First Time Investors: Should You Get Property Investment Advice?

By Kristie Kwok on 8 Jan 2014
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Are you wondering whether to adopt a DIY investment approach or ask for expert help in relation to your investment property project?

First time investors are often put off by the hefty fees that come with seeking professional property advice. However, statistics tell us that around half of the people who buy an investment property will sell up within the first five years, and most investors will never own more than one or two properties.

Clearly, there is a strong case for obtaining guidance from experienced property investment advisor, especially for novice investors who are serious about building a portfolio of property.  

How Good Investment Advice Can Help First Time Investors

Good advice will contribute to your property investment education, giving you the confidence and knowledge to make sound investment choices.

According to the Property Investment Association of Australia (PIAA), there are two categories of advisors that can assist you in relation to property investing.

“A fact surprising many is that property investment advice is currently unregulated.”

Firstly, accredited advisors will help you plan your finance, structure your investment and ensure a smooth investment process. 

Certified consultants on the other hand, will provide assistance with strategy, property selection and purchase and property management. They will also assist with building inspections.

The Hard Task of Getting Everything Right in DIY Investments

Although there is a wealth of free or low cost resources available, especially over the internet, DIY investors need to interpret any statistics and guidance correctly for the information to be useful. 

Given the diverse components that property investing encompasses, DIY investors face a difficult challenge to get everything right without expert help.   

Good, Bad and Unscrupulous Investment Advice

Whilst professional guidance is beneficial, a fact surprising many is that property investment advice is currently unregulated

In fact, there are no educational, continuing professional development and licensing requirements to become a property investment advisor. 

“DIY investors face a difficult challenge to get everything right without expert help.”

Accordingly, there is little to prevent fraudsters from claiming to be a property expert and giving false, misleading or incompetent guidance. 

It is therefore important to exercise caution when looking for a property advisor who can provide genuinely good advice. Ensure they belong to a reputable property investment body like PIAA.

Finding a Good and Legitimate Advisor

Hiring a PIAA member is a good start, as PIAA is an industry association that campaigns for higher professional standards of property investment advisors.

Understanding the qualifications or credentials of the adviser will also give you an idea of their level of expertise and past success.  

If you have met the advisor through an investment seminar, check with the Australian Securities and Investments Commission (ASIC) and the Australian Competition and Consumer Commission (ACCC) to find out about any past actions taken against this person.

Finally, according to ASIC, first time investors should also think twice before using the services of related groups of advisors such as property developers, accountants, lawyers and mortgage brokers who work together and recommend each other’s services, as there may be a conflict of interest. All commissions and fees need to be disclosed.

The information or opinions contained in the commentary are general in nature and should not be construed as investment advice or financial product advice. Any research or analysis contained within the commentary is specific to the execution of a purchase brief provided by a licensed adviser. Kristie Kwok is not licensed to provide advice on regulated financial products and the information should not be relied upon to in determining the appropriateness of SMSF property purchases.

About the Author

Kristie Kwok is a Street News writer and a fully qualified chartered accountant with a Bachelor of Accounting and Finance degree. Kristie has a passion for all aspects related to property. She also has a strong interest in the economy and financial markets. Kristie has worked for reputable corporates such as KPMG UK, UBS, Lloyds Banking Group and the Royal Bank of Scotland.

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