Custodian Wealth Builders

I thought they were quite reasonable and seem to know what/where to invest…..
A couple of years ago, when I was interested they were mainly focusing on large/new 4 bedrrom houses on the outskirts of Brisbane/SE Qld…. looking for CG.! (am sure they had success coz Brissie enjoyed large CG's in 07/08)…

Out of interest, where are they looking at now? I would be interested to know which areas….
They obviously have networks with builders/lawyers/RE etc and this is how they are making their money coz you are paying them for everything but for the time-poor people I think they are good!!

Cheers
Ritchie

This forum comes close to the top in google search when reviewing Custodian Wealth Builders, so I thought it might be the best place to put my experience for others to read.

I attended one of their seminars (paid the $30) and got the free book 7 steps to wealth. The seminar was ok, not big on details but gave me enough information to understand the potential of property investment. Their basic premise is, build a house, don't buy, avoid the big four banks and cross collateralisation and make negative gearing work for you. I also was interested to see John Fiztgerald in the flesh – the shiny suit, the gel hair, the suntan – this guy reeks of salesmanship.

I read John Fitzgerald's book which gave me the detail I was after on how it all works, ie negative gearing, depreciation deductions, whats important to look for in a location etc.. All of it is sound advice and I can't disagree with his ideas.
Some people say house price doulbing every ten years is a myth, but actually, it is a fact that since the early 1900's, on average house prices have gone up 10% each year. Mind you its not linear and John Fitzgerald fails to mention that, but even since 1970, on average house prices have increased 10% each year.. S it might not be in the next 10 years, prices will double, but over the next 20-30 years we should be confident there is going to be growth consistent with the last 100 years.. right??

Onto the first meeting with Custodian. I booked a meeting to see their consultant. I can describe that as very smooth. He has employed some smart people. They are happy to spend a LOT of time with you to answer all your questions, explain scenarios and show you how it can be done. I am a reasonably intelligent guy and I really put some tough questions to the rep and read over their material and their logic stacked up. I am happy to say I am still using their logic to purchase my investment properties. So far so good.
Then comes the selling…

Once they convince you can actually do this, they invite you out to a day in which you view a piece of land, sign up for a loan and sign the contract with a solicitor present. Woah I said . "All in the one day"… Of course there is the cooling off period if you want to pull out, they said. I asked to review the land and house package they were going to show me so I had time to review and get questions ready and do research on the area, but they denied that request, or rather claimed they didn't know what property was going to be available until Saturday. Strange I thought..
So I went along with it and spent a day with them.
They claim to use their own reliable builders.
They have their own investbank broker who the loan is done through. (ING seems to be their favourite)
They use their chosen solicitors to act on your behalf. (how nice)
They offer a fixed price contract to complete everything to turnkey.
They charge 3% for the first home you build with them. On an avergae $400k home thats $12k

So what happened.
They showed me some land in an area that I know is of some disrepute, ie high crime – not bad in itself but you try and get good returns there..
The house was a package being done by the developer (not their builder as they had indicated) and it was going to be similar to to the other houses in the same estate that the developer was building – not quite what I was after – I want to be the average house in the street with better houses around me.
It was way overpriced for what it was, I knew I could build a superior house for a cheaper price straight away.
When we returned to the office, the invest loan guy was ok and took me through the fees and the loan (boy there were a lot of fees)  but the solicitor…
thats when it all went a bit hairy
The fees.
The solicitor wanted to charge an enormous sum of money (read $1800) to review a contract that they had seen dozens of times before. I challenged them on that – the clerk or whoever she was didn't like that at all. I asked for my own solicitor and they all got a bit narky.

Then I started to challenge them on a few other things, ie the loan fees, the interest rates (which are a little higher than I can get elsewhere).

In the end I walked away. The costs were going to be over the top and I couldn't see the value in their property.
So what did I learn?

Don't just take it for granted they are securing a really good deal for you in terms of location, property and house – they may on some occasions, but they are just getting whatever is available at the time making you believe that its all going to be double the value in ten years time . Well Mr Fitzgerald, that may be true, but how about I pour my money into something that costs the same and is going to get me an even better return over those 10 years and probably be worth a bit more after that because I did some research and got some real value from my own house builder. All that from reading  your own book and applying your principles and realising what you were trying to sell me didn't stack up.

Their loans and solicitors are more expensive that what you will get normally.
Their 3% fee is expensive and only useful if you just don't understand the process and don't have any time to build a house yourself.

They want you to sign a contract for a property on the day you see it and use the cooling off period for you to do the research – well that may be good for time poor people – but thats not the way I want to work, but they won't be flexible on that and now I know why.

If you feel you have zero time to handle the process of property investment, these guys will do it all for you, BUT, you are more likely to get a better investment by doing the work yourself using his logic and saving yourself the $12k+ fee.

I don't represent any company and have no affiliation with anyone in the investment industry. I'm a private individual who likes to do his homework.

cheers

John.

Yes John appreciate your honest view.

As GOM mentioned i think another case of PS ing.

Thanks John. Good info.

ING is one bank which wholesales their funds. Depending who you go with the interest rate can vary as can the broker's trailing commission.

You will generally do better if you purchased a block of land and built a turn key home yourself. This takes away the middle men and the tens of thousands in commissions that are involved.