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  • Profile photo of PetePete
    Participant
    @peterepeat
    Join Date: 2016
    Post Count: 3

    Hi all,

    I just joined the forum hoping I could get some broad advice around property investment firms. I already have one investment property in Melb and have been thinking about getting another in QLD but having recently moved here, my knowledge of real estate here is low and I’m also quite time poor. Accordingly I’ve met with a couple of property investment firms and they sound like they can provide a good turnkey solution but at the same time I’m being cautious and suspicious as this is an area where there is a large portion of sprookers and scammers. Firstly I’ll spell out that I haven’t used any that sell property they own nor have I found any that do seminars and free dinners for people stupid enough to sign up on the night for a condo on the gold coast. These all seem like companies that can make money themselves and still give you a fair deal by getting clipped on things like the referral for the sale and property management post the sale etc. One of them is even an external property advisor for the National Australia Bank.
    Since I haven’t been able to find any horror web reviews or stories or reviews on any of them I am feeling like they are legit but wanted to pose the question to the web to see what a broad consensus was and even if someone had firms they could genuinely recommend out there?

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,325

    Hi Pete,
    Though I can’t recommend firms that are kosher, what I can do is to say that I am sure there are many GOOD firms out there. But yes, there have been countless “horror stories” over the years of marketeers who fleece unwitting buyers.

    These are some of the “alarm bells” that should ring loudly if you are dealing with “bad dudes”:-

    1. Bad dudes – They purport to have the answer to your financial woes and promote themselves as experts. They will “make you an investor, and have the tenant and the taxman make you rich!” They will have a “deal” that often includes a Rental Guarantee (that will be built into the price) to help allay any fears you might have, or counter your “I’m not sure!” arguments. They will often have COLD-CALLED YOU, and not the other way around.
    Good firms – will discuss the kind of house you want, and talk of how to make that happen.

    2. Bad dudes – They run a one-stop-shop that will sell you a property, provide you with a broker to arrange your finance through, and a solicitor too, and will have you stitched up in just a couple of hours!! If you want to have your own advisers take a look, they will apply huge pressure to get you “signed up today” in whatever way they can.
    Good firms – will talk of your finances, but mostly leave you to arrange these. If you want to use your own advisers, this will be no problem to them at all.

    3. Bad dudes – They will already have discussed your PPOR and will have worked out that there is “Equity to spare” in it. If that were NOT the case, they would have dropped you like a hot spud way back. These dudes NEED you to have spare equity that can offset the over-high price they are charging you to buy their wares.
    Good firms – will ensure you can pay them, and will ask questions re this.

    4. Bad dudes – If you ask whether they also buy/sell second-hand property, they will steer you away from second-hand – they want to sell you their over-priced new (or OTP) house in an area with which you are unfamiliar. If you “want to go check comparables with other sellers” they will up the ante on pressuring you to “sign now”. If they make it hard to leave the building without signing up, be sure to leave – and RUN !!
    NB – the fact that they don’t deal in secondhand property means they WON’T be buying you out if you get into trouble, or if an area sees falling values (perhaps from over-building??). Once they have sold you a property, their involvement ends except to sell you another one.
    Good firms – some builders will talk of “doing up” a place rather than building new – others might not do “second-hand” any more. They will likely share why building new works better for them. They won’t be incessantly pressuring you to go with them. Their money is often made via referrals – so if they can give you what you want at a fair price, and with minimal hassles, then that is what they will do. They will appreciate you will want to “go away and have a think about it” and will not be pressuring you to sign anything.

    5. Bad dudes – will INSIST you bring your partner with you to their “information session” – as they don’t want you going home and talking to your partner, then pulling the plug. They want to pressure you BOTH and get you signed up THAT DAY.
    Good firms – they may also suggest you bring your partner – so they can get to hear the needs of both of you. But there won’t be the pressure !!!!

    6. Bad dudes – will usually be selling you something in an area you are unfamiliar with – e.g. if you are from Sydney, they will sell you a Gold Coast or outer Brisbane property. The prices are way lower than usual Sydney prices, so they SOUND like good deals. By taking you “out of your area”, they have exposed a weakness. BE SURE you take your time, DON’T be pressured, and DO find the time to sound out other comparable firms and their offerings in any instance.
    Good firms – Will talk of building where you want to build, or might offer some of their current OTP’s if you don’t have an idea of where you want to buy. They won’t be trying to talk you into buying in Ballarat if you are meeting them in Brisbane.

    Mainly, the more PRESSURE there is, the more alarmed you should be. Tread carefully, and you should be fine. Maybe some of our members can come up with names of builders they have used who are on the “Good firms” list…..

    Benny

    • This reply was modified 1 year, 1 month ago by Profile photo of Benny Benny. Reason: Add extra to point 4 - re "secondhand IPs"
    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,110

    Consider a buyers agent?

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of BuyersAgentBuyersAgent
    Participant
    @knightm
    Join Date: 2005
    Post Count: 313

    Consider a buyers agent?

    :) But make sure they are not bad dudes too. PS great post benny.

    BuyersAgent | Precium
    http://www.precium.com.au
    Email Me | Phone Me

    South Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 11,992

    Hi Pete

    Benny has made some good points.

    Like any industry there are good and bad operators but you always ask the firm you engage how do they get paid.

    If you the buyer are paying them at least you know the cost involved.

    If they tell you their services are free then someone has to be paying them which is often the developer or seller.
    Any so call property advisory firm will give you a 101 reasons why you should buy a new property but in the main it is so the valuer finds it difficult to find a comparison sale and also because the commission they receive from the developer can be hidden.

    Irrespective of the so called “free services” such Property Investment offer i would avoid them like the plague.

    There is nothing wrong with a second hand property especially in an established suburb.

    We do not deal with new or OTP properties and tell all of our forum clients to be vary of organisations that promote such.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of PetePete
    Participant
    @peterepeat
    Join Date: 2016
    Post Count: 3

    Thank you all, especially Benny. Really appreciate the effort you put in. Your advice is really good and it makes a lot of sense. Actually the first company I crossed off the list after one meeting was one on the Gold Coast. They only wanted to steer me to one area, which was Pimpama, and immediately challenged ideas of buying closer to Brisbane. These were of course all to-be-built homes in a new development. Furthermore there was a sense of pressure in the language around the next step which would involve the in house broker and making sure I had a deposit handy that day?!? It didn’t help that the poor bloke wore a hideous be-jewelled Rolex which sent all the wrong messages (dot get me wrong, I like Swiss watches, just ones with class) and couldn’t pronounce the word boutique, though used it multiple times in the conversation. The other two firms both use their own finance brokers but work on finding the right property in multiple different areas, rather than pushing you into one development. There is no fee and they haven’t been pushy. They make their money by getting a clip on the finance, a kick back from the sale and property management if you opt to do everything with them. All three though have pushed the notion that building new makes the most sense for an investment as you get the depreciation aspect and reduce your stamp duty paid, plus build equity faster if you build in the right area that is on a growth trajectory. I haven’t yet got beyond initial discussions with any of them so have not yet gone looking at any of their suggested properties. I was always going to compare whatever they show with anything similar sold in whatever area we look at…this is why a development in Pimpama that has not yet been developed was off the cards as I couldn’t compare anything if there was nothing to compare it against. The due diligence on a making sure I get a fair price was always going to be a priority for me and if they start pressuring me before I’ve had a chance to do this, I will walk immediately. I figure there is still enough sales commission in a house sale that they can make good money without inflating.

    Profile photo of PetePete
    Participant
    @peterepeat
    Join Date: 2016
    Post Count: 3

    Consider a buyers agent?

    What’s a buyers agent?

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,110

    A licensed person that you engage to find a property that meets your requirements.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,325

    Hi Pete,

    A licensed person that you engage to find a property that meets your requirements.

    Where a Seller goes to a Real Estate Agent to have them SELL his property, a buyer might search for a Buyer’s Agent to help him BUY a property. e.g. You might live in Melbourne and want to buy in Brisbane – a Brisbane Buyer’s Agent would have local knowledge and be able to negotiate on your behalf.

    Talk with them re their fee structure prior to taking them on. Some might want an up-front fee, while others might want a % of final buy price.

    Benny

    PS On reading your earlier post, it sounds like you are “onto them”, and not about to fall into their trap any time soon – good news !! Re Pimpama, do a Search and you will find a few threads re that suburb. I believe anyone buying there should be prepared to see very little Capital Growth for many years. There is so much land around, and only highly priced new McMansions that will defy making any growth in value for some time. Unless you are able to find one of the older homes in Pimpama with a 1/4 acre or more of land – THEY might create some equity for you.

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