More planners are becoming familiar with direct property investment and investors should shop around for balanced advice that feels right to them.
It’s not an uncommon scenario. An investor raises with their financial planner the idea of buying an investment property. They’ve heard bits and pieces from friends or media about hikes in rental demand, or property values taking off, or tax benefits of negative gearing or what have you, and they think it’s worth a look at. But their financial planner pours cold water on the idea and suggests they do something else.
Having seen the financial planning industry evolve over the last decade or so, I realise the concern with direct property investment stems from unfamiliarity, rather than an issue with the asset class itself.
It’s natural for experts to stick to what they know well and are comfortable with. To be honest, financial planners aren’t licensed to say, ‘go buy that actual property’ so as a result of that, many have never really developed an understanding of direct property.
But as we’re seeing the focus move from pushing financial products to advising on financial strategy, things are changing. With the option to purchase property through self-managed super funds, financial planners are increasingly open to discussing a direct property investment strategy with their clients.
Before you get into asset classes, I really recommend interviewing financial planners about the kinds of investment strategies they prefer. Like any professional advice, it pays to get a second opinion before making major decisions and ensure you understand what’s being recommended.
Ask the financial planner, “What’s your opinion on direct property investment and the possibility of investing through my Super?”. If you see any of these red flags, consider looking elsewhere:
They look blank or seem vague
This is an indication they are uncertain or inexperienced with direct property investment.
They dismiss the idea outright
If there’s no explanation of why it’s a bad idea for you specifically, they may be doing what’s easy and comfortable for them, rather than what’s best for you.
They say it’s a great idea, without saying why
This can be a sign of a planner who is too eager to please and isn’t taking into consideration your circumstances before allowing you to invest.
A good financial planner is always focused on what’s right for your personal circumstances, and they will make a concerted effort to find out what those are before giving you advice.
If you need a referral to a balanced and open minded financial planner, get in touch through our website dfgproperty.com.au and we’ll introduce you to some good people.
About Owen Davis: Owen Davis is the Principal of DFG Property, a full service property management, finance & sales firm based in Sydney. Owen has over 15 years experience in property financing, real estate and property management. More than a third of his clients are among the top 10% of property investors in Australia.