Good post nonrecourse - kudos to you.
I agree there are many paths to the top of the mountain.
Many people think it's a good idea to put their property on the market for a high price just to see if they get any bites. Sometimes they also believe quote lies. This technique can often cost the seller thousands in additional interest, advertising and results in a lower sale as the property becomes 'stale'.
I know, my parents did the same thing when my parents divorced. It took them over a year to sell and then they ended up selling for a good 15-17% less than the original price (and probably 5% under market value) plus all the heartache and stress for them. Getting to know a market takes A LOT of time. Some say at least 3 months for an area, especially a 'non-auction' area.
When I compared the amount of time required to be able to accurately determine an optimum asking price versus cost of valuer (and took into account the potential cost for getting it wrong), for the majority of home sellers, I believe using an indepedent valuer wins.
When I decided do I specialise in one area or be able to access the opportunities around the country I decided to go for a mix. I have properties that are in the inner suburbs, outer suburbs, some houses, some apartments, new, old, high end, low end, high growth/low yield, medium growth/medium yield. Diversifying across states has big impacts on land tax too. Land tax multiplied over my investing time frame (45 years) really adds up, much more than a few hundred on a valuer.
If one of your advisors stuff up guess what? Its your problem.
I agree. I'll accept the responsibility and I won't use them again. I'll also share my experience as I did with this board on when I used a BA.
Of course I double check everything they say and compare with my own research. I also don't choose them willy nilly in the first place. I have an investing mastermind group and I also take into account their experiences and recommendations.
Other posters on this board have likened my attitude towards passive investing as 'putting my entire fate' into the hands of some stranger. I don't think this is true. I only outsource some functions. Property management, mortgage broking, some market research and I used a BA once. I haven't used a valuer before (as I've never sold) but I have used an online valuation service to help determine my max bid at an auction and they were $4k or so off on a ~$600k result. Well worth the $59.
My greatest asset is time. I'm only young once. As I mature and am less interested in things like backpacking around Eastern Europe for a few months (just got back a few weeks ago) then I'll take a more active role. I am very interested in property (as evidenced by my presence on this board) however I have several other pursuits right now.
Unlike 98% of property investors we invest through trusts for asset protection and better long term control of our destiny. In the end you do what is best for you and your family. Our kids have grown up immersed in property. They are now witnessing what happens to people when they let the experts look after the detail of their life savings.
Did you study law and accounting and setup your own company and trust through
www.cleardocs.com.au? You can get a Hybrid trust setup for $137.50 here -
http://www.cleardocs.com/products-hybrid-trust.html.
- Or -
Did you figure that your time is better spent elsewhere and you paid several times this amount (as I did) to have an accounting/legal firm who specailises in Property Investing through trusts to set one up for you.
Where does one draw the line? Obviously this line is different for many people. I'm not interesting in learning it as much as others, I'm mainly interested in getting more freedom and time and being able to do whatever I want (thx Alex).
IMHO if you want sensational results with real estate then you have to do more than the average punter.
I do have sensational results. I believe an even better way to get them is to start early so I bought my first property at 21. As a result now that I'm 30 I don't need to spend my weekends driving around attending auctions.
Our experience has been no one has our interest at heart like we do and over time we have taken back the management of all but one of the properties as well as the valuations. We check and recheck any legal documents such as leases, contracts of sale, mortgage documents, insurance polices and council bylaws.
Yes, I agree with this and have experienced the downside. You are right in saying that nobody has your own interest at heart like you do.
However, in order to get to where I really want to be I think a key skill is constructing an 'A team' of advisers, seeking out the best, building long term relationships with them, leveraging my time and keeping my eye on the bigger picture. I'm not after another job.
The last time I organised finance I just went with my brokers recommendation because I trust him. I've used him for many years and most times it's obvious it's a good deal. Every other time I double checked it out myself his recommendations came back spot on. I don't have to check again anymore, in the same way I can walk into a Big W store and buy a book or CD I'm after knowing it's one of the lowest prices around.
I also make all the final decisions - just because a valuer might say a property is worth $x that doesn't mean that's the figure I'll use. I'll take that into consideration based on his skills, experience and level of independence in the process.