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Episode 167 | When you SHOULDN’T use a Buyers Agent?

Alright, folks! Let’s bring on Episode 167!!

Today is all about Buyers Agents… and when you SHOULDN’T use one!

Yep — it might seem a bit strange considering Bryce is one… but we’re going there! And why? Well, we’ve received a couple of questions recently about the cost of a Buyers Agent, and whether or not this represents value for money

So, how much (in $$) is a reasonable Buyers Agent fee? — and WHY exactly do they charge what they do?

More importantly, how can you tell if you’re dealing with a Spruiker?

 

… just a heads up before we jot down the 2 questions we’ll be answering Folks, the 2nd question is particularly long, so if you can’t catch everything Bryce says on the podcast, we’ve got you covered below 🙂

So, the questions that came in are:

 

1st Question:
“Good afternoon Team. I have organised an interview with a Buyers Agent and they told me what I should do, which has been in line with the fundamentals of The Property Couch. But the bottom line is it’s $15,000 for them to find my first investment house! I wanted to think about the best way forward, and ever since they keep ringing, and picking on my FOMO, which has since turned me off using them. What I want to know is, what risk do Buyers Agents hold and are accountable for? Because as far as I can see, they don’t hold any risk in regard to a return on the investment I am left with. Should people place an act against its members to ensure a warranty or guarantee in place to hold these business accountable?”

 

2nd Question:
“Hi Ben. I have a question on using Buyers Agents. I am genuinely considering using a Buyers Agent; but the cost is much higher than other property professionals. I think that if the price was affordable, very few people would fall prey of the spruikers. Here’s what I mean: solicitors are equally important partners in buying a property and they are appropriately trained and their role is important — it’s actually mandatory to use a solicitor or a conveyancer and yet they don’t take advantage of the fact that you can’t buy property without them. Most charge around $2000 — and one can pay even less with conveyancers — I’ve used conveyancers twice in Victoria and paid $770. They arranged settlement, made sure your bank doesn’t delay to settle, they advise me on the contract, their fee is NO WHERE NEAR that of a Buyers Agent. BA charge around 10K when buying a $450,000 house, this is more than 3% — that’s a very high price to pay for financial advice. The other important person for a property investor is a building and pest inspector — and yet they are nowhere near what a BA charges… $100 will get you a building and pest inspection. Another important person — around $600 will get you tax information from an accountant so one can have a clearer picture on how one’s decision will affect one’s position, one can see whether they can afford the investment, they can also do the tax … and yet they charge nowhere near the BAs. Financial Advisors are equally important. They charge about $700 – $2000 their fees are around 1% of investment, the rate charge for investments in SMSF is also around 1%. This includes financial advice, assistance with selecting, usually investing in shares, which can be more risky than property. This is why I think BAs are overpriced and are very good at instilling fear in property investors when they fall into the hands of Spruikers.

The irony of this that the equity they normally use to buy an IP is usually from their home, which they bought themselves. I think that if a BA charged around $2,000 more people would use them and spruikers would be out of business. I’m also aware that some BA provide financial and strategy advice and, therefore, feel as if they should charge more. I don’t think most of them are qualified financial advisors, but they charge more than financial advisors. To be fair to them, they don’t call themselves as financial advisors but, rather strategists, which is the additional serving to source a property. I don’t think mum and dad need a strategy plan every time they buy a property, and yet they pay for this every time they buy a property through a BA. And the ones I have spoken to say they charge so much because they don’t only do sourcing. Financial Advice can be done once, and one can pay, say, $1000 – $2,000 session for the planning, formulation of the strategy and the sourcing … be not more than $2,000, which is less than a lot of property investment professionals. I think the high cost of BAs and the fear in which they instill in investors make those who can’t afford their exuberant price fall into the advice of spruikers.

I’ve identified a region I want to buy in Adelaide and want someone who can view properties for me and buy for me. I’ve already seen a Financial Planner and strategist and what is remaining is the property. I’ve done my adequate research, I’ve contacted a BA and the average price is $10 – $15K and I fail to find justification in this fee. I know that a provider of this service can charge whatever they want as someone on the other side of the transaction is willing to pay that much.

My question is: I wanted to ask you as a Financial Advisor whether you find Buyers Agents fees reasonable?

Episode 166 | How to Avoid the 7 Common and Costly Settlement Mistakes when Buying a Property – Chat with Nicole Faid

Back by popular demand! We heard from today’s guest back on Episode 107, and joining us again is none other than Nicole Faid, Principal and Founder of Accord Conveyancing, who has handed out accurate legal advice for over 25 years of industry experience! Just a heads up — we covered her awesome back story in that episode, so if you want to hear it (and it’s well worth the listen), go back and check it out!

So — Conveyancing — let’s take the mystery out of it, folks! Because a lot of people out there don’t know what happens once the documents have been handed over to a Conveyancer, especially one like Nicole!

And we jump straight into it, folks! So get pumped for the 7 common & COSTLY mistakes you really DON’T want to make…

(If this episode doesn’t cement the fact that it’s crucial to get a contract review BEFORE you sign, very little will!)

 

So, let’s hear it. What exactly are you in for?

  • In a nutshell, what does a conveyancer do?
  • What is the most important document that underpins a contract?
  • How many people don’t get the amount of land they thought they would when purchasing a property?
  • What happens if the discrepancy of this land is less than 5%?
  • What REAL LIFE EXAMPLE happened in Brunswick? (And how much did this mistake cost the buyer?!)
  • Why shouldn’t you rely on your own interpretation of “wear and tear”?
  • Are “back to back settlements” a bad idea?
  • What happens with the conveyancing rules if you’re a borderless investor?
  • What is a “caveat”?
  • If you’re purchasing through a SMSF, what title requirements do you need to be aware of?
  • What can happen in the settlement period that will seriously shock you?
  • Why is it important to distinguish between major and minor issues with the settlement process?
  • When should you conduct a Building and Pest Inspection?
  • How does the art of negotiation fit into all this?
  • What is the best risk management?
  • What do you need to keep in mind with the final inspection?
  • What is the legal requirement about having a granny flat?!

… Yep, it’s a hairy and very serious episode folks, because the mistakes we talk about in this episode can be VERY EXPENSIVE!!

 

TODAY’S TEASER:

P.S Missed yesterday’s Facebook Live?

We answered a couple of questions on your lunchbreak (in 15 minutes)!

WATCH it here.

 

Episode 165 | Royal Commission’s Role in the Lending Sector and Q&A on Improving Loan Serviceability, Sell v Hold Strategy and Investing in Shares

Just a heads up, folks: we’re tackling a couple of serious topics today!

Because, not only are we diving into the world of the Banking Royal Commission (and what they do), we’re also answering a few voicemail messages about how to best service your loan, what to look out for if you considering investing in shares and having a crack at the million dollar question: should you sell or hold??

Yep, Ben will be donning on his Chair of PICA hat to address some of these topics, especially when it comes to choosing your mortgage broker wisely and making sure, as property investors our assets and financial wellbeing are well protected!

 

As part of this, we will be dropping the “F” word… Fraud.

It should go without saying, DON’T go there… but if you find yourself taking dodgy advice, you could find yourself in boiling water too. And remember — for the folks that haven’t signed up yet — you can get an individual Membership of PICA for as little as $5 to lobby government regulations and help us get rid of the “bad eggs” and spruikers responsible!

 

So, let’s jump into the SpeakPipe Q’s:

Question from Nick (from New Zealand) about Selling or Holding a House and Land Package:

I purchased a house and land package in Landsdale, Perth in 2012. It’s next to the parks, next to the school; it’s a beautiful place with nice places around it — should I play the long game and hold onto it? Or should I look at selling it & placing my money elsewhere? It’s cash flow neutral, so it’s not costing me anything. It’s rented out, I’m paying the debt down through my own cash flow… the only other thing is, I’m at university so if I sell it, I won’t be able to get another place — I wouldn’t be able to get a mortgage — for 2 years until I graduate. I know it’s a million dollar question — but should I sell it or hold it?

 

Question from Will about serviceability concerns with current lending regulations:

We’ve got a current portfolio of currently 3 properties, looking to buy our 4th and final property in late 2018. I’m a little bit concerned about serviceability since the new APRA rules? have been brought in with the big banks. I was wondering if there were any practical things we could do to improve our serviceability? The second part to the question: Is there anything we can do to increase serviceability with second-tier lenders and third tier lenders?

 

Question about shares from Jamie:

Through your podcast, Rich Dad, Poor Dad. In the book, it talks about using shares to raise a deposit to purchase property. I was wondering if you were aware of any podcasts or books or any other resources that are similar to your own podcast but talk about trading shares? It’s something that is less tangible than property and I have a harder time understanding it.

 

p.s. Make sure to check out PICA’s website: www.pica.asn.au

p.p.s. And the video that we talked about is called, Becoming Warren Buffet.

 

Episode 164 | Q&A – How to Avoid Poor Loan Structure

It’s Q & A Day, folks!!

Off the back of last night’s webinar, “7 Deadly Sins of Building a Property Portfolio” we’ve got plenty of questions leftover that we reckon are going to help you with ALL THINGS LOANS and INVESTMENT LENDING!!!

Before it kicks off though … we’ve got a BIG announcement (well, big news for Bryce!!)… so make sure you keep an ear out!

So, we’ve got SIX questions to get through, which will help you in avoiding poor loan structure and more importantly, your planning stage of building a property portfolio!

 

Question from Mark:

I have a PPR mortgaged at the moment, as does my girlfriend. We wish in the future to turn both into investment properties and buy a further property to live in long term. Should we be spending money doing any works to the properties that we currently live in? Or should we spend the bare minimum and save every cent for our “together” house?

 

Question from Laudy:

I thought they’d changed the PPR loans and didn’t allow interest only loans anymore — how can this be done?

 

Question from Dean

Can you use equity in your investment properties to wipe out your PPR mortgage?

 

Question from Chris:

I understand the concept of “tapping into property 1’s equity” but HOW do we do it? Is a Line of Credit an appropriate method? Is this with the same bank or a different bank? Thanks guys, appreciate the help!

 

Question from Matt:

In the case studies it shows the debt on investment properties being paid off over time. When do you switch from IO to P&I? Should you refinance after 5 years to extend IO period as long as possible or switch to P&I when your cash flow allows?

 

Question from Shanki:

Regarding loan structure, can I use the equity from 1 property to pay the deposit for 2 separate investment properties? Is it similar to collateral?

 

 

p.s. Here are all the links for today’s podcast!

 

 

 

Episode 163 | Infrastructure: What’s the Game Changer for Property?

We’re going off the cuff today, folks! Yep, there’s been no prep behind this podcast… BUT we guarantee it’s still going to be golden!

Why?? It all started (yesterday) when Ben created a little pop quiz for the staff at our company… and his question is:

What is the No.1 infrastructure needed to grow property prices?

Based on the banter that spread through our office, the answer might also surprise you!!
So, let’s drill it down to these two points:

  1. How are megacities built?
  2. What’s the connection between infrastructure and property prices?

 

Here’s the deal:

 

Stick around for Ben’s Did You Know … you’ll find out the projected population growth for Australia’s cities (this might influence where you invest!)

Missed our Facebook Live yesterday?

We announced a Free Live Webinar — The 7 Deadly Sins of Building a Property Portfolio: The hidden habits undermining your success (and how you can overcome them)”!

You can register for the Live Webinar here.

 

P.S. This episode’s a true glimpse of what an overheard convo between Bryce and Ben sounds like! Gold!!!!

 

 

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