Building your property portfolio is a serious business that involves large amounts of money, so you need to be confident you have the best team of professionals around you.
Blogger: Chris Gray, CEO, Your Empire
Nobody is an expert at every endeavour. It makes sense to focus your time on what you excel on, while bringing in professionals to help with other tasks and commitments. Most of us don’t bat an eyelid outsourcing to personal trainers, cleaners, even dog walkers – so why wouldn’t you bring in professional help when outlaying significant amounts of money to invest in property?
We’re accustomed to thinking that if we want to get wealthy we need 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
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.
Building your property portfolio is a serious business that involves large amounts of money. To achieve the best results in the long term you need to invest in at least three experts. Here’s who they are and where to find them:
Expert #1: The 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 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. Make sure the accountant you use for your property investments is experienced in residential property.
Expert # 2: The property valuer
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 can give you this kind of valuable advice.
The irony in buying property is that people love the house they’ll live in – and often pay too much for it – while they make poor choices when finding an investment property. Many will buy an investment that seems cheap compared with a similar property in their home suburb – and they might even buy interstate or out of the area they know 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.
Expert #3: The buyers’ agent
Buyers’ agents are a reasonably new phenomenon that few people are aware of, but one of the best assets you can have on board. A buyers’ agent can do the legwork for you when looking for your investment property. Why pound the pavement every weekend scoping out 100+ properties when a buyer’s agent with specialist knowledge in the local market can do this on your behalf?
Buyers’ agents have strong relationships with real estate agents, and have many sales comparisons to back up their auction bids. 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 and anyone serious about growth needs to consider investing in one.
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, they will have done their research and know the pros and cons of each and every option.
Try asking other property investors which professionals they use, 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 increase my profits.