Domacom Advisor Articles
Managing clients expectations when selecting property
It’s very easy for clients to get excited about purchasing property as part of their investment and wealth creation mix.
Unlike managed funds, shares and other asset types that are governed by regulations and overseen by ASIC, the property sector is totally unregulated and sharks abound in the murky real estate waters, waiting to pounce on unsuspecting investors at every opportunity.
The property industry is guilty of dumbing down what is in fact a complex process - investing in property. Selling agents, project marketers, property spruikers and developers offer education, one stop shops, integrated programs and all sorts of tricky strategies to sell what is mostly poor performing investment property and they do this for their own and their vendors benefit.
When meeting with clients who are interested in property, from an Advisors perspective, it is always a good idea to bring them back to the basics first. Property is an asset class. Like any other asset class, it shouldn't be bought based on emotional appeal, hype, ‘edutainment’ or the spiel provided by a selling agent, which is always general and totally biased in favour of the vendor.
Before even discussing property type, your client should understand that any property they purchase should fit with their overall investment strategy. It should factor in their (and their partner’s) personal risk profiles, their age, their investment strategy (capital growth or income), their budget, borrowing capacity, cash flow and their time-frame.
These are factors a selling agent, project marketer or developer will never mention as they aren't qualified to do so and they won’t ever put a potential sale at risk. The best thing you can do as an Advisor is to arm your clients with this basic information before they even consider the next steps of investing - what type of property and where to buy.
You will be giving them the best chance possible of minimising investment mistakes, as they will have a foundation to work to which is tailored to their circumstances.
Next month I will expand further on the difference between free vs paid property advice.
Miriam Sandkuhler is the founder of Property Mavens - a specialist property advisory firm based in Melbourne.
Unlike most ‘Property Advisors’, Miriam is an Accredited Property Investment Advisor (PIAA), Licensed Estate Agent and REIV member and award nominated Buyer Agent, with 15 years of real estate experience in two states. She is also the author of the book Property Prosperity.
Miriam and her team excel at identifying high-performing property and strategically building a client’s portfolio with high capital and income growth assets. She is also a passionate advocate of fair play for all and complete accountability and transparency in the real estate industry. She has a strong track record helping investors and home buyers and believes education is the key to empowering people on their journey to achieving their goals.
Miriam is a regular real estate and investment media commentator and has published articles in Australian Property Investor, Property Observer, Smart Property Investment and Your Investment Property magazines, as well as having appeared on radio and in metro daily newspapers.