The Importance of Advice When Investing in Property

When it comes to getting advice on property, its safe to say that in general Australian’s are not very good at it. Most investors own a property (the one they live in) before they invest so they have a false sense of comfort when selecting their first investment property.

“My property did well over the last 20 years, I’ll buy something just like it”.  Sound familiar?  The problem is, the demographic make up of Australia has changed so significantly, that the locations and properties that performed  20 years ago will not necessarily perform today.

Compare this extremely low level of advice to what you would get when you visit a Financial Adviser to invest in managed funds or another financial product – say for $50,000.  First, they will take you through a rigorous fact find process to learn everything possible about your financial situation. Once that is done they will put together a document called a Statement of Advice, 50 pages + of information which covers areas such as asset allocation, risk mitigation, diversification, personal insurances, budgeting and the list goes on. Just to invest in $50,000 worth of managed funds.
Compare that to the research the average Australian undertakes to purchase a $500,00+ property for investment. Talking to the local agent and some searches on realestate.com.au does not constitute rigorous research and when you sit back and consider that property is a much less liquid asset (takes longer to sell and costs much more in agents fee’s etc) it makes it even more concerning. Unfortunately this is the norm, in fact I did exactly the same thing when I bought my first property – but there is a better way.

Nine and a half years ago when we started Nyko Property, we made the decision that every single client that engages Nyko Property must see a financial expert first. How could we, as a property business, possibly know what property works best for our clients current situation if we don’t know the intricacies of their financial situation. This is not something an agent should do, or is legally qualified to discuss.

The fist step for any potential property investor is to see their primary adviser in finance, that could be your mortgage broker, accountant or financial adviser – think your main go-to person out of those industries. They will then help you build an investor profile by working things out such as your borrowing capacity, comfort levels, cash flow requirements,  other asset holdings + more.

An investor is now ready to speak to a property specialist like Nyko. We would then take you through an education process to learn all that you can about the marketplace and then, and only then, would Nyko present some options that we believe would best suit your individual circumstances.

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