This is a collection of questions asked by some clients we have interviewed with some answers.
Q- How do I know I am getting a good price/good value on property from APAS?
A- I am proud to say the Australian Property Advisory Service has never been beaten for value/price by any genuine written quote. Any potential APAS property purchase will be valued by your chosen bank. One of our standards is that we deal directly with the vendor to reduce the cost to our clients to ensure they get the best possible deal with the property they purchase.
Our goal is not just one property, we aim to help you grow a property portfolio so you can achieve a comfortable standard of living in retirement. That’s why the Australian Property Advisory Service works with clients on an ongoing basis to ensure property investments are structured and established correctly. These factors demonstrate to experienced (DIY) investors the possibility of a better result in dealing with us.
Q- What will the Australian Property Advisory Service charge me?
A- APAS does not charge a fee. Similar to neighbourhood real estate companies, such as when you bought your home, we will be paid by the vendor, developer or builder. The similarity ends there however, because APAS specializes in giving clients an “armchair ride” through the process of successful, effective property investment by guiding you to specialist professionals for finance, conveyancing, financial planning, property management, etc., at preferred client rates helping people like you make an informed commercial decision.
Q- How often or how soon will I be able to add another IP to my portfolio?
A- The Australian Property Advisory Service recommends ensuring the 1st property is set up correctly, achieving desirable results, before looking to the next one and so on. Our processes and methods are entirely based on doing all possible to assure you of the optimum bottom line result to put you in a position to acquire more properties, when the time is right. (Refer to our finance structure diagram) can you see by applying this structure you can be in a position to invest again asap with the appropriate control?
Q- What’s the property market doing at the moment? Can you give me some reassurance about property values? (and) I read this morning/saw on TV – is the real estate bubble about to burst?
A- Old saying –“put 12 economists in a room and you will get13 economic predictions”. (Refer to median house price statistics) This is what the market has been doing over the last 70 years and reliable data suggests this is continuing. Given this evidence, it is very difficult to accept doom and gloom predictions. During this 70 year period we have had World wars, small wars, inflation, deflation and recessions, natural disasters plus other events, so given continuing high demand and population growth we expect these property growth trends to continue.
Q- When is the best time to invest?
A- Given the data of the median house price growth of the last 70 years, can you see that it always has been and probably always will be a case of do I invest now or do I invest later? Can you also see that the data suggests the longer you delay getting into the market, the more growth (money) you are denying yourself?
Q- What builders do you recommend?
A- We only recommend builders who in our experience have a proven track record of appropriate quality. If and when you proceed to stage 3 Property Selection, you will be given all details of any builders that we are recommending relevant to your position in the market to get you the best possible result.
You will be able to inspect a home built by those builders (avoiding display homes) as part of that process. Our clients have been happy with these builders (see testimonial letters). Given our goal of helping you and your family and friends buy property, can you see why we need to have confidence in the quality of work by the builder and only recommend builders we are confident of delivering you the best commercial result?
Q- What if interest rates go up?
A- Do you know what else usually goes up with interest rates? Yes, rents and property values generally do, so can you see there is a silver lining in that cloud for the investor that the non-investor does not receive? A silver lining to the cloud of an interest rate increase is that it is tax deductible. Interest rates have gone up and down many times throughout the last 70 years covered by the median house statistics, and probably will continue to fluctuate, so can you understand why you can be better off having an investment working for you no matter what the interest rates do?
Q- What if I lose my job?
A- If you are building your IP, you can choose for it to be approximately 7 to 9 months before you will need to pay any money out of your pocket. Also there will be a buffer built in to this finance structure for such possible contingencies if they were to occur. (refer to finance structure diagram) We only recommend proceeding when these appropriate structures are in place.
Our recommended Risk Assessment/Financial Planning professionals will discuss income protection insurance. It is always prudent to be aware of consequences of loss of employment. What happens if you lose your job now if you don’t acquire an investment property through APAS? Yes you would be looking to obtain another job. Nothing changes except if you have an IP you could have some other income coming in.
Q- How do I know the property will be tenanted?
A- Do you remember we discussed the function of a professional property manager? Did I tell you why we recommend the property managers we recommend to our clients? I have known our recommended property manager to achieve tenanting of a property when other less specialized property managers are unable to do so. Not only that, but consistently for a better dollar value.
Q- How do I know I can afford property?
A- With our step by step process (refer to 4 stage diagram) we will only be showing you a property if and when the finance specialist has established that a bank will approve finance. Also, after qualification by a finance specialist, you will receive a personal Property Investment Analysis report, similar to the example we have shown you, that details what your actual “out of pocket” (if any) cost per week will be. Another question is, can you afford not to invest in property if you wish for a comfortable retirement standard of living?
Q- What if the tenants damage the house?
A- The professional specialist property managers recommended by APAS conduct vetting of potential tenants that includes their character and employment checks. There will be the standard regulation RTA lease agreement signed and a bond obtained, plus at the appropriate time we recommend you obtain appropriate Landlord Insurance. We also recommend consultation with a Risk Assessment professional. We only recommend diligent property managers.
Q- What if property crashes like in the USA?
A- Do you understand why we didn’t experience what was known as the “sub-prime crisis” in the U.S.? The main reason in my view is the L.V.R. policy applied by banks in Australia, the higher interest rates paid in Australia and the subsequent enormous bank profits in this country.
Q- Why didn’t my financial planner recommend I invest in property?
A- Do you know what type of products financial planners recommend? Yes that is because they specialize in those type of financial products. I and APAS specialize in effective property investment. Do you recall (refer to Current Investment Profile question) why you said you would be most comfortable with property for investment purposes? APAS see benefit in the historical data of property investment as being evidence of consistent long term growth. We also recognize the benefits of diversification.
Q- What happens if the government changes rules so I can’t negative gear?
A- Do you know why the government provides tax benefits such as negative gearing to the investor? In my view it is because people who have worked hard enough to contemplate a property investment are helping the government to solve the housing shortage crisis. Can you see why the population growth data suggests that there is no end in sight to this shortage and that is why the negative gearing rules appear to be assured of continuing for a substantial period yet?
Q- What is the % growth of the areas you recommend?
A-This is very similar to asking me how long is a piece of string but with the criteria we apply for effective property investment, combined with the median house price data, can you form an expectation of what you might achieve with a property we would recommend? We are optimistic of outperforming median price growth through application of proven criteria. Due to the fact that we only recommend property we believe will put you in a position to invest again, we are diligent in applying that criteria.
Q-How long will the build take?
A- If the recommended property is not already completed, I always tell my clients it should be ready in approximately 6 months from now (initial consultation), allowing for “Murphy’s Law”. In my experience, the biggest holdups are settlement of finance and plans through council. Once the builder gets the go ahead the building is usually finished in less than 3 months in my experience.
Q- How much interest do I have to pay while we are building?
A- The way finance is structured with your chosen bank by the finance specialist, if you are building your IP, the most tax effective method is to capitalize the interest which could be around ten thousand dollars until tenanting. (Refer to finance structure diagram provided) So you may choose to pay no money from your pocket for up to 9 months or more.
The interest is tax deductible and is only accrued as each stage is reached. The construction loan draws down as the relevant stages are achieved, i.e. base, frame, enclosed, fixing and practical completion, (to use building contract terminology).
Q- What if I want to use my own finance person?
A- You are welcome to do so. We only recommend finance specialists who have a proven track record of putting in place an optimum finance structure for short and long term benefits to our clients. If you have another personal preference that’s ok. Simply obtain a pre-approval letter from a lender to establish your price point.
Same goes for solicitor, accountant, property manager etc., we only recommend specialist professionals who have proven expertize to contribute to your bottom line result. These professionals naturally have their own fees calculated into the report we give you. In turn we can be optimistic that you’ll be wanting APAS to grow your investment property (IP) portfolio sooner & refer us to your family because the best people can get the best results.
Q- Will I get a fixed price contract?
A- Yes. On the day of stage 3 property selection you will be making an informed commercial decision with a written fixed price, on a turn-key property ready to live in that includes all fixtures and APAS standard fittings such as (typically) dishwasher and air conditioner, ceiling fans, security screens, landscaping, clothes line, and even a letterbox. The good old fashioned word-of-mouth referral is good business. We are proud that our clients have recommended family and friends to deal with us.
One step at a time to keep it simple!
Our philosophy is to apply our experience and our expertise to obtain a better bottom line result for you.
Imagine being “plugged in” to our team of recommended professionals who specialize in all the elementary components of successful property investment including:
APAS provides a genuine “One Stop Shop” solution including strategy formation, implementation and ongoing monitoring. We source and co-ordinate all the elements involved. It’s as simple as that!