Here at bfp property, we offer one service solution for all our clients. We follow a six-step process that provides an end to end service covering all aspects of investing in property. Our clients love it! This blog dives deep into each of these steps.
Step 1 – Property Strategy & Education
This is where we get to know our clients. We ask alot of questions (some a little intrusive) but we make no excuses. In order for us to put together a strategy to build an investment property portfolio we need to know everything! What are your spending habits, do you use credit cards, are you planning on starting a family, do you take an annual family holiday, what is your job security like, what are your thoughts on risk, when do you wish to retire, what is your desired retirement income, why do you want to invest, what does wealth through property mean to you…….and so on. These questions allow us to gauge your risk profile, your spending habits, and your future financial commitments. Knowing this information will help us recommend a strategy.
Every client has unique requirements and goals, so we don’t apply a “cookie cutter” solution. We customise a plan that is best suited to their specific investor profile. In our opinion there is no point investing without a strategy in place.
As a guide, there is number of “off the shelf” strategies that we customise for our clients. These include:
– Buy and Hold (base portfolio)
– Buy and Hold (base portfolio with value add)
– Buy, Manufacture Equity, Hold
– Buy, Manufacture Equity, Sell
– Property Development
Property education also forms a big part of our service offering. We take the time to give our clients a base understanding of all moving pieces within property, and remain in contact regularly to continue that education. We also publish a regular blog and provide valuable insights via our social channels on market updates and key topics.
Step 2 – Asset & Loan Structuring
A crucial step often overlooked by investors. As Chartered Accountants we are well experienced in advising on the best structure to hold your investment property. When it comes to structuring, whether it’s for property investment, property development, a business, or any other activity, there isn’t a one-size-fits-all solution. This is because everyone’s individual circumstances are different and we need to take into account these differences in coming up with a structure that is fit-for-purpose for the specific situation at hand.
Whether we like it or not, life is full of potential liabilities. The more dealings you have with other parties, the higher the probability you might run into legal disputes with others, which might, in turn, expose your hard-earned assets to risk. Structuring investment properties needs to take into account and quarantine these potential liabilities to the maximum extent possible, i.e. you may consider ‘locking’ your valuable assets in an entity that is difficult for creditors or the trustee in bankruptcy to make a claim against you if you get sued.
There are many different ways to structure your loan when purchasing an investment property. The way you choose to structure your loan will have a significant impact on your return on investment. It is very important to get your loan structure right. Here we look at principal and interest V interest only, interest only loans, variable V fixed, use of offset accounts etc. We will work very closely with your mortgage broker to ensure the structure is right.
Step 3 – Search
Having spent considerable time building a strategy we can now narrow it down to specific locations. Our ultimate goal is to acquire investment grade properties that are under market value, within areas that have the qualities attributable to price growth. We achieve this by following a proven formula tested over a number of property cycles. Our sweat spot is affordable free standing dwellings in a growth corridor of a CBD. Some of the attributes we look for in a location include:
– Strong population growth
– Public and private infrastructure spend on the rise
– Low levels of high-density development
– Strong employment/low unemployment
– Good transport links
Step 4 – Source & Select
This is the fun part! At this stage we will get in touch with our network of real estate agents in the chosen areas to express interest in specific property types. This is where we get access to fantastic off-market opportunities. We also have access to distressed property sales from time to time, so we will tap into our network to explore these opportunities too. Some of the attributes we look for in a specific property include:
– Owner occupier appear
– Sound cash flow and rental yield
– Sound structure and foundations
– High land to asset ratio
– Priced below intrinsic value
– Close proximity to amenities and transport
– Equity manufacturing potential
Step 5 – Negotiate & Complete
With our experience we understand where true value lies in a property. Not only do we negotiate on price, we also negotiate on contract terms (an area often overlooked by buyers). Contract terms like cooling-off periods, finance clauses, building and pest clauses, settlement period, the deposit, fixtures and property inclusions etc.
As part of the property purchase we help our clients put together a team of professionals that will assist in closing out the purchase. We have relationships with:
– Mortgage brokers
– Building and pest inspectors
– Property managers
– Quantity surveyors
Step 6 – Manage & Monitor
The final step (often overlooked by buyers agents) is the management and monitoring of your newly purchased property. Here at bfp property, we pride ourselves on delivering a first class client experience, and this doesn’t end at settlement. Once the property is in your hands we can assist with tenant selection and options around manufacturing equity with your property through renovation or development. We will regularly keep in contact with you and provide market valuation updates and other valuable insights. The goal for our clients is to see their newly acquired property grow in value, cash out the equity and repeat the process again. It’s all about building a sustainable property portfolio.
As always, please get in touch if you would like more information on what we do at bfp property.
Ben Plohl – Founder & Director
**All information published has been collated and prepared in good faith. No representation is given or implied as to its accuracy or interpretation. Please ensure you rely on your own research before making any investment decisions**