[Podcast] How to choose a property advisor and avoid property spruikers

Who do you ask for property advice?

With so many mixed messages and vested interests, who can you really trust?

Our annual Property Investor Consumer Sentiment Survey revealed the many and varied sources that property investors consult for advice.

But since most property investors fail to achieve the financial freedom they deserve, and with less than 8% ever owning more than 2 properties, a better question to ask would be…who should you be asking for advice?

Today’s podcast is designed to help you cut through the clutter:

Let’s start with who could you ask for property investment advice?

Here are the people you could turn to:

1. No One
2. Friends or family
3. A real estate agent
4. A mortgage broker
5. An accountant
6. Financial planners
7. A property marketer
8. Investment seminars and workshops
9. A property mentor
10. A buyer’s agent

When you look at this list you can now see why you need… an independent, unbiased property adviser or strategist.

In my mind, it is critical to have a trusted advisor when making property investment decisions. It’s just too hard to do it on your own or by trial and error. There’s a huge learning fee involved — of time, money, effort and heartache.

Here’s a list of some of the things a good property advisor can (should) do:

1. A good advisor will first start by getting to know their clients’ hopes and fears and then be future-focused to help them achieve their long-term financial goals.

2. With so many mixed messages about property investing out there (many coming from parties with vested interests), a good property advisor will help remove his client’s anxiety by simplifying the complex.
3. While most buyers’ agents or property sales people are transactional and think of the current “sale” or purchase, a professional property advisor will aim to develop a long-term relationship and help their clients understand the next two or three steps even before taking the first step.

4. Many clients come to a real estate advisor looking for the next big thing — some are looking for a shortcut, or the next hotspot, or a way to get rich quickly.
   Instead, a qualified property strategist will stop their clients speculating by recommending proven strategies that have always worked.

5. A good independent advisor will not have any properties for sale but will have a list of potential options and refer their clients to a buyer’s agent who is part of their team to find the best opportunity in the market to suit their client’s budget, plans and risk profile.
6. A strategic advisor will never put any pressure on their client to make an investment decision, but their knowledge, research and experience will help their clients select an investment property that is the highest and best use of their funds, and one that will work hard for them over the long term.
7. A wise property strategist will help their clients avoid the big mistakes made by the average investor and will earn their fees simply by helping their clients avoid the devastating errors made by many investors such as those who lost significant amounts of money by investing in mining towns, regional locations, house and land packages or off-the-plan properties.
8. By being a student of history, a good strategist will be able to provide perspective, insights and often optimism at a time when the media is being pessimistic, and vice versa.
9. They will also advise their clients to invest their money the way they do themselves — they must be experienced investors — not enthusiastic amateurs.
10. A good strategist will regularly meet with their clients to objectively assess the performance of their property portfolio and ensure they are heading in the right financial direction.

As you can see — it takes years of learning, experience and the perspective that only comes from investing through a number of property cycles to become a great property strategist.

Let’s look at some things a property advisor can’t do:

1. Even a good advisor cannot predict the future. They won’t be able to tell you how the market will perform, what will happen to interest rates or what capital growth rate a particular property will achieve.
   
    

2. They won’t be able to find the next hot spot for you, yet many so-called advisors suggest they can. In essence they give their clients what they are requesting, rather than what they need — sound, solid advice.
3. Even the most qualified advisor won’t be able to pick the best time to purchase an investment property other than to remind you that the best time to invest was 20 years ago, and the second best time is today.
   
4. A good advisor won’t be able to help you get rich quickly or achieve extraordinarily high returns without taking on extra risks.

What is the difference between a property strategist and a buyer’s agent?

• Buyers agents are order takers — they will fill an order given to them to find you a property and will be biased towards the areas they have expertise in, but this may not be in your best interests.
• Only a property strategist has the expertise to design that “order” to suit your specific needs. They will be your long-term wealth creation partner, annually reviewing the performance of your property portfolio, and will provide recommendations on any opportunities as well as when it’s best for you to do nothing.

Here are some signs that you’re dealing with a property spruiker.

1. They have a one-size fits all approach
2. They don’t talk about the risks
3. They talk a lot about investing but don’t do it themselves

Beware of someone who:

• Has a stock list of properties to sell you.
• Offers you a property rather than an investment strategy. Red Flags
• Gives “advice” before they’ve found out all about you, your needs, your plans, your risk profile.
• Offers a “one stop shop.” Particularly if they want you to use their lawyers, rather than your own who should vet any contract carefully.
• Tells you that negative gearing is a sound property strategy (because it’s not an investment strategy at all — it’s a consequence of how you finance your property.)
• Suggests property values always keep rising.
• Offers a rental guarantee to sweeten the deal.
• Pressures you into saying yes quickly to whatever it is they’re offering, whether it’s deciding to attend a seminar, signing up with their company to gain advice and any other sales tactics.
• Downplays the risks and related costs that are involved in property investing, and/or has an inability to substantiate their claims of profit and success. If they’ve helped so many people achieve success, where is the proof of that?

Links and Resources:

Michael Yardney

Metropole Property Strategists

Rich Habits Poor Habits

Michael Yardney’s Mentorship Program

Some of our favourite quotes from the show:

“While they may know their local neighbourhood, that’s very different to understanding property markets and property investment.” – Michael Yardney

“Some mentors are thinly-disguised salespeople.” – Michael Yardney

“Put simply, if the advice is free, you’re the product.” – Michael Yardney

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