Wanting Advice About Choosing Finance Broker for House Purchase/Investment

[Silverbirch]

Hi, I live in Australia, and so appreciate that there are differences between countries, but would like to ask if others might be prepared to share their experience with this.

 

I am an older woman. In my younger years, have had 2 lovely homes, but due to circumstances in my life, I lost my home. I have always wanted to get a home again of my own, and it does seem that this is going to become a real possibility at some point in the future.

 

I have been reading up about property investment and will continue learning as much as I can before I take the plunge. I don't know yet whether I will buy a property I will live in or whether I will start off by buying a small place I can rent out. One writer advised that to start with, studio apartments which one could renovate and rent out is sometimes a good starting point.

 

Anyway, this advice was also that before making decisions, one should select a team consisting of: 1) a finance broker 2) an accountant 3) a person who has been successful in property investment who would be prepared to offer advice/mentoring.

 

Well, I am wondering if anyone here knows much about finance brokers. How does one find a reputable one and how is payment generally calculated. Thanks in advance.

[mhowe]

I think you are.best off asking for referrals from people.you know/respect in your town or place of work. I am a financial ad is or in the States and my business is all word of mouth. If the market and practices are the.same in Oz...investment accounts are.either. commission based on transactions....or.fee based on assets (generally @1%).

[Silverbirch]

Thanks M! I have to put my head down and think of who I might know who invests in property. I'd like also to find out more about "self-managed superannuation" and just how some people utilise this to purchase properties.

[RedDress]

I also agree that word of mouth is best. I'm a little confused, though, if you are looking for a mortgage broker or a financial advisor? I guess we use different terms.

 

Anyways - I just purchased a home and I used an independent mortgage broker. I found him via a colleague at work. He found him through his fee-based financial advisor. They really are the best as they "sell" mortgages from many different financial institutions (or private investors) and so they really are looking for the best product for YOU. He was paid a standard commission via the bank that I eventually got my mortgage with so it didn't cost me anything (and really, I also did some "shopping" on my own and he was able to negotiate a better deal and rate than I was able to).

 

But - what I really wanted to chime in about is that my previous property was a condo (1 bedroom apartment) that I rented out. I had planned on living there but I got transferred to another city.... so I became a landlord by mistake. It's true that an accountant is a good plan because you really have to do the math. You have to make sure that you can rent the place for your mortgage + property taxes + condo fees + additional income tax that you will have to pay + maintenance + a bit of a profit margin or it's just not worth it. Don't underestimate the maintenance, either. I know that personally, I had to replace a fridge, paint, call a plumber once or twice, etc. It can really catch you by surprise if you are not prepared. You should even really have a buffer saved for that stuff because maintenance can happen at any time.

 

To be honest, I've been a landlord and I wouldn't do it again. I also have friends who have rented out a townhouse and the people they rented it to trashed the place. I'm pretty sure they lost money on the deal. Also - I was lucky to have had a great tenant who paid her rent (in full and on time) - but that is not always the case. I did, though, have a few months where it was vacant between tenants - so you have to be able to carry your own rent and a mortgage in that time on less income. If you have a tenant that doesn't pay, though (and this happened to friends of mine) - you should also know the eviction process. Where I am, it's near impossible and extremely expensive to have someone evicted...

 

Personally, I found it to be a lot of hassle and risk. For this reason, when my tenant moved out, I simply sold the place and bought my own home where I live now.

 

... but... I DID make money. So... it's up to you. It's true that it's important, though, to know what you are really getting into.

 

Screen tenants well.

[Silverbirch]

Thanks RedDress. Yes, I mean a mortgage broker. So glad there was no fee for you, and hoping it's the same here.

 

I know it wouldn't likely be the go for a studio apartment, but I only JUST read about a scheme here from the Army Defence Force Housing program where the army leases homes from private house owners and that it is meant to be very safe. I've known women here whose husbands have been in the army, and there is a big deal about leaving the homes as they were when moved in. The army also guarantees rent paid. I agree though that there could be some bad experiences for a lot of people when renting out, and not something to go into without carefully thinking it out.