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This blog helps the property buying community to more easily share strategies, stories and helpful tips. It is an open blog. Anyone can join, contribute and invite others to join.

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11 April 2009

Good advice - Where are you getting yours from?

This sounds like a simple enough question, yet the responses we hear are often quite frightening.

There are three main examples of how buyers obtain advice. We seek:
a) NO advice
b) some advice, but we choose unreliable sources
c) some advice from reliable professionals

Throughout a property transaction, you will often need some or all of the following professional services:
  • Wealth Coach - to help ensure you have clear goals, a good budget, etc.
  • Accountant - to ensure tax effective set up
  • Solicitor - to maximise your asset protection, as well as ensure you're using legally enforceable and suitable conditions in your contract of sale
  • Buyer's Agent - to find the right property at the right price and ensure the transaction runs smoothly
  • Building and pest inspectors - to ensure the property is what it appears to be (help eliminate surprises)
  • Conveyancing - manage all legal correspondence and searches
  • Property Manager - find tenants for your investment property
  • Tax Depreciation Specialists - ensures you get the maximum refund for your investment property
NO advice - Example
Buyer A goes to an auction to see what they're all about. A Real Estate Agent greets Buyer A at the entrance to the auction and encourages the buyer to "register to bid" - no harm there....

During the auction, Buyer A gets quite excited by all the noise and hype.  Not knowing the value of the property on the day, Buyer A puts his hand goes up in the air to make a 'silly' offer on a property. He believes it couldn't possibly go that cheap, so again - no harm there.

Unfortunately, Buyer A made an judgement error.  His first bid was the ONLY bid and Buyer A is now the proud (and very nervous) owner of a property he knows very little about.  Prior to the auction, Buyer A could have seen an accountant, solicitor, buyer's agent, building and pest inspector, but chose not to.  The consequences could prove to be devastating.

Advice - Unreliable source
Buyer B enjoys a lovely Sunday BBQ with close friends and family.  Buyer B's uncle (the property mogul of the family who 'knows everything') starts talking about a mate of his at work who uses a hybrid trust to purchase property. The uncle explains how this mate of his had sought professional advice and the trust was the best way to achieve the best asset protection and tax efficiency. As Buyer B is about to buy her first investment property, Buyer B listens intently.

On Monday, Buyer B sends an email to her solicitor with instructions to set up a trust entity - the solicitor obliges.

Buyer B then proceeds to get finance and purchase the property in the trust entity's name.  While the solution for one buyer may be the best for that person, it wasn't the best setup for Buyer B. The buyer only finds out how much she has lost when she walks into her accountant's office to help her with tax reporting obligations.

Advice - Professionals
Buyer C is an Engineer. She knows how to build a bridge and appreciates the benefits of growing her investment portfolio to generate wealth. She also realises her limitations and understands the value of professional advice. As such, she begins with her accountant and lawyer.

Once Buyer C has her structure sorted, she applies for finance pre-approval. In a strong position to buy, she approaches her Buyer's Agent to do the searching and negotiation on her behalf. Buyer C relaxes as the Buyer's Agent ensures the appropriate professionals are engaged throughout the purchasing process.

Buyer C has bought her investment property, which is optimised in terms of:
- asset protection
- tax effective set up
- value for money
- potential growth
- good tenants, who pay on time

If you want a buying experience similar to the last example, we can help you.  Operating in the industry every day, we know the good professionals, who can help deliver these services and make sure you get the most out of your property purchase.

Yours in property! 

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