Some frequently asked questions
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 dealing directly with developers and builders we are often able to secure properties below market value. We spend thousands of dollars each month researching areas we believe are going to produce consistent long-term growth. To ensure the price is right we also obtain an independent valuation report on the property and in most cases can provide it to you for piece of mind.
What if we buy an investment property and one of us becomes unemployed?
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 ‘Safety Net’ account strategy to help fund the investment until you’re back on your feet.
What if interest rates rise?
If you have your finance structured correctly from day one you can certainly minimise 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 and current market conditions.
What if I dont find a tenant?
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 do however factor in the possibility of vacancy period in your figures and we forecast all rents slightly lower than the market is currently achieving. Sometimes vacant rental properties are due to a lazy property manager, hence why we started our own Property Management company called ‘Property Management Head Quarters’ or PMHQ for short so we can assure you of the best possible management experience. As soon as your purchase takes place, PMHQ is informed and they start getting the management of the property underway. They often arrange a tenant many weeks in advance of settlement so when the time comes your tenant is in the property from day one.
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 that our staff are active investors and invest in the same areas and developments as our clients.
Ive had some capital growth, but what happens when the market strats to drop?
As the market approaches a downturn, 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.
What happens if i have to sell?
If the need to sell does arise we encourage you to contact us to assess your situation. If it must be sold we can point you in the right direction for information like sale price and which agent to use. Sometimes a simple loan re-finance or repayment break option is available.
What if the tenant damaged the property?
In your cost per week estimates, we factor in the cost of a landlord insurance policy for you. For around $350-$400 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 PMHQ will help you get the policy in place prior to settlement.
What if I buy a property but get no captial growth?
It’s a proven fact that any property will get some capital growth over time.The first thing to consider is how long have you had the property, and at what phase of the market cycle are we? 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. Property is generally a 7-10 year investment as that allows for at least one full property cycle.
What if there is an oversupply of rental properties?
10 Important questions to ask your advisors
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?