Expert buying advice drives property investment success
Buyer agency is a new industry. Less than 1 per cent of property transactions across Australia are made using buyer agents like us.
Which begs the question: why should you pay a buyer agent fee when you can buy property yourself?
Our biggest competitor is in fact not other buyer agencies. Our biggest competitor is the self-assured investor who believes they can successfully manage the process themselves, get a good outcome and not pay a fee.
Property is not like any other purchase. For a start there is the huge upfront outlay – as much as five to six times as people’s annual income. That is all poured into one property at one time, and within one market. The risks associated with making the wrong decision are huge.
Yet many property investors base their decisions on little more than a hunch, or worse.
Many buy in a suburb in their home town, figuring that because the value of their own home or their friend’s home has gone up, or because a new shopping centre is being built, that means the market is going to rise.
Others buy because they’ve been the subject of marketing. They might attend a swanky seminar and get seduced into buying an off-the-plan apartment because of sexy brochures and a great sales pitch using fabricated data. (On average, off-the-plan purchases take five to six years to see any increase in capital value – and sometimes longer – making this strategy one of the highest risk ways to invest in real estate.)
But buying an investment property is a serious decision that needs to take into account a number of considerations:
- Property is not one market. That would be like saying all shares are one market
- There are 8 capital city markets and at least 30 regional markets to consider
- All of these markets have multiple sub markets. That means there are hundreds of places to invest and literally hundreds of thousands of property to choose from at any one time
- There are different property sectors to consider: Residential, Industrial, Commercial, Retail
- There are property types within these sectors. For instance, within the residential sector there are units, townhouses, houses, high rise apartments, and studio apartments.
- There are different price points to consider
- At any given time these markets, property sectors, property types and price points will all be at different stages of the supply cycle
- At any given time these markets, property sectors, property types and price points will all be at different stages of the value cycle.
A buyer agent’s job and the reason they earn their fee is because they use their expertise to work through all these considerations. Through quality research, experience and first hand market knowledge, they provide the best options for their clients’ circumstances. They save their clients time and manage their risks, providing the best chance of short medium and long term growth and most importantly stopping them from making obvious mistakes.
The complexities of the market place and the inexperience of the self-assured investor show up very clearly in the statistics. Of property investors, 75% own just one property in their portfolio, 15% own just two properties and only 3% of investors hold 4 properties or more. That statistic is surprising given that Australian property has outperformed every other investment class over the last 100 years, compounding at approximately 8% per annum.
If property investing is so simple, why aren’t 90% investing in more than just 1 or 2 properties in their portfolio? Why aren’t they leveraging off the exceptional growth they should be receiving? Why aren’t they creating effective portfolios that could be providing them with a reliable passive income in retirement?
The simple reason is that after purchasing one property, most people don’t believe it’s a great way to build wealth.
- They managed to lose money investing in property (despite an average 8% compounding growth)
- Their property underperformed other asset classes (despite an average 8% compounding growth)
- They have had a frustrating experience with tenants
- They couldn’t handle the property manager
- The couldn’t handle the ongoing maintenance contractors
- They lost control of their repayments
Like most things in life, property investing only works if you get the execution right. There are ways you can eliminate or reduce some of these risks. There are ways you can consistently outperform the averages. It all comes down to the right strategy and an experienced team. Engaging a buyer agent to provide expert advice will play a vital role in this.
So why pay our fee?
Because all of our clients are in the process of building effective portfolios, and many of them become part of the 3% who will own four properties or more. All of our clients will enjoy a more comfortable retirement – not because they worked harder or because they earned more, but because they took advice and used their time effectively and executed a strategy that worked.
In the end you will pay a fee – whether you use us or not. Unfortunately for most self-assured investors the fee they pay is that they will burn through precious time, and often money too, trying to figure out what we already know.