The importance of a property investment advisor to help increase your wealth

Why should you use a buyer’s advocate or property investment advisory to help increase your wealth?

Ultimately, anyone can buy a good property. You have access to online listing websites such as realestate.com.au or Domain, you can jump on the phone with an agent, research suburb values and look at what’s sold recently and at what price point.

The question that arises is whether you can buy a great property? Do you know how to set your investing strategy and then execute it based on what property is available on the market?

That’s where an experienced and qualified property investment advisor comes in. They look at property all day, every day. They research the market and have an intimate understanding of what is performing where and why.

Consider this. If there are 5 properties available for purchase in a given area, a buyer’s advocate helps you to identify the one that’s going to fit your strategy and perform accordingly. What’s the potential return on investment for a particular property now and in the future.

Investing for capital growth or for rental yield

The two major investing strategies people utilise are capital growth and rental yield. Ideally, your buyer’s advocate will support you in finding a property that provides a good balance of the two. However, you may have a requirement to chase one of these strategies over the other.

Capital growth refers to the increasing value of the property over time. If you are investing for capital growth then you’re investing for the long haul. You likely won’t be buying and selling the property within a year or two, as genuine, sustained capital growth takes time.

Rental yield refers to how much rental income the property generates. If you are investing for rental yield then you’re seeking cash flow from the property from day one. It may be you are relying on the rental income to cover loan repayments or for a retired investor, the rental income may supplement your superannuation.

Not all properties provide both strong capital growth and rental yield concurrently. For instance, apartments and units tend to return higher rental yield as a percentage of purchase price however don’t tend to perform as well as houses when it comes to capital growth.

Balancing your priorities now and into the future, along with your cash flow and debt position is something your investment advisor will help you do.

Helping you look at other options

Sometimes in life, you might have a preconceived idea of what you think you want or need. Working with a property investment advisor can help open your eyes to other options, which may be more beneficial for you over the long term.

Joe recently purchased his first investment property, before doing so he engaged Entourage Property Advisory. Our buyer’s advocate sat down with us to understand what he was hoping to achieve. At first, he wanted to buy something that needed a little bit of work but would cost less upfront and have immediate capital uplift thereby increasing his rental yield. Joe worked in the tech industry and didn’t have experience renovating therefore would be relying on tradespeople and labourers to carry out cosmetic works.

After chatting with his investment advisor, he came to realise that those works were going to eat into the ultimate value of his property, not just because of the additional funds needed to complete the work, but the time the property would be vacant for whilst those works were carried out.

In the end, he decided he’d prefer to purchase a property that was already renovated, a “turnkey” property and put tenants in it immediately. He was also able to realise a higher rental yield right away, owing to the classic appeal of the property in the Stonnington area, close to schools and infrastructure.

Joe hadn’t considered spending more on his initial purchase, feeling it would be more savvy to buy and renovate. After reviewing the research, looking at the numbers behind renovating vs. buying turnkey and the projected rental yield he changed his mind. Something he likely would not have done had he not engaged a professional investment advisor.

What happens when it’s time to sell or divest?

An investment advisor or vendor’s advocate is helpful here too. When it comes time to sell, perhaps to fund an upgrade or liquidate assets to fund retirement, it’s crucial to ensure a strategy is once again in place.

Appealing to the broadest part of the market is key. This may be other investors or it could be an owner-occupier. When you initially purchased the property, future sales strategies should have been part of your considerations. For example, buying a block big enough to subdivide, allows a future investor to maximise the land potential. Or selecting something with proximity to a particular school that would appeal to families moving into the area.

When selling you want to maximise the capital growth for yourself, highlight the future potential to prospective buyers and ensure it sells in a timely manner (particularly if you must line up the settlement of another purchase for yourself).

Learn more about our investment property advisors based in Richmond to make the right decisions to grow your wealth through property. Feel free to arrange a chat with us today on 03 9421 1651.