Following on from my post about people finding Excuses to not invest, one of the other big reasons why people struggle to get started in property investment is their lack of knowledge or confidence. As I mentioned in that post, one thing that sets successful investors apart from the rest is the motivation to take action. So how do you take action if you don’t know where to start?
The best thing you can do is to build a team of advisors around you that will help you on your journey.
So, who should you find for your property A-Team?
Property Investment Advisor
Usually the best place to start for people who don’t have any experience in property investing is to talk to a Property Investment Advisor. They can help you understand your existing personal financial and property position, identify your financial and property goals, and build a tailored property investment strategy around your individual needs. A Property Investment Advisor will work with you to determine your personal risk profile, your appetite for investment and your financial capacity to invest.
You should also expect a good property advisor to help you learn the fundamentals around investment property and explain the different strategies available. A Property Investment Advisor is ideally placed to help you coordinate the other members of your property A-Team and to work side by side with them to help you succeed on your path to wealth creation and financial freedom.
Your Property Investment Advisor may also be your Buyers Agent depending on where you want to buy. A good Buyers Agent will work with you to purchase an appropriate property for your investment portfolio as per your property investment strategy. A Buyers Agent can act on your behalf to research, source, negotiate and transact on an investment property. They will also coordinate the exchange of contracts alongside your Solicitor/Conveyancer and ensure that the settlement process is looked after. A Buyers Agent that specialises in investment property will also help you to source and engage a suitable Property Manager to look after your investment asset following settlement.
Many investors choose to buy their investment property themselves but unless you are experienced in purchasing property and have the time to undertake this part yourself, then it can be much more beneficial to use the services of a Buyers Agent. Other than the time it can save you searching, inspecting, negotiating and coordinating other professionals, a Buyers Agent will ensure that you don’t overpay for a property.
One of the most critical elements of investing in property is the ability to borrow money to help fund your property purchase. When it comes to building a successful property investment portfolio a good independent Mortgage Broker is a key member of your property A-Team.
An independent broker has access to multiple products from all different lenders to suit your personal requirements, therefore you are not restricted to borrowing from just your existing bank. A good investment property Mortgage Broker is one that has their own property investment portfolio and can advise you from a position of experience. They can help you structure your equity and purchase loans the best way to build a successful portfolio. They should also be able to help you form a lending strategy based on your property investment strategy to maximise your ongoing borrowing capacity.
The next important member of your property A-Team should be a licensed Tax Accountant and one that invests in property themselves. It is important that you talk to a Tax Accountant before you buy your next investment property as they will help you understand the best structure to purchase in, whether that is in single or joint names, a trust structure or in a company name. It is very costly to change a property structure after you have purchased, therefore it is critical to get it right from the start.
A Tax Accountant will also help you understand your tax liabilities and benefits associated with investment property, such as Income Tax, Land Tax, Capital Gains Tax, Deductions and Depreciation. They will also help you prepare for and lodge your end of year Tax Returns which is critical to maximising the performance of your portfolio. A good Tax Accountant will work with you to ensure that the cash flow of your investment property is maximised.
So many people underestimate the benefit of having a good Financial Advisor working for you, but I believe they are a critical member of your A-Team. A Financial Advisor can help you look at your bigger financial picture and long-term wealth plan which encompasses different investment strategies, not just property. A good Financial Planner is one that believes in property as a beneficial part of balancing a personal investment portfolio and will work alongside your Property Investment Advisor to build your long-term wealth plan.
A Financial Planner should also be able to help you determine the right strategy and products for your Superannuation whether that be a retail, actively managed or a self-managed fund. The other critical element of a successful property investment portfolio is Risk Management and Protection which your Financial Planner can help you with. It is vital that your Personal Insurances such as Income Protection, Life, Trauma and TPD insurances are appropriate for your personal investment strategy. When you are building an investment portfolio you are likely to be increasing your financial liabilities and therefore you need to ensure that you are protected from financial loss if you were to have a serious accident or illness and unable to work.
When you are building a property investment portfolio you are also increasing the number of assets which are held in your name. It is vitally important that you determine early on what should happen to those assets if anything serious were to happen to you. A Lawyer which specialises in Estate Planning can help you draw up or revise your Will and nominate your Powers of Attorney and Guardians.
As you are building your financial security you also need the peace of mind that if anything were to happen, your accumulated wealth will be passed on as per your wishes. In most cases your Financial Advisor should be able to facilitate the Estate Planning process and help you engage a suitable Lawyer.
Solictor/Conveyancer, Quantity Surveyor, Building & Pest Inspector, Valuer, Property Manager
These are just some of the other important professionals that you will work with as part of the property purchase and portfolio management phase but I will go in to more detail about them in a future post.
Have you found your A-Team?
If you are serious about getting started with property investment or building on your existing portfolio, don’t be ‘a fool’ and make sure you find your A-Team to help you build your financial security. If you need help getting started then don’t hesitate to contact my company STRAND Property Group, which is a Sydney based Investment Advisory and Buyers Agency, specialising in residential property.
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