It's the age old question and more relevant today than ever. Today it's easier than ever to access information about almost anything and there are so many guru's and 'expert's' in every field and some of them are very convincing and it's easy on the internet to appear like you have a large audience, so before you act on someone's advice, take the time to think about what they are telling you and whether it makes sense for you.
Always, consider the source, not everyone with an outstretched hand offering you the next best thing actually has your best interests at heart, especially if they've not even met you yet, how could they?
Understand who the person is who is giving you the advice and what their particular perspective is and what their goal is. Rarely will someone else's goal align with your own.
Let me cover off some common places you might get advice:
1. Family & Friends
Unless they happen to be active in the property market, in the area and way you want to be active, then rarely is this a good source of advice. While they will likely have good intentions, the simple fact is, unless they've done it themselves, how can they offer you meaningful advice?
I still recall an example of this from when I was selling new homes for a builder on north side of Brisbane. I had a young first home buyer couple who had been wanting to purchase within 12km of the CBD of Brisbane, but simply couldn't afford it. The market was moving well at the time and I suggested that it might be viable for them to make use of the first home buyer bonus available to new builds only, live in the house for a year or two and all indications were, the market will have risen reasonably but at the very least they'd recoup the $20,000 first home grant.
They went all the way to making an appointment to pay their deposit and sign build contracts and then didn't show. Why? A a close family member adamantly told them that homes in new estates 'never' go up in value so don't buy one.
18 months on, they hadn't bought, homes in the new estate had almost doubled in value and they still couldn't get into the market.
Their family member was looking out for them, wanting to make sure they didn't buy a dud from a slick salesmen, but that family member had never met the me, never visited the estate and done no research on the property market at all. As a result of taking that advice they missed out on about $120,000 in capital gain.
2. Real Estate Agents
This is an interesting one, there are times an agents advice is extremely valuable, and of course like everything the quality of the advice varies markedly from agent to agent. There are time however, when a real estate agent is simply not the person to give you the particular property advice you're looking for, and the good one's will say so.
When do I mean? I mean asking an agent for advice about a purchase that's not in the market they sell in, or asking an agent that only sells for an appraisal of what a property should rent for, without them spending a lot of time researching how can they give you any meaningful advice?
Yet, many times I've seen clients make decisions on property purchases that are driven by one agent telling them not to buy a particular property as it's no good (they're not the marketing agent and it's outside their market) but that they have a far superior property available and you should buy that (guess what they get paid on the second one).
Now before you think I'm just bashing agents I'm not at all, there are some excellent very professional ones out there, just not all of them fall into that category. So, if you're considering a development, or a purchase and you want a second opinion, or if someone volunteer's an opinion, consider how much knowledge they actually have behind that opinion.
Don't be afraid to ask the age old question of, "Why?"
3. Accountants & Financial Planners
These professionals are just that, qualified professionals, but that doesn't mean they're experts in everything involving money. What I mean is, not all accountants have an interest or even an understanding of property, and the same goes for financial planners.
You should be connecting with and engaging professionals that are active in the area you're interested in as well. What I mean is, if you wanted to invest only in shares, would you go to an accountant or financial planner that only invested in property themselves? Doens't sound sensible does it. So qualify your advisors and make sure you're on the same page.
Financial Planners, depending on who they work for, i.e. whether they are running their own practice or engaged by a large organisation, often are rewarded based on selling particular products (financial products) to their clients.
It's worth understanding if you're working with a financial planner whether they are paid differently for particular products?
I'm not saying they shouldn't be paid, just that if they're paid twice as much for selling a particular investment vehicle, that it could have some impact on the advice they offer you, and it's worth understanding.
Also because financial products are so specialised, often this is the area Financial Planners have experience and expertise in, and far fewer of them have experience in property, let alone the particular area of property you might be interested in. If you can find one who does, hang on to them.
4. Buyer's Agents and Property Marketers
You'd think that a buyer's agent in particular will be working for you, since you're paying them (usually). Well like many things, that's sometimes the case. Often, buyers agents are simply order takers, by that I mean, you tell them what you want and they go and find it, negotiate the deal and assist you in that way.
There's nothing wrong with that, but there's an assumption built into that model. The assumption is that you know what you need to buy and why without any assistance. Some people are well placed to figure this out for themselves, but most people will benefit from some assistance in figuring out a plan of what to buy and why.
When someone I've not worked with tells me they've just bought a property (other than a Principle Place of Residence) I always ask them, what's your property goal? How did that purchase help you? You should always be able to answer those two questions for yourself, if no one else.
A good buyers agent will take the time to help you figure out what your goals are and what the next purchase should look like for you.
Property marketers, (or marketeers), are purely sales people. I'm not saying don't buy from them, just that perhaps have a clear plan and understanding of what you want before you do. Many property marketers have strong relationships with national developers and access to some great stock that you may not be otherwise able to find.
What I am saying is, would you go to the salesperson at the Jeep dealership to ask whether you should buy the Cherokee or the Kluger? Perhaps, but you'd seek other opinions as well.
5. So who is left?
A property mentor or advisor. These are experienced people who are working in the property industry and actually doing the things you want to be doing. If you want to do renovations and flips, find someone who is doing that and can help and advice you.
If you'd rather subdivide or add value through creating dual occupancy developments, or adding secondary dwellings, then find someone who is doing or has done that.
“Most wealthy people have trusted advisors and are prepared to pay for them in all areas of their lives.”
The key is to build a team around you, who understands your goals and what you seek to achieve and will help you. Some of the best advice I ever received in property came from people who were already doing it, and that is how I learned a lot of what I do and help others to do.
A good mentor will be a good fit for you, someone you can relate to and get along with. You won't know until you approach someone and ask for that first meeting. It doesn't happen by chance.
Build your team, find opportunities and take the next step on your property journey.