Where do the expert property investors turn to for advice

Rates and Fees verified correct on December 10th, 2016

If you’re into sport, you get a coach; if you’re into music, you get a lesson. Property investing is the same.

A property coach is part-mentor, part-teacher and part-cheer-squad to help you realise your investment dreams and goals.

Tabitha Bright

Tabitha is a head property coach for Positive Real Estate

Tabitha says often when she meets with clients for the first time they have somehow fallen short of what they hoped to achieve with property investment.

“Normally … when a client engages me they often have dabbled with property investment and they’ve found for whatever reason they haven’t got the result they want. They often have property as the preferred vehicle but they’ve often got fear and they require support and education. We all have analogies: if you’re a sport person you get sport coaching, if you’re in music, you get music coaching.” And with property investing it is the same, she says.

The main issue Tabitha says she often faces with clients is establishing a strong base of trust, because without trust, there can be no relationship between coach and client.

Once trust is established, Tabitha says works with her clients to get a clear understanding of their goals – both financial and life goals – over the next 6 months, 12 months, two years and five years.

“I don’t believe I’m here to life coach people, but inevitably because money is so closely linked in with emotion, some of that comes into play,”

The type of properties her clients decide to buy will vary greatly, depending on their situation and their goals.

“One client, a young gentleman, he wanted to generate an income of $20,000 a year because he lived 90% of his time in Cambodia doing charity work. He would buy a very different type of property compared with someone who is a pilot for Virgin earning $200,000 and wanting to put his kids through private schools.”

David McCarthy is one of Tabitha’s clients and David says he and his wife Edith were “professional procrastinators” when it came to investing before they started working with a coach.

“We had looked and almost purchased many investment properties over a 15 year period. I just never felt comfortable with the ‘negative gearing’ – ‘buy and hold’ for 20 to 30 years strategy. There had to be a better way.”

“They need to feel confident the coach has their best interests at heart,” she says.

Once trust is established, Tabitha says works with her clients to get a clear understanding of their goals – both financial and life goals – over the next 6 months, 12 months, two years and five years.

“I don’t believe I’m here to life coach people, but inevitably because money is so closely linked in with emotion, some of that comes into play,” she says.

The type of properties her clients decide to buy will vary greatly, depending on their situation and their goals.

“One client, a young gentleman, he wanted to generate an income of $20,000 a year because he lived 90% of his time in Cambodia doing charity work. He would buy a very different type of property compared with someone who is a pilot for Virgin earning $200,000 and wanting to put his kids through private schools.”


A coach can help put an end to procrastination

David McCarthy is one of Tabitha’s clients and David says he and his wife Edith were “professional procrastinators” when it came to investing before they started working with a coach.

“We had looked and almost purchased many investment properties over a 15 year period. I just never felt comfortable with the ‘negative gearing’ – ‘buy and hold’ for 20 to 30 years strategy. There had to be a better way.”

David says he had never heard of a property coach until he attended a seminar three years ago. He’s now built up a portfolio of four properties after working with his coach.

“We discussed our financial position, then our personal goals and most importantly our understanding of the property market and comfort level with debt. In other words what could we comfortably sleep straight at night with. Once we were all comfortable with these key points, Tab devised an acquisition strategy plan for us. Three years ago I would never have believed I could have achieved what we have and not lost a moments sleep about it.”

The process has been enjoyable and remarkably simple, David says and includes monthly meetings with his property coach as well as monthly Saturday morning coffee meetings with other investors who are also clients of his coach. David says he doesn’t have a specific investment strategy, but he and his wife have devised a few guidelines for themselves to help decide which properties to buy.

“Much like a football player draft, we take the best available deal we can find at the time that is within our price range. The property can be anywhere within Australia. We look for something that will return our deposit in equity in the shortest possible time and that must be under one and a half years,” he says.

“We also look for government and big business spending large money on infrastructure in an area of interest.”

Working with a property coach has also led David and Edith to starting a self-managed super fund and putting properties through the fund. David describes the process of working with his property coach as “life-changing” for many reasons and says there are many advantages of working with a coach.

“First and foremost is the ongoing education process, which is still ongoing today - you can't learn less. Secondly is the early days hand-holding and ongoing support. As an example, while we were purchasing our second investment property we were a little uncertain on how the bank would respond. Tab organised one of her financial contacts to be on standby. She agreed to not take a call from anyone except us while we were with the bank. Tab also advised exactly what we should ask and how we should proceed. At that stage it was the easiest contact we had ever had with a bank. Knowing we had that support behind us was very reassuring,” David says.

“Also the contacts [she has given us] - be it brokers in any State, expert property accountants, quantity surveyors, the list goes on.”

David says an unexpected outcome of working with a property coach and putting an active investment strategy into play was the interest his daughter took in the process.

“Our oldest daughter was in her second year of accounting at uni and she became very interested in the entire process and began to also get involved and attend mentoring sessions. Today she is a very successful real estate agent, after initially cutting her teeth as a rental property manager. She is in the process of purchasing her second investment property and only just turned 23 years old.”

Six tips from the investment experts

Property consultant Michael Furlong from MAP Real Estate has been in the property investment game for close to two decades, bought and sold around 20 of his own properties and worked with hundreds of clients to help them find the best property investment strategy. Here are Michael’s tips on six things you should never do when investing in property.

Never use the same selection criteria to purchase an investment property as you would to purchase a family home:

'When you’re buying your family home you’re looking for something that relates to your personal lifestyle, social network, community and schools. When investing, the tenant
should be the focal point,' Michael says. 'One is lifestyle, the other is to make you money. You’ll always pay more for the family home because it’s your life, but for an investment you wouldn’t because you’re not going to live there. You must have a separate set of criteria for purchasing an investment property to the family home.'

Never purchase an investment property before speaking with your accountant or financial adviser:

'I speak with accountants all the time and they are annoyed with their clients because what happens generally is that a client will go off and by an investment property and won’t do homework, won’t do research, won’t seek advice from an adviser and then at tax time say, ‘Make this an investment for me’. Never make a financial decision, particularly when it comes to your investment property, without seeking guidance or advice from you accountant and financial adviser.'

Never buy a property without researching rental trends in the area:

'You need to understand what is it that the majority of applicants are looking for in that area. Numerous websites give that data: what is the demographic, the income, the sex, whether they’ve got children, the type of employment, the rental price?” Michael says. 'For example, don’t be mistaken with your own preconceived ideas that everybody is the same as you. If you have a property that doesn’t have a car space, don’t be disturbed by it if most of the tenants applying for your property don’t have cars.'

Never focus on the price of the property alone, rather than the amount it will cost you per week:

What you can afford to service on a weekly basis is much more important than the amount the bank will lend you, Michael says. 'You might find a $400,000 property - if it’s not structured properly it could cost you $300 a week. But if it’s structured well it might only cost you $200 a week and then you can afford it.' The issues to consider are the cash and the non-cash depreciation, your gearing and your outgoings. Michael says every single person will have a different result for these figures depending on their own personal income and tax situation.

Never purchase investment property in joint names (as joint tenants) as equal share owners instead of buying as tenants-in-common (where the shares can be higher for the person in the higher tax bracket):

'This is the one that most people mess up,” Michael says. “Let’s say you’ve got a husband and wife. The husband is on $100,000 and the wife is on $30,000, she’s working part-time and looking after kids. So the wife doesn’t have that much tax to minimise. In this situation it would make sense to do a 99% to1% split on the investment property: put 99% in the husband’s name and 1% in the wife’s. He has higher income, he has a higher tax bracket and he has implications for tax. He can have 99% of gearing offset against his tax. She would end up not paying any tax and she carries losses forward but she’s not earning enough. The key point is before you buy an investment property sit down with your adviser to make sure you’re doing the right thing.'

Never cross-collateral's investment properties with your family home:

'The purpose of buying investment property is to increase wealth, but it is also to minimise risk,' Michael says. Putting your family home as collateral against your investments properties is never a wise strategy, just in case something does go wrong. 'The solution is to draw a line of credit against the family home, so each is stand alone but not linked to the others. You can still get 100% finance but the family home is not at risk if there’s an issue.'

Other things to think about:

As well as these six tips, Michael says other things to know is that you should not automatically decide to pay off your investment property mortgage quickly, because there might be better debts to pay down first (such as the mortgage for the home you live in or your personal loans or credit cards, which have no tax benefit). An investment property is a long-term investment that can be very expensive if you don’t do it wrong, so it’s important not to cut corners on getting the right advice and documentation before you commit your time, energy and money.

Special thanks to Michael Furlong from MAP Real Estate for the tips.

Jacob Joseph

Jacob is a writer and video journalist with finder.com.au. Credit cards, personal loans and savings accounts are his bread and butter, and he likes nothing more helping people understand the sometimes overly complex world of personal finance.

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