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Leaders in the property investment industry have come out in force to remind investors about the importance of conducting due diligence on their property advisers.
Speaking to Smart Property Investment, founder and director of Destiny Financial Solutions, Margaret Lomas, said the property industry is susceptible to unscrupulous operators, but honest operators will have no problems disclosing how they run their business.
“The first thing to know is that every singly industry in the world will have some ‘bad guys’ in it,” she said. “And of course, the property investment industry is no different.
“But you need to ask pointed questions. Ask the adviser ‘What’s your commission on this? How are you paid in this transaction? Are these extra commissions you get if you manage to sell a number of this person’s properties?’”
Ms Lomas said there was nothing wrong with commissions as a form of remuneration, but property professionals should be disclosing how they earn their income.
“Ask them to put all of those answers in writing for you because people are a bit less inclined to actually tell you a lie in writing than they are verbally,” she said.
Todd Hunter, director of wHeregroup, said a little bit of research goes a long way when it comes to separating a professional from someone who is out to make a profit from your loss.
“If it sounds too good to be true, it probably is,” Mr Hunter told Smart Property Investment. “If you’re not sure how the system works and can’t work out how their offer works, go and do some research before signing up,” he said.
“You can simply start by conducting an internet search on someone’s name and their company. There are various chat rooms and forums out there. Just have a bit of a read.
“Not everything in those forums and chat rooms is gospel. Everyone has different views on properties and strategies – so you have to filter through some of it – but there is certainly some interesting information out there for investors to find.”