1. How do I know I’m buying under market value?

Firstly, there’s nothing wrong with paying fair market value for the right property if it’s going to obtain growth long term. However, due to ongoing, long term business relationships from dealing directly with developers and builders, we are often able to secure properties for well below market value. We spend thousands of dollars each month researching areas we believe are going to produce consistent long-term growth. To ensure our information is correct, we also obtain an independent valuation report on the property and provide it to you for piece of mind.

2. What if we buy an investment property and one of us becomes unemployed or we

Our biggest assets are our clients. Should your work circumstances change, there are options available that we can implement so you can still keep your investment. Examples of this could be a temporary line of credit, a loan restructure or our ‘Running Account’ to fund the investment until you’re back on your feet. As long as you keep us informed we will always do our best to help you out of a tight spot.

3. What if interest rates rise?

We don’t just specialise in property. Another major area we specialise in is finance, managed by our Prowealth Money arm. If you have your finance structured correctly from day one you can certainly minimize these concerns. Typically, we would allow for an interest rate buffer in all our projections, and a buffer in the loan amount to allow for increased payments. You also have the option of taking a fixed or variable rate loan and can choose between principal and interest or interest only repayments. The team at Prowealth Money will come up with a solution to fit your circumstances.

4. What if I don’t find a tenant, I can’t afford the whole mortgage!

From the time your property exchanges and we know a settlement date, we start getting the management of the property underway. Working with leading agents in the area, we can often arrange a tenant a few weeks in advance, so when the time comes to settle, your tenant is in the property from day one. Of course, your property may be vacant for a short period in between tenants, but when constructing your investment property strategy, we factor in a vacancy rate so that it won’t affect your overall position. Sometimes, vacant rental properties are due to a lazy agent - that’s why we negotiate and secure who we believe to be the best property managers for you, to lessen the risk of a vacancy period.

5. How do I know I’m buying in the right area?

Our research identifies areas of consistent growth and also emerging hot spots in the market. We use leading industry research providers such as Australian Property Monitors, RPDATA, and Residex to name a few. It’s an important fact also, that our staff are active investors, and invest in the same areas and developments as our clients.

6. So I own an investment property, the market has picked up and I have obtained some great growth – what happens when the market has a downturn?

If you have bought an investment property and obtained growth you should congratulate yourself as you bought at the right time and obviously bought well. If the market approaches a downturn, you should welcome this as it brings you your next opportunity. When this starts to occur, most of our clients get their existing properties re-valued and borrow against their increased value by setting up a line of credit. When the market hits the bottom, you can buy again at the lowest point of the cycle.

7. What happens if I have to sell?

Every one is different and every situation is different. If the need to sell did arise we encourage you to contact us to asses your situation. We like to try to help you hold your properties and not sell, so we’ll do everything we can to help, but if it must be sold, we can point you in the right direction in terms of factors like sale price and what agent to use. Our in-house finance team at Prowealth Money can also be involved in case a simple loan re-shuffle or repayment break option is available.

8. What if I buy and my situation changes?

Everyone’s situation will change at some stage. This is not something to worry about. As long as the communication lines are still open and you keep your consultant informed we can always re-adjust your plan, finance or strategy.

9. What if the tenant destroys the property?

In your figures and loan, we factor in the cost of a landlord insurance policy for you. For around $300-$350 per year, you get piece of mind that if something goes wrong you’re covered for a range of potential tenant problems. This expense is tax deductible and we will help you get the policy in place prior to settlement.

10. What if I buy an investment property and get no growth?

It’s a proven fact that property over time will continue to grow and history shows it will double in value every 7 to 10 years. The first thing to consider is how long have you had the property, and what phase of the market cycle are we in? We would suggest you buy properties in different areas to hedge against this concern, as, if one property does not perform the others should balance it out.

11. What if there is an over supply of rental properties ?

There will never be enough rental properties. The statistics show that more and more people are turning to rent rather than buy due to poor affordability - this is especially apparent in the younger generations and therefore increases the number of renters. We have factored in a possibility of vacancy period in your figures and we forecast all projections on rent figures slightly lower than the current market is achieving. Eg – market rent may be $330 per week, so we factor your figures on a worst-case scenario of say $315 per week. Therefore, if you needed too, you could slightly lower your asking rent securing a tenant over everyone else without affecting your budget.

10 Important Questions

Listed below are the 10 most important questions that should be asked when deciding whether to invest in any asset. If you are seeing a number of companies and/or financial planners, it might be an idea to use this as an agenda to your meeting as it will save you time, provide structure and help you determine the most suitable business partner for you.

1. What do you know about the company you’re talking to, and how long have they been established?
2. Can the company and staff be contacted easily and do they have an office you can visit to get advice?
3. Do the staff of the company invest their money in the same asset classes as they advise their clients eg property / shares / superannuation?
4. Can the company discuss with you, property, finance and tax implications all under the one roof?
5. How much does the company charge to help you?
6. Do you have to pay the company upfront before you get a result?
7. In the case of property, does the company offer you a choice of property both locally and interstate? What criteria does the company use to select property to offer clients?
8. In the case of property, can the company provide independent valuations as to market value?
9. In the case of property, has the company worked with a particular builder or developer before and can they show examples of previous work?
10. In the case of property, can the company provide you a list of developments that have been sold to past and current clients?