IF you want profitable property investments, you need a good team. Chris Gray explains why it’s essential to invest in at least three experts, and how to go about it.
Our parents’ generation told us that if we wanted to get wealthy we needed to look after the pennies, as the pennies will then look after the pounds. But times have changed. Current thinking is that a) you need to spend money to make money, and b) you’re better off paying experts who are specialists in their area than try to be a jack of all trades but master of none.
If you’re aiming to venture off and build a property portfolio that will give you the ability to leave work early and enjoy life’s luxuries then you’re getting into a serious business that involves large amounts of money.
Here are the experts you’ll need on board to help you get there:
Get an accountant with property expertise
The average accountant can do your bookkeeping and save you some money by adding in your expenses. However, not all accountants will understand what’s really involved with property investing.
I’ve spoken at about 20 accounting conferences and discovered the average accountant still thinks that paying off your home loan is the best thing you can do. The broader-thinking ones know that using the principal part of your repayment to fund a second property will make much more money than you will otherwise save in tax.
Bring a property valuer on board
A property valuer can not only tell you what your house is worth today, he or she can tell you what it’ll be worth next year, in five years, with a new kitchen, a paint job, or a second-storey addition. Why spend $50,000 on a new kitchen and bathroom if it will only add $30,000 to the value of your home? A valuer will give you this kind of valuable advice.
The irony in buying property is that people love with the house they’ll live in – and therefore often pay too much – while they make terrible decisions with regards to investment properties. Many will buy an investment that seems cheap compared with a similar property in their home suburb – and they’ll often buy interstate to get it.
Hiring a valuer every time you purchase a property will give you peace of mind that you’re making a sound investment.
Get a buyers agent to do the legwork
Buyers agents are a reasonably new phenomenon that few people are aware of. Why pound the pavement every weekend scoping out 100+ properties when a buyers agent who specialises in your suburb can do it for you?
Buyers agents have strong relationships with real estate agents, and have many sales comparisons to back up their auction bids. The benefits are they often buy properties before they go on the market and negotiate from a stronger ground.
Most mum and dad buyers get bored after a few open homes and then buy anything at any price. Buyers agents are out there each week no matter what happens.
How to source your team
Not all professionals will be able to help you implement your wealth creation plan, so it’s vital to pick the right ones.
I always try to find professionals who are active property investors too. If they are doing it personally, it often means they will have done their research and know the pros and cons of every option.
Try asking other property investors which professionals they use, and then network the contacts you already have. Your accountant will often know a few brokers who will then know a few valuers and so the network of good professionals continues.
I am always on the lookout for more professionals that I can use and often I don’t ask how much they charge. I concentrate on getting the best advice possible, and I know that every dollar I spend will either reduce my risk or will make me additional profits.
By Chris Gray.* Chris Gray is one of Australia’s most recognised property investors with over 20 years of experience in property investing and education. He is the host of Sky News Business Channel’s “Your Property Empire” every Friday.
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