An article by Hamish Turner (NZ)
I had this very question last week from a client of mine looking to expand his portfolio. We made a time to talk via Skype as we were in different parts of the country.
The first question you want to ask your client when they are leaning on you for an answer concerning “what to buy” is - what is your motivation? Ie; is it capital growth, investment return, renovation opportunity, land use opportunity?!
It’s a little dangerous telling a client what you think they should buy – there are alot of variables in style of investment and you don’t want to be held accountable for issues that may arise down the track. The best advice is to simply ask questions concerning different styles of investment – highlighting different factors of consideration in an investment your client may have not thought about.
What % return do you require? Do you want to buy and alter an existing dwelling? What do you want to achieve more - capital gain or % return? How many properties do you want to end up owning? How long do you want to hold your properties for?
I always suggest when looking at buying another property – to create a spreadsheet with approximate purchase price and approximate rental return – and poll the properties from highest return to lowest return. Understanding what the market requires in a certain area is important to.
This kind of information can be gained by simply calling and asking the question from property managers in the local area to where you are looking to buy.
After a general discussion about “what to buy” I ALWAYS ask my client to ensure they seek independent legal advice – be it from their accountant or lawyer. When spending several hundred thousand it does pay to cross your t’s and dot your i’s and spend that little bit extra.
If you are ever in doubt regarding information you are giving to a client about investing, ensure you see your principal or indeed, one of the sales team!