After many years in this profession, what I can now bring to the table is wisdom, experience, research, logic, and efficiency.
My concept of professional investing is "least in, most out" with 105% funding from local banks (depending of course on their valuations) with a deposit of $1,000. When you strip away the emotion about what a property investment looks, you will then be able to focus on how you (and your family) can invest with maximum efficiency.
We have developed a clinical and scientific approach to property investment. We were delighted early in early 2007 when we received a testimonial (from America): "You are the only rational source of information in your market". Our method totally ignores emotion, and has its focus solely on the expected financial return.
My practice is based on long term relationships, repeat business and personal referrals. And none of that happens if clients are not totally at peace with the first investment that I share with them.
Our private clients generally need to consider an on-going investment program to be able to achieve their goals, consequently the investments that I share are in growth corridors - so that equity is built quickly to enable you to add to your portfolio as soon as possible. And to ensure that you will be able to sell easily into the widest possible market (i.e. families) when the time comes to implement your eventual exit strategy, you need to acquire investments that are under the median price for that locality.
Another issue to mention are the tax benefits. Even if your investment never increases even $1 over the next ten years - heaven forbid - the average investor (with 105% funding) will still have saved up towards $100,000 in taxes.
Novice investors generally don't have any knowledge of the true benefits of property investing. Daily journalists frequently shape our views, but they are often wrong, and rarely offer Wisdom.
The Best Investment Asset (this will be 30% of your success)
Without question, the best investment asset is a single story, four bedroom family home with a double lockup garage, on its own title - I describe these as "a display home without the furniture" - and we locate the investment in a growth corridor close to a cluster of solid jobs in a well established, and well diversified, economic zone.
The reason is that this property will always attract a continuing series of the ideal tenant - a young couple with children in primary school.
Some of the important considerations for the purchase of a successful residential property investment are internal and external inclusions, correct funding, the tenants-in-common legal structure, your tax refund every payday, the quantity surveyor's report etc however its long-term performance depends on the vehicle's ability to attract a succession of long-stay, high quality tenants, paying a relatively higher rental, and located in an exciting growth corridor in a low land-tax jurisdiction.
The preferred product is a brand new family home off-the-plan i.e. it will be built over the next few months. This is very attractive to
(a) investors - as it achieves maximum taxation benefits - as well as to
(b) the ideal tenant e.g. a young couple with children in primary school.
By a continuing process of research and elimination, my focus comes down to brand-new family homes in established family suburbs in the vicinity of Brisbane's southwest economic zones. In these suburbs there will always be long-stay, quality tenants - because of that mass of broad based jobs in the adjacent light-industrial precincts.
The pricing should be up towards - but just under - the median price. You don't earn more rent (proportionately) for a more expensive investment, and by staying just under the median you will have the broadest possible market to exit into when the time comes to realize on your investment.
About Bernard Kelly:
Bernard Kelly BEcon MBA CRPC Australia's Retirement Strategist
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