One of the most common mistakes I see first-time property investors make is thinking that they can do it all on their own. With the possible underlaying beliefs that lawyers are crooks, accountants won’t tell you anything, financial planners only push other people’s stuff so they can make money, I can see the apprehension as to why one wouldn’t ask for help.
Some people even feel that they’re familiar with property because they may have bought one in the past or they see so many people buying and selling, they mistakenly believe that making money from real estate is easy… Not seeking advice from experts in the field, result in less than spectacular investments on their hands that drains their pocket, rather than lining it.
Just because your first deal went well it doesn’t mean that you’re going to replicate the experience next time. Especially if you are caught up in the hype that the media often creates around property.
Think about it: would you go to a dentist who had successfully completed one filling? Or to a mechanic who had successfully repaired one car? Then what makes you think you can successfully invest in property based on one experience?
There are those investors who do consult relevant experts like accountants and finance brokers, and I’d say that these are the ones that have accumulated a large asset base that has replaced their income. Most people that embarked on becoming a property investor however are stuck on 1-2 properties, that are delivering less than great results, I’d willing to bet that these people are those that didn’t consult their accountants or lawyers until the deal is done.
I have even seen people purchase an investment property and hand over a sizeable deposit before they consult with a mortgage broker – and it’s only then, after money and contracts have changed hands that they discover that for one reason or another, they can’t gain finance approval, not to mention bought the property in the wrong entity for tax efficiency.
What a stressful situation – and one that could be avoided altogether with a little planning upfront…
For some people, I get the feeling that these expert services are something of an afterthought i.e. they perceive an accountant, lawyer or finance broker as people who they begrudgingly pay to handle certain aspects of their property journey, but whose expertise they don’t really value or take advantage of.
My view is the complete opposite. Even if you have already had some experiences and success in property, how can you know what the impact of your investment purchase will be on your finances if you don’t consult with experts?
For instance: What is the impact of that property purchase on your taxable income? How much money can you actually borrow? Will it make a difference if you refinance your current loans? How much of your income is required to fund your new investment each week and how will this property help you reach your wealth creation goals?
With the right experts on your team, you can answer all of these questions and more – and come up with the kind of tailored investment strategy that will help you to create and hold on to your wealth for the long term.
But with no experts on your team – well, that’s too much like gambling for my liking.
The truth is, having a panel of experts to refer to during the process can make all the difference between buying a great investment or getting stuck with a lemon. The way I like to look at property investing is as if it is a business. I therefore consider the experts to be my employees. If you are very worried about their fees, then you really shouldn’t be a property investor. More often than not, their advice can save you thousands of dollars… So why are you concerned about spending a few hundred dollars on their services?
Do you think Donald Trump made his billions by knowing everything himself? Absolutely not! He relies on the expert knowledge of solicitors, accountants, mentors and financiers to grow his wealth. You too can do the same.
There are a handful of players that can make your property experiences infinitely more enjoyable, less stressful and ultimately, more profitable.
These are the people you need to add to your property dream team:
- Finance broker: your qualified broker will help you find the best loan for your needs, not the best loan in their product range.
- Accountant: your accountant can assess what the impact of the purchase of an investment property will be prior to purchasing. Ask whether buying it in your own name, a trust or company is better for you. Let them know what your long-term intentions are with the property so they can advise you accordingly.
- Conveyancer: your conveyancer is your legal expert, who not only will walk you through the sale contract, but will also handle relevant searches and ensure that you meet all of your legal obligations.
- Property Lawyer: They can act on your behalf for settlement, however their expertise lays in advising you how to set up the right structure for you property deal to ensure your investment is protected.
- Mentor: your experienced mentor who has been there and done that can help you avoid the pitfalls of investing, while guiding you towards maximising your opportunities.
- Property manager: your property manager can be likened to your personal assistant for each property you own. They handle every aspect of managing your asset, from finding and vetting tenants (your income stream) to raising rents regularly, to keeping your property well maintained. A good property manager is worth their weight in gold.