost and as long as you feel what they come up with plus their fees is still a good buy you have someone do all the leg work.

    2) Alternatively locate an area do a bit of reading on it and then call a couple of real estate agents and tell them to come to you with what they have listed. You can look through the properties and short list anything you want to have a look at. Give them your parametres up front i.e I want a 3 freehold bedroom Townhouse no older than 6 years old with single garage parking.
    You will be suprised what you can learn from a good agent. Yes sure they have a job to do and yes the earn a commission but let them start the process off by doing some basic legwork for you.

    Get your Mortgage Broker to have you loan structure in play so you are ready to jump as soon as you find something and try and obtain a copy of the valuation. Not always possible but with many lenders you can even if you cant get hold of the valuation work out what the lender valued the property at. If not your Broker can always find out.

    As i said in the opening paragraph remember you want to buy what is right for you and not what is right for the investment organisation to sell to you. They market new property for a variety of reasons but in the main it is because of the healthy commissions that can be earned and difficult to detect.

    As Mesma mentioned the forum can be a wealth of free information.

    Cheers

    Yours in Finance

     

    Well said!

    I'm not sure how to add any more value other than 'trust but verify' with everything related to investing!

    Good luck with your journey AJ :)

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi Ken

    Please can you tell me why Phil only recommends new property (and by the way i am fully aware of the Capital Allowance / Depreciation argurment) when since the Doomsday book land is what has increased value and not the property itself.

    Buyers Agents often recommend a property that is a year old or older and do it for it a number of reasons.

    Can you tell me why your group doesnt do this?

    What commission do you receive on the successful settle of each property?

    Couple of basic questions which i am sure you will agree in wanting to be transparent are simple enough to answer.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of Nigel KibelNigel Kibel
    Participant
    @nigel-kibel
    Join Date: 2005
    Post Count: 1,425

    Perhaps you should take a look at our website. Because rather than just try and sell you a property we work with clients and teach them to make money. We also arrange to put clients directly into development projects and thereby allow them to make much of the development margin. This is the only way to get a property at a real wholesale price.

    However it is important to always look at the experience of who you are dealing with. Personally I am always uncomfortable with a website where there is no mention of a real person. In the end my view is all I off is my time knowledge and service.

    Nigel Kibel | Property Know How
    http://propertyknowhow.com.au
    Email Me | Phone Me

    We have just launched a new website join our membership today

    Profile photo of DerekDerek
    Member
    @derek
    Join Date: 2004
    Post Count: 3,544

    Hi AJ,

    Adding further to some of the comments above

    If you do choose to use a 'company' make sure their philosophy and strategies suit your needs and that you are not made to fit their strategy.

    Profile photo of CatalystCatalyst
    Participant
    @catalyst
    Join Date: 2008
    Post Count: 1,404

    Good luck. I did the company ruin around myself and couldn't find one that I felt comfortable with so started on my own but started going to fortnightly meetups and it was invaluable. Networking with likeminded people gives you the knowledge and motivation you need.

    There are a lot of experienced investors on this forum but also a lot of "advertisements" Be careful when reading "advice" from anyone, particularly ones where it is the posters first post.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Catalyst Yes very observant of you.

    My thoughts exactly. Very well timed to join up the day a comment about the Company you partner with has been mentioned in a  post.
     
    Cheers

    Yours in Finance  

    Richard Taylor | Australia's leading private lender

    Profile photo of SydneyBizSydneyBiz
    Member
    @sydneybiz
    Join Date: 2012
    Post Count: 11

    Hi Richard,

    Qlds007 wrote:
    Hi Ken

    Please can you tell me why Phil only recommends new property (and by the way i am fully aware of the Capital Allowance / Depreciation argurment) when since the Doomsday book land is what has increased value and not the property itself.

    Buyers Agents often recommend a property that is a year old or older and do it for it a number of reasons.

    Can you tell me why your group doesnt do this?

    Ok, I want to be wary of drilling into this too far because at the end of the day it’s Phil’s strategy and he is the expert rather than me. I’ll answer as best I can and will go to Phil for more info if required.

    Phil has a specific formula which he likes to stick to very closely. He wants his model to be repeatable and low risk for his group members, and also not require a lot of time commitment on their part. Hence he will only present a development to the members after he’s reached the end of a long process and checklist of requirements – if it doesn’t stack up in any area then that development is discarded and the members will never hear about it.

    His system is built around “affordable” new standalone single family homes (you want the land component for capital growth, as you point out), at the moment typically priced around $300k to $400k, in strong growth areas with multiple “legs” to the local economy (mining towns are usually ruled out for this reason) and in neighbourhoods/larger developments with no more than 20% of the properties used for rental (i.e. at least 80% owner occupiers). Those type of properties should have minimum vacancies and strong rental growth over time.

    Apart from depreciation, one reason why he goes with new houses is because he will tell the developer that he wants the properties built with certain specific floorings, appliances, fittings etc to make it optimal for renting rather than for an owner occupier. This will have an extra cost which the developer must absorb. He will also ask the developer to pay the buyer’s interest on the loan during construction, so that the investor only incurs interest costs once they are able to put a tenant in and offset the cost with rental income.

    A couple of other requirements are that the developer must pay the investor a rebate on settlement out of his budget for marketing & sales for that property, since he will avoid many of those costs if it’s sold through Phil’s group. The purchase price must also be below a valuation of the property from a completely independent, bank approved valuer.

    Qlds007 wrote:
    What commission do you receive on the successful settle of each property?

    If your question is directed to us (i.e. Universal Events) then we receive no commission on property sales. We make our revenue from enrolment sales in Phil’s advanced training courses and membership fees for his group.

    If you were asking about Phil, then his group receives a few thousand dollars per property from the developer. He says, “much less than a real estate agent’s commission on the same property would be, but I make it up in volume”.

    Regards,
    Ken

    Profile photo of SydneyBizSydneyBiz
    Member
    @sydneybiz
    Join Date: 2012
    Post Count: 11
    Qlds007 wrote:
    Catalyst Yes very observant of you.

    My thoughts exactly. Very well timed to join up the day a comment about the Company you partner with has been mentioned in a post.

    I’m not sure if this was directed at me, but I’ll answer as if it was. Two things:

    1. Actually neither Phil nor ourselves were mentioned in this thread until I did so. I was putting forward a suggestion in response to the OP, and I think my reply was reasonable given the questions posed.

    2. I’ve read this forum semi-regularly for quite some time, but never bothered signing up until I wanted to post a reply. Other new posters may have joined for similar reasons.

    Regards,
    Ken

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Thank you for your response Ken.

    I am sure with that information AJ can make an informed decision.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of BigAJBigAJ
    Participant
    @bigaj
    Join Date: 2012
    Post Count: 15

    Thanks for all the input guys.

    Its all quite overwhelming when your starting out in this game.

    Im going to have a chat to some buyers agent aswell now.

    Cheers
    AJ

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi AJ

    Good for you.

    Yes get if from a different perspective.

    If you have thought of SE Qld contact Andrew @ Allen Real Estate as he is a buyers agent based here in Brisbane.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of DerekDerek
    Member
    @derek
    Join Date: 2004
    Post Count: 3,544

    Hi AJ,

    You will still need to work out what you are trying to achieve so you can properly brief your buyers agent otherwise you may end up with a property that doesn't necessarily meet your investment needs. 

    Profile photo of BigAJBigAJ
    Participant
    @bigaj
    Join Date: 2012
    Post Count: 15
    Derek wrote:
    Hi AJ,

    You will still need to work out what you are trying to achieve so you can properly brief your buyers agent otherwise you may end up with a property that doesn't necessarily meet your investment needs. 

    Well theres another problem, I dont have an investment strategy or any idea at all what I want to achieve.

    I thought the basics were to buy your first IP, and then continue to buy IP using the equity from your current IP's??

    Im not the most intelligent person so all this kind of stuff does go over my head a little.

    Who would be the person I'd need to speak to in order to work out a good investment plan for myself and my partner? A Financial planner or something?

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    AJ i think you are wasting your time talking to a Financial Planner as most will want to promote other forms of investment.

    If you shoot me an email i will send you and API interview i did based upon how i got started some 15 years ago and how to use equity to purchase multiple properties.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of DerekDerek
    Member
    @derek
    Join Date: 2004
    Post Count: 3,544

    Hi Aj,

    Definately not a financial planner – their training does not expose themselves to direct property investments.

    There are a couple of organisations around that are endeavouring to get some accreditation & recognitiono of property investment advisors. Check out their websites PIPA and PIAA.

    In a nutshell both organisations are endeavouring to 'clean up' the property investment 'advisory' industry.

    I am half way through full accreditation with PIPA and I must admit I have enjoyed and appreciated the content to date.

    Profile photo of Nigel KibelNigel Kibel
    Participant
    @nigel-kibel
    Join Date: 2005
    Post Count: 1,425

    Hi Aj
    You do not need a financial planner. What I tell people however is that they need a lifeplan. In other words you need to look at what you want to achieve in all aspects of your life. If you dont plan how can you really make any decisions apart from those made on the run.

    Planning your objective will help you work out want you want to achieve and will help you plan and do it.

    Nigel Kibel | Property Know How
    http://propertyknowhow.com.au
    Email Me | Phone Me

    We have just launched a new website join our membership today

    Profile photo of BigAJBigAJ
    Participant
    @bigaj
    Join Date: 2012
    Post Count: 15

    Thansk guys.

    Ill shoot you off an email later in the day Richard.

    Would chatting to a company like Margaret Lomas's one Destiny be a good idea ??

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