13 May The 4 ways a Property Investor will pay
In today’s show Bryce Holdaway, from EmpowerWealth.com.au and also the co-host of that great show on Foxtel, Location, Location, Location Australia, explains the 4 ways a property investor will pay.
Kevin: Joining me once again, a regular guest on the show, a partner in EmpowerWealth.com.au and also the co-host of that great show on Foxtel, Location, Location, Location Australia, Bryce Holdaway.
Good day, Bryce.
Bryce: Hello, Kevin. How are you?
Kevin: Good. Always good to be talking to you. I’m very, very interested in this topic we have today, and that is the four ways that a property investor will pay. Tell me what you mean.
Bryce: I think it’s a good summary. I was at a lunch recently with Cameron Kusher where he was talking about the property market and obviously, with a big focus on Sydney.
Kevin: Cameron Kusher, of course, from RP Data?
Bryce: CoreLogic RP Data. They have this report where they said anyone who sells a property for less than what they originally paid for it, a very large percentage of those were actually property investors rather than owner-occupiers. My ears pricked up.
I thought it’s interesting because I’ve seen investors over a 16-year professional career as well as a personal property investor myself, and I think that there are four ways that someone is going to pay, and that is through experience and having seen them go through the process.
The first one, for me, is picking the wrong asset. Just because a property is maxed for an investment stock, it doesn’t necessarily mean that it’s investment-grade stock. I’ve seen so many times when people just buy an investment property because they can rather than buying the right asset that will give them a better performance over time. My first way that they’ll pay is by buying the wrong asset.
The second way is through procrastination. You probably know it yourself, Kevin, how many people come up to you and say, “I’ve been meaning to do this for the last 18 months, but I haven’t gotten around to it.” The problem with that is that the market’s not going to wait for them.
Kevin: Good point, mate. What’s next?
Bryce: The third one for me is they’ll pay too much. That’s the biggest fear, as you know, that most people have, and as a professional buyer’s agent, one of the common things that people come to me and get my help for is to make sure that they’re buying the right asset but also paying at least fair market value for the property. In my view, I see too many people up against real estate agents who negotiate all day, every day, as part of the job.
Kevin: I guess there are two things there. Don’t get involved emotionally, and also make sure you do your research and set your limit price.
Bryce: Yes, I think so. Quite often, you’re getting most of your information from the real estate agent, and if they’re doing their job correctly, they’re trying to get the best deal for their client, which is the seller. So quite often you need to be able to be confident in doing your independent comparable sales research, but that’s not easy if you don’t have access to all the resources.
Kevin: Exactly. And the fourth one?
Bryce: For me, professional advice. I’m on the fee-for-service side of the ledger, where as a buyer’s agent, we charge a fee for service. At face value, we can appear to be more expensive, given that on the other side, the free side of the equation, you have a real estate agent who’ll give you free advice – but they’re getting paid by the seller – or someone who’s selling brand-new stuff, whether it’s a house and land package or an off-the-plan apartment. They’re getting paid by the developer and often quite handsomely, so they can give some free advice, as well.
But in my view, you should be taking advice from someone who doesn’t have a vested interest in the outcome and is therefore working in the best interests of you, the buyer.
In my view, it’s one of those four things: wrong asset, procrastination, pay too much, or professional advice.
Kevin: Always good talking to you. Bryce Holdaway from Location, Location, Location Australia and also a partner in Empower Wealth. As Bryce said there, they are buyer’s agents.
Bryce, good talking to you, mate. We’ll catch up again soon.
Bryce: Likewise. Thanks, Kevin.