Property Investment Company’s?

Hi BigAJ,

Welcome to the forum.  We can definately relate to your situation. My husband and I had been itching to invest for quite a few years now.  We purchased our PPOR 4.5 years ago and as much as we would have liked to start investing sooner but we didn't really know where to begin.  We started reading investment magazines and books and we started religiously looking through the forums to obtain information from those who have a wealth of experience to share.  We both work full time and I am also completing a degree part-time so doing the hard yards ourselves seemed like a very daunting task. Like yourself, we thought the simplest solution would be to find a company that would do the work for you.

Before we even looked into narrowing down the areas of interest, we sat down and made a list of what we were aiming to achieve and how we were going to do it based on our personal situation.  Then we made a list of criterias that would hopefully lead us to where to look.  We originally set out to pick up something local, in Melb and also looked at 2 regional areas in Vic because we felt that it would be easier especially when you're starting out.  After doing further research, our interest was diverted to Brisbane.  4 months went by and we got to a point where it felt like it was consuming too much of our time.  So we decided to meet with an investment group in Melb because we thought they would have the answers for us.  How wrong I was.  

The first meeting with the group consisted of them telling us how they will do everything for us from picking the location, the property to organising the finance and arranging the accountant.  They kept emphasing how little it was going to costs us and that their current clients have come back for the second, third etc property.  Not once did they ever ask us about what we thought, their whole sales pitch was all about how people fail because they do it on their own and they don't have the experience that this type of company can provide.  They few a threw options on the table in regards to the areas we should be investing in and then followed up by saying that they only offer brand new houses through their direct developer because they receive generous discounts because they buy so many properties for their clients.  

We left the meeting knowing that we weren't any closer to where we wanted to be and we felt very uncomfortable about the whole process.  We kept receiving calls in the days that followed whereby the company urged us to act as quickly as possible as they had received word that the developer was about to increase the price.

After that meeting, we decided that the best option for us was to do it on our own, even if it was going to require more time and energy.  We made quite a few express trips from Melb to Brisbane and as exhausting as it was, when we found the house we had been looking for, it was worth all the hours it took to find it.  We are now 17 days away from settlement, which we are absolutely thrilled and excited about.  

We are by no means experienced investors and we have so much more to learn but we relate to your situation because when you haven't done it before, you always worried about what can go wrong.  It seems easier for someone to give you the answers but they might not be the right answers for you.  If you decide to go through an investment company, ensure that what they are offering is in line with your requirements and always question what their motives are.  Otherwise, if you decide to do it on your own, find yourselves a good broker (they are worth their weight in gold and we would gladly recommend you someone who is a regular on this forum), a good accountant and the people on this forum have a wealth of information which you don't pay a cent for  

Wishing you all the best.

Mezma3        

Well said!

I'm not sure how to add any more value other than 'trust but verify' with everything related to investing!

Good luck with your journey AJ

Perhaps you should take a look at our website. Because rather than just try and sell you a property we work with clients and teach them to make money. We also arrange to put clients directly into development projects and thereby allow them to make much of the development margin. This is the only way to get a property at a real wholesale price.

However it is important to always look at the experience of who you are dealing with. Personally I am always uncomfortable with a website where there is no mention of a real person. In the end my view is all I off is my time knowledge and service.

Good luck. I did the company ruin around myself and couldn't find one that I felt comfortable with so started on my own but started going to fortnightly meetups and it was invaluable. Networking with likeminded people gives you the knowledge and motivation you need.

There are a lot of experienced investors on this forum but also a lot of "advertisements" Be careful when reading "advice" from anyone, particularly ones where it is the posters first post.

Hi Richard,

Ok, I want to be wary of drilling into this too far because at the end of the day it’s Phil’s strategy and he is the expert rather than me. I’ll answer as best I can and will go to Phil for more info if required.

Phil has a specific formula which he likes to stick to very closely. He wants his model to be repeatable and low risk for his group members, and also not require a lot of time commitment on their part. Hence he will only present a development to the members after he’s reached the end of a long process and checklist of requirements – if it doesn’t stack up in any area then that development is discarded and the members will never hear about it.

His system is built around “affordable” new standalone single family homes (you want the land component for capital growth, as you point out), at the moment typically priced around $300k to $400k, in strong growth areas with multiple “legs” to the local economy (mining towns are usually ruled out for this reason) and in neighbourhoods/larger developments with no more than 20% of the properties used for rental (i.e. at least 80% owner occupiers). Those type of properties should have minimum vacancies and strong rental growth over time.

Apart from depreciation, one reason why he goes with new houses is because he will tell the developer that he wants the properties built with certain specific floorings, appliances, fittings etc to make it optimal for renting rather than for an owner occupier. This will have an extra cost which the developer must absorb. He will also ask the developer to pay the buyer’s interest on the loan during construction, so that the investor only incurs interest costs once they are able to put a tenant in and offset the cost with rental income.

A couple of other requirements are that the developer must pay the investor a rebate on settlement out of his budget for marketing & sales for that property, since he will avoid many of those costs if it’s sold through Phil’s group. The purchase price must also be below a valuation of the property from a completely independent, bank approved valuer.

If your question is directed to us (i.e. Universal Events) then we receive no commission on property sales. We make our revenue from enrolment sales in Phil’s advanced training courses and membership fees for his group.

If you were asking about Phil, then his group receives a few thousand dollars per property from the developer. He says, “much less than a real estate agent’s commission on the same property would be, but I make it up in volume”.

Regards,
Ken

Thank you for your response Ken.

I am sure with that information AJ can make an informed decision.

Cheers

Yours in Finance

Hi AJ

Good for you.

Yes get if from a different perspective.

If you have thought of SE Qld contact Andrew @ Allen Real Estate as he is a buyers agent based here in Brisbane.

Cheers

Yours in Finance

Hi Aj,

Definately not a financial planner – their training does not expose themselves to direct property investments.

There are a couple of organisations around that are endeavouring to get some accreditation & recognitiono of property investment advisors. Check out their websites PIPA and PIAA.

In a nutshell both organisations are endeavouring to 'clean up' the property investment 'advisory' industry.

I am half way through full accreditation with PIPA and I must admit I have enjoyed and appreciated the content to date.