Buyers Agent-First investment property

Hi all, I was hoping someone could provide some advice.

I?m looking at purchasing my first investment property in Melbourne and was considering using a buyer?s agent. I?ve looked at a few companies that offer these services and I?m getting a little bit stuck. The companies I?ve spoken to thus far have the full package which is around $10,000, for that they handle everything and put forward what they feel the best investment option is. The second option is to do all the groundwork yourself and then have them step in for the negotiating process, which is significantly less, between $2,000-$3,000.

I?m apprehensive to depart with $10,000 but at the same time I?m concerned about paying overs if I?m dealing with Real Estate agents directly. I was interested to hear about other peoples experience and what you?d recommend. I?m looking to spend approximately $400,000 on the property.

Last year we used a BA for our first investment property and I would not hesitate to recommend use of a BA to anyone, particularly in the hot market that we are in now.

Honestly, you get what you pay for and more. A $10K investment will save you that plus more in time, stress, anxiety, research and connections. The BA will be able to recommend you great lawyers, building inspectors, architects, designers.. whatever you need. As it is in an investment property, the cost is also tax deductible in the same way as your other purchase expenses will be.

I would suggest in your situation a BA would be incredibly helpful - they know the market better than you, are closer to it and have the relationships with the agents. IMHO it is a no-brainer. Do it!

Fungus - we looked at using Suburbanite when we were selecting our BA. We met with Anna and she was great. We ended up using another BA, but she was clearly very knowledgeable and professional. I'd suggest you meet with her and see for yourself.

vtt
:)
 
Gday Fungus,

As david said, there are a good reasons to use BA mainly to do with leveraging experience but I also agree with Biz that its not about outsourcing everything or all the work. Especially not you brain. Do you due diligence, learn as much as you can (like on here) and you will be better able to engage with what any professionals (be it brokers, accountants, or BA's) are telling you.

I haven't heard testimonials for suburbanite. Some BA's are willing to incorporate training into their model so you learn as you go. Others are much more formula driven "buy what we give your or leave" etc

I'm definitely one who like to go out there and learn. Have been jumping onto this forum pretty much every day for the last 4 or so months, and have been going out and checking out properties every Saturday.

I have learnt a fair bit, but I think I just lack that confidence to actually go out and seal a deal especially in a hot market like Sydney right now. It's pretty big a deal and a large amount of money to invest so I'm just slightly cautious. Plus if I end up going with Brisbane I want to have someone who knows a bit more of the area.

Thanks, Matt, Always good to see your thoughts.

Last year we used a BA for our first investment property and I would not hesitate to recommend use of a BA to anyone, particularly in the hot market that we are in now.

Honestly, you get what you pay for and more. A $10K investment will save you that plus more in time, stress, anxiety, research and connections. The BA will be able to recommend you great lawyers, building inspectors, architects, designers.. whatever you need. As it is in an investment property, the cost is also tax deductible in the same way as your other purchase expenses will be.

I would suggest in your situation a BA would be incredibly helpful - they know the market better than you, are closer to it and have the relationships with the agents. IMHO it is a no-brainer. Do it!

Fungus - we looked at using Suburbanite when we were selecting our BA. We met with Anna and she was great. We ended up using another BA, but she was clearly very knowledgeable and professional. I'd suggest you meet with her and see for yourself.

vtt
:)

Are the BA fees fully tax deductible, vvt?

Anna was referred by a financial advisor, so definitely keen to have a chat to her. Just couldn't find anything on the internet testaments wise.
 
As it is in an investment property, the cost is also tax deductible in the same way as your other purchase expenses will be.

To clarify for others, BA fees are not immediately deductible, and form part of the cost base like other professional service fees.
 
Gday Fungus,

.... Do you due diligence, learn as much as you can (like on here) and you will be better able to engage with what any professionals (be it brokers, accountants, or BA's) are telling you. ..... Some BA's are willing to incorporate training into their model so you learn as you go. Others are much more formula driven "buy what we give your or leave" etc

This is a very important point: educate yourself and become comfortable in the field - at the end of the day you will need to assess whether a given property suits your circumstances and strategy and understand the reasons why...

Some of our clients just want the job done and are not interested in the process too much. Others participate more and learn more from the "journey" as we explain why we recommend certain properties, reject other and go into details about the pluses and minuses of each (no property is perfect).

Many of our clients don't have a clear strategy (why, what and where to buy) - here we would assist them in developing it and provide reasearch and advice as needed. In other words, they learn how it's done.
 
This is a very important point: educate yourself and become comfortable in the field - at the end of the day you will need to assess whether a given property suits your circumstances and strategy and understand the reasons why....

Ditto. I have used a BA and would use a BA again but it doesn't take away from your own DD and understanding the numbers and your strategy. I was presented with a number of properties before settling on the ones I went forward with. I rejected the others because they didn't fit my strategy or the numbers didn't add up for me.

I also agree with comments that it is about putting a value on your own time but being comfortable that the BA is taking you in the direction you want to go.
 
I understand that a Buyer Agent fee goes onto the cost base of a property but if you draw the Buyers Agent fees from a seperate LOC can that interest be tax deductable?

Cheers
Coota
 
I understand that a Buyer Agent fee goes onto the cost base of a property but if you draw the Buyers Agent fees from a seperate LOC can that interest be tax deductable?

Cheers
Coota

Generally yes as its for investment purposes
 
I'm definitely one who like to go out there and learn. Have been jumping onto this forum pretty much every day for the last 4 or so months, and have been going out and checking out properties every Saturday.

I have learnt a fair bit, but I think I just lack that confidence to actually go out and seal a deal especially in a hot market like Sydney right now. It's pretty big a deal and a large amount of money to invest so I'm just slightly cautious. Plus if I end up going with Brisbane I want to have someone who knows a bit more of the area.

Thanks, Matt, Always good to see your thoughts.



Are the BA fees fully tax deductible, vvt?

Anna was referred by a financial advisor, so definitely keen to have a chat to her. Just couldn't find anything on the internet testaments wise.


Welcome Fungus, I was like you not too long ago, I wanted to buy in Brissy but didn't know how, so I considered using a BA. But if I wanted to achieve my dream of accumulating 10+ IPs, sooner or later I am going to have to put in the hard yards and learn the deal spotting process myself.

Don't be afraid to reach out to people on this forum, you will find there are plenty of people looking at the same areas you are looking at, and are willing to share ideas and strategies, best of luck!
 
Welcome Fungus, I was like you not too long ago, I wanted to buy in Brissy but didn't know how, so I considered using a BA. But if I wanted to achieve my dream of accumulating 10+ IPs, sooner or later I am going to have to put in the hard yards and learn the deal spotting process myself.

Don't be afraid to reach out to people on this forum, you will find there are plenty of people looking at the same areas you are looking at, and are willing to share ideas and strategies, best of luck!

Thanks JameZ.

Did you end up using a BA for Brisbane, or ended up doing it yourself? I was more intending to use BA for the first property to get off to a good platform, and to hopefully learn a lot from - ideally I want a BA that I can bounce ideas off (is that realistic?).

At the moment I'm getting overloaded with information so trying to sort out the important pieces and put them together. I have bits and pieces of a strategy but I'm reading as much on here to build up a more detailed one
 
I was more intending to use BA for the first property to get off to a good platform, and to hopefully learn a lot from - ideally I want a BA that I can bounce ideas off (is that realistic?).

At the moment I'm getting overloaded with information so trying to sort out the important pieces and put them together. I have bits and pieces of a strategy but I'm reading as much on here to build up a more detailed one

Hi Fungus

We've had many clients over the years use our services for their first IP only, both to gain a foothold in the market and also to gain an education along the way. It really is a learning process and you will benefit, both in knowledge and confidence, having an advocate by your side for the first time. Obviously I'm biased :D given what I do but if you're looking for a good Brissy based BA feel free to check out www.rebaa.com.au which has the largest list of exclusive buyers agents nationally- all of whom have been accredited and are appropriately licensed, insured and qualified.

Also it's important to go with someone that has local experience (REBAA full members stipulation is now a minimum of 2 years field experience in buyers agency)- what part of Brissy are you interested in specifically?
 
Hi Fungus

We've had many clients over the years use our services for their first IP only, both to gain a foothold in the market and also to gain an education along the way. It really is a learning process and you will benefit, both in knowledge and confidence, having an advocate by your side for the first time. Obviously I'm biased :D given what I do but if you're looking for a good Brissy based BA feel free to check out www.rebaa.com.au which has the largest list of exclusive buyers agents nationally- all of whom have been accredited and are appropriately licensed, insured and qualified.

Also it's important to go with someone that has local experience (REBAA full members stipulation is now a minimum of 2 years field experience in buyers agency)- what part of Brissy are you interested in specifically?

Yeah, I'm just weighing up the costs vs benefits at the moment with a BA. Do you have any suggestions of a good Brisbane BA from that list?

I've been looking at Strathpine area as I feel that's the next thing. Could be completely off. I'm just not sure how much more Logan has in it this cycle.
 
Are the BA fees fully tax deductible, vvt?

Anna was referred by a financial advisor, so definitely keen to have a chat to her. Just couldn't find anything on the internet testaments wise.

The BA expenses are fully deductible but form part of your capital cost base for tax purposes. Your accountant or perhaps an expert on here can explain it better than I can.

Even if they weren't deductible (which they are) remember to factor in the value they will add to you, if you pay attention you will learn their reasoning and start understanding how they are doing things. In my case, the BA was able to give a very refined estimate of how much the property was really worth in this hot market and actually made an offer at less than I was prepared to pay because they had built a professional relationship with the sellers agent and understood what the vendor was prepared to accept.

This alone saved me $17,000 and I saved more in time and hassle. I've now got a great building inspector, a fabulous architect for when I'm ready to renovate and an absolute respect for BAs and the process.

Good Luck!
vtt
 
Yeah, I'm just weighing up the costs vs benefits at the moment with a BA. Do you have any suggestions of a good Brisbane BA from that list?

I've been looking at Strathpine area as I feel that's the next thing. Could be completely off. I'm just not sure how much more Logan has in it this cycle.

Hi Fungus

I would use any of the REBAA members on the list for QLD but for Brissy the only ones who won't be able to help would be NQ and VFM as they don't operate in Brissy. Best of luck with your quest :)
 
Generally yes as its for investment purposes

Not deductible!

https://www.ato.gov.au/individuals/...4/?page=9#Property_agents_fees_or_commissions

Property agents fees or commissions
You can claim the cost of fees such as regular management fees or commissions you pay to a property agent or real estate agent for managing, inspecting or collecting rent for a rental property on your behalf.
You are unable to claim the cost of:
commissions or other costs paid to a real estate agent or other person for the sale or disposal of a rental property
buyer's agent fees paid to any entity or person you engage to find you a suitable rental property to purchase.
Further information
These costs may form part of the cost base of your property for capital gains purposes.
 
Not deductible!

https://www.ato.gov.au/individuals/...4/?page=9#Property_agents_fees_or_commissions

Property agents fees or commissions
You can claim the cost of fees such as regular management fees or commissions you pay to a property agent or real estate agent for managing, inspecting or collecting rent for a rental property on your behalf.
You are unable to claim the cost of:
commissions or other costs paid to a real estate agent or other person for the sale or disposal of a rental property
buyer's agent fees paid to any entity or person you engage to find you a suitable rental property to purchase.
Further information
These costs may form part of the cost base of your property for capital gains purposes.

Everybody who responded said the fee is added to the cost base for CGT and your information confirms that.
 
To assist, and I hope there are no BA's in my area ... :)

As the sellers agent, the goal is to do the best you can for your client. The next issue, in your market place, or price range, is it a buyers or sellers market.

If its a buyers market, then I must say, my job to do the best for my client is harder when I am dealing with a BA than it may be directly with a buyer. In the main, that will apply to both IP and PPOR.

If its a sellers market, then its a slightly different scenario, as perhaps the "importance" is "securing" first, and mmmmm "best price" second, then if its the first, I think too many buyers try to be hard nosed, to achieve the second and then miss out on the property. DOH, unless that was the "objective".

Yes, sadly I have seen some terrible agency practice and if that is who you are dealing with, then both a BA as well as a buyer directly is likely not to enjoy the outcome. However dealing with a knowable and experienced agent, then I will say you may end up with a better result using a BA.

Did I say a better price, no better result, and that may be even less personal stress during the negotiations.

They may be a BA or two, that has dealt with me and reading this, and they might say, hey that's not how it went for me, so perhaps we had a difference of opinion, on whether we saw it being a buyer or sellers market for that property.

Anyway, that my 2 cents from a sellers agents perspective. Hope that helps
 
I take it the majority of buyers agents are based in the areas they specialise in?

What about if you are open to buying anywhere in aus as long as its a great investment but you don't know which areas are worth buying in or at least researching?
 
I understand there are BA that move around depending on where deals are but you have to understand what their criteria is (ie why do they think that location x is doing/going to do well) and what about the local issues (eg flood areas for BNE)
 
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