Incestment Advisor

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From: John Metti


I am starting the process of investing in my first property. Financing should not be a problem (salary is OK and I have 100% equity in my own home). As I started looking I came across an "investment advisor" (linked to a real estate group")... I wanted to understand the various options available for financing the new property. The advisor set up an appointment to inspect some properties (these were new developments as yet unrented).
The person showed us a number of properties, one being superior to the others. They quoted the usual details of purchase price, expected rents (5%) and benefits of the property.
Overall my "gut feel" was that the property was overvalued (the apartment cost more than my house) and I did not appreciate the comment "sign this large contract now or the property will surely be taken by the next person to inspect".

Do any of you have an opinion the value of these advisors and property analysts and whether their asking prices are generally too high given that they act for the seller or developer ?

Maybe it's "first property nerves" but I do not think I will proceed. Any advise appreciated

Regards
 
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Reply: 1
From: Duncan M


I assume you mean Investment Advisor, I shudder to think of the legality of an Incestment Advisor.

The spelling aside, it does seem to be very much on the nose.. Whats the name of the advisors?

Regards,

Duncan.
 
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Reply: 2
From: Brad M


John

When you say 'investment advisor' are you referring to someone who is presenting themselves as an authorised representative of a licensed financial planning/investment advisor group?

Assuming you are, from my understanding, an important thing to note is that there are 'advisors' out there who also market/sell property developments and this part of their operation runs under a separate name/business/structure than that of their 'investment advice' service.

As such you are not afforded the same protections under the law even though you assume you are because you are talking to the same person, who if they were operating under their 'financial planning' licence in acting on your behalf you would.

From memory, Paul Murphy from the Investment Institute is a licensed financial planner, hopefully he can clarify this situation.


Brad M
 
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Reply: 2.1
From: Les .



G'day John,

>>> Overall my "gut feel" was that the property was overvalued (the apartment cost more than my house) and I did not appreciate the comment "sign this large contract now or the property will surely be taken by the next person to inspect".

I would tend to "trust my guts" on this one. It certainly seems that the sign is attempting to appeal to your emotions. And, as you will have read herein, the figures tell the good deals, and emotions should not come into the picture.

Since it is your first investment, you would be well advised to stay cool (which you appear to be) and select a property that fits your parameters, not the developers.

Someone (not sure who??) has said to look at 100 properties before deciding - you might miss the odd good one, but after seeing/evaluating 100, you will KNOW the next good deal that pops up.

To paraphrase John Fitzgerald, "lift the veil" on any deal - i.e. what is the agent and/or seller getting out of this deal that may not be immediately visible? In other words, do your homework, and let the numbers tell you the truth.

How does THIS property stack up against others "out there"? Is NEW really the way you want to go? Why? Does this new property have anything special that sets it apart from 100 other new properties in the same area? Would someone pay you more for that extra "something"?

And one other personal pet of mine - don't get fooled by the "new property" Tax deductions - typically they amount to $20 per week ($1000 per year) - but if you can buy something similar 15 years old, how much can you discount the purchase price compared to this new, shiny property? And how much (or how little) would it cost to make the 15 year old property look JUST as shiny? Could make a $50k difference to your situation (but you'll miss $1000 per year for 40 years - damn .... ;^) (And on this point, I disagree wholeheartedly with Mr John Fitzgerald - sorry, John).

Regards,


Les
 
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Reply: 2.2
From: Paul Murphy


Brad suggested that I clarify the position for you, and yes Brad, I am a licenced Financial Planner.

To operate as a Financial Planner, you need to either have your own Dealers Licence, or hold a Proper Authority under someone else's licence. This Proper Authority then allows the giving of advice in certain, authorised areas. It is not often that the sale of property is considered compliant under the licence, and therefore the vast majority of planners do not sell or recommend property.

The term "adviser" can be very loose, and I too would like to hear exactly what your adviser is or who he represents. If you don't want to name him on this public forum, send me an email and I'll let you know if I know anything about him.

Many "advisers" charge the developer between 3%-10% of the selling price of the property, with 5-6% being typical. I know of one Melbourne marketing company that currently charges the developer $40,000!

It has been stressed so many times on this forum the need for your own independent valuation, and this is never more true than if you are purchasing from an investment marketer or "adviser". Continue to do your homework and research, and when you have a solid knowledge in your preferred area, you will get to know the good deals from the bad ones. Not need to rush, particularly on your first investment. The last thing you want is buyers remorse, because this may stop you from future investments.

Paul Murphy
The Investment Institute
info@theinvestmentinstitute.com.au
 
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Reply: 2.2.1
From: Jack Moro


Gday john
Have a look at my post to HELP.
Trust your gut it sounds to me as though the deal stinks stay away and go and buy some relevant educational material educate your self and you will have the knowledge to deal with those wanker type sales people who seem to prey on the inexperienced

Hoo roo
Jack
 
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Reply: 3
From: Rolf Latham


John

Better if you do not mix property advice AND finance advice. Your gut feel is worth much more than you give creedence. Our modern society has all but crushed our intuition with give me the facts and show me the money.

Get yourself an independent val, and do not allow them to cross collateralise your property. Use a part loan of a LOC to get the deposit out of your home to limit the exposure
Ta

Rolf
 
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Reply: 4
From: Sergey Golovin


Hi John.

If you do have a chance have look at this book.



CONFESSIONS OF A REAL ESTATE - $17.95
RYDER T
ISBN: 1875857591 - Paperback - Management. Dymocks.

http://www.dymocks.com.au/asp/search_results.asp

Sounds like they took you for run.

Serge G.
 
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