Bushy Martin says property investment is a game of finance in an elite team sport, and success comes from selecting the right team.
The property investment expert says one of the keys to sustainable success comes from leveraging your carefully selected property investment team.
On the Property Hub Property WEALTH podcast series, Bushy revealed the ideal make-up of your ‘golden circle’, including your team manager and master coaches.
The people to avoid in property investment
Bushy firstly revealed the people to avoid when assembling your team of qualified experts.
“Firstly, don’t engage a family member, a friend or a friend of a friend – you need a specialist who you can have hard conversations with, not a generalist member of the family who knows just enough to be dangerous. Situations such as this can quickly become difficult, and having to talk tough can put your relationship at risk,” he warned.
“Secondly, don’t choose someone because their office is close to you – expertise is not proximity based and you need the best, not the nearest. Thirdly, don’t select someone based on brand or having a flash, expensive and/or large office – you’ll end up paying for it and, again, you’re looking for professionalism not prestige. You may also be wined and dined by the head honchos initially – and then be hand-balled to the backroom juniors to do your work. So ignore the brand and focus on the actual person who will be looking after you. In a similar vein, don’t reject someone because they don’t have a flash office – choose on ability and affability, not accommodation. Don’t judge a book by its cover.
“Fourthly, don’t focus on cost rather than value. Remember, you don’t get what you don’t pay for! The lowest cost often ends up being the most costly. So paying a little bit more to get a much superior result through extra smarts that save or make you thousands is a small price to pay. Don’t be penny wise and pound foolish, because as Benjamin Franklin was famous for saying, ‘the bitterness of poor quality remains long after the sweetness of low price is forgotten.”
Property investment team member: Team Manager
The ideal team manager is an independent property investment advisor or property strategist.
“These professionals form a relatively new but growing field of experts who have arisen in recent years to fill a large void for investors – that is, independent trusted advisors who help create clarity and confidence in what to do in property investment, and help to co-ordinate the input of others to make it all happen safely, easily and affordably,” Bushy said.
“They provide you with property investment smarts and act as your independent expert brain, ears, eyes, and voice on your investment trajectory. Then, they facilitate the arms and legs of all the other required property players to turn your vision into reality.
“Once your team leader’s in place, you can then go about locking in the other members of your elite property team. So to round out your overall holistic and integrated investment strategy, you and your independent property strategist need to work with three other professionals. These are your accountant, investment finance specialist and financial planner – known as your master coaches.”
Property investment team member: Accountant
It is crucial for investors to find an accountant who invests in property.
“A specialised accountant will be able to assist in advising you on the most appropriate property ownership structures, whether that be in individual names, tenants in common splits, trusts (whether discretionary or unit), companies or SMSFs,” Bushy said.
“An accountant who knows about property investment can also advise you on tax considerations and depreciation impacts. You need to be wary of ‘everyday’ tax accountants who may be good at doing a simple tax return, but are unlikely to understand all of the nuances of the multitude of property investment tax rulings,
which may end up costing you thousands.”
Property investment team member: Investment Finance Specialist
Your investment financial specialist needs to be more than just an average mortgage broker or someone who works for a bank.
“Property is a game of finance, so if you’re investing in property, some fundamental and critical finance structuring and strategy considerations can make or break the success of your property portfolio if not understood properly from the start. And don’t underestimate the importance of this, for I’ve seen a lot of very sorry investors who’ve paid the price of going straight to the bank or a low-rate loan broker who just doesn’t understand the nuances of property investment finance,” Bushy warned.
“So make sure you’re dealing with an investment-savvy finance broker who invests in property themselves. It will likely save you thousands, reduce risk considerably and help you sleep comfortably at night.
“An expert investment-savvy finance broker will determine your capacity in terms of borrowings, equity and property purchase price points, structure your finances to minimise risk and limit exposure of your family home, save you tens of thousands in loan repayments, help you use your property portfolio to pay off your deductible home loan years earlier, and know which bank or lender is best suited to you achieving your goals.”
Property investment team member: Financial Planner
The final ‘master coach’ is a good, property-aware financial planner.
“Financial planners are an important part of your strategy in terms of risk protection insurances, diversified investment planning, and the critical transition to retirement, or Liberate and Remunerate stop work phase,” Bushy said.
“Again, you need to tread very carefully here, because many financial planners don’t support property as a part of their preferred investment portfolios, so ensure you select a financial planner who invests in property personally and adopts a balanced asset approach to your overall investment strategy. These are hard to find, and many financial planners will actively try to talk you out of property and into equities or other investment classes because they’re not licensed to advise on property and don’t get paid for property.
“You also need to ensure that your financial planner is paid based on a fee for service model, and not taking undisclosed commissions from insurance, superannuation and other financial product providers. Also, make sure that the financial planner has their own financial services licence and is independent of the major financial institutions, so they don’t have an obligation to refer you to host providers, because this severely limits the objective and transparent choice, quality and performance of financial products (and increases the cost to you).”