As a Qualified Property Investment Advisor, it always amazes me how much information people think they know and understand about property. Yet time and time again when I’m speaking with people, I realize that it is everything that they don’t know that is the biggest problem. The sources that a lot of property investors rely on for information is also a big surprise. Let’s take a look at the 5 most dangerous sources of information that people are relying on today for property advice.
1. Online Forums and Facebook Groups
Whilst I do sometimes read through information on some of the largest online property related forums and facebook groups, I often cringe with what I read. Every participant has their own opinion and often the opinions of some participants are taken as gospel. When this happens, the Mum and Dad investors are often buying in locations recommended by others, or applying strategies learnt from others that may be completely unsuitable for their own personal investment circumstances.
I speak to a lot of people who are interstate and who are looking to buy in Brisbane. It is a function of my role as a Buyer’s agent. But what truly surprises me is the number of Clients that tell me they would have bought in this suburb, or that suburb, based on what they have read about the area. When I seek further information, I often find out that their information source is online property forums! This is very dangerous, and my advice is to proceed with caution and verify your facts before relying solely on this source of property advice.
2. Family and Friends
Relatives and friends have always got our back … or have they?
It seems that our family and friends are experts in many areas – and especially when it comes to property. Who hasn’t been to a BBQ and talked about the house around the corner which would make a great investment?
The truth is, that unless your family and friends have built a successful property portfolio themselves, how do you know that their property advice is going to be right for you? And even if they have built their own portfolio, are their goals and circumstances the same as yours?
It is wonderful to feel supported by those closest to us, but when it comes to receiving advice around property investments, it might be better left to the professionals in most cases.
3. Real Estate Sales Agents
When searching for properties, I often see listings which describe a property as a “perfect investment opportunity” for the astute buyer. Says who? Sales Agents are there to sell a property on behalf of a vendor, so they are certainly not in a position to determine if a property is going to be a good investment for a buyer.
In fact, it is highly unlikely that a Sales Agent would be asking enough questions to understand what a buyer’s property investment objectives area, what their risk profile may be or what property investment strategy they are utilizing.
Just because a property is well maintained, or low maintenance, does not automatically qualify it as a good investment. There is far more that goes into the selection of a suitable investment opportunity than what a Sales Agent is likely to provide, so avoid falling into the trap of relying on property advice from Sales Agents.
4. Property Marketers
The role of a property marketer is to sell properties on behalf of a developer. Many Property Marketers do provide a lot of information about property investment metrics, so it can quite often be difficult to determine if they are acting in your best interests or not. The best way to determine if you are being “sold” to by a property marketer is that they will most likely not be charging you anything for the property advice.
Now I don’t know if there are many people who actually work for free, and I can guarantee that these people don’t work for free either. They are being paid by the developers and their commissions are built in to the price you pay for the brand new property they will be recommending for you to buy.
Property marketers are often referred to as “property spruikers” because they tend to attract large crowds to attend free “property investment” seminars. Then during the sales presentation they provide all the reasons why the product that they have to offer it the best investment for everyone in the room – without much consideration for their personal circumstances.
Often, the person providing the investment advice is just a sales person working through a script, and is not in fact someone who has a lot of experience in providing property advice. Tread with caution if you are caught in this situation … and never sign up for anything instantly. Take yourself away and use time to your advantage to determine if the strategy they are recommending is in fact the best strategy for your investment needs before diving in.
5. Mortgage Brokers, Accountants and Financial Planners
Mortgage Brokers, Accountants and Financial Planners are all licenced or qualified in their own field of expertise, however most are not qualified to provide property advice or most don’t understand the intricacies of the real estate markets and investment strategies to know how to find properties that are best suited to a Client’s long term goals and risk profile. This is because Property Investment is not considered a “financial service” and therefore it falls outside of the legislation in relation to how it is regulated.
I’ve heard of accountants that recommend their clients purchase property for the tax depreciation benefits. I’ve also heard of some financial planners taking commissions from developers to recommend their excess development stock. It is unfortunate that this happens. Thankfully this does not happen with the majority of operators, and by no means am I implying that it does.
But consumers should always be aware of the recommendations they are receiving, regardless of who is making the recommendation, and seek an alternative opinion if they are not 100% certain that the investment property advice is right for them.
In summary, these are just a few sources of information where property advice can be shared with the every day property investor. But it is very important that you understand if the advice you are receiving is going to be right for you. The world is full of unscrupulous advice and when it comes to property investment in Australia, things are no different. Tread with caution, never make rushed decisions, and seek out professional assistance if you are unsure. Property investment involves a lot of money, so if you really don’t want to make a costly mistake.