DIY investors 'disadvantaged'
Property investment professionals at the Smart Property Investment/PIPA Roundtable agreed “mum and dad” investors were unlikely to make the best possible choices without advice.
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Margaret Lomas of Destiny Financial Solutions said many Australians believe property is a do-it-yourself investment.
“For some reason, and I think it’s the fact that we’re born and raised in it, we believe we’re experts on property and therefore we think we can do it ourselves. That is the fundamental mistake,” she said.
While many investors baulk at the cost of professional property advice, Mr Lomas said well-informed investors were more likely to profit in the long-term.
“Now is not the time to be penny pinching," she said.
“If you’re paying $10,000 to get a really good quality piece of advice that’s going to see you through your first property purchases, you’re going to make tenfold or twentyfold in what you save and what you make by making better choices.”
She believes many Australians think they understand the growth potential of certain areas when in reality they know little about the fundamental growth drivers, like demographic information, vacancy rates, median income and infrastructure plans.
“When people come to my company for help when they’ve already bought property, it’s usually because they failed spectacularly,” she said.
Ben Kingsley of Empower Wealth agreed investors were at a disadvantage without expert advice.
“Statistically, only around 25 per cent of the population is likely to seek out advice. If you also look at the other statistics around property investment, 78 per cent stop at one investment property,” he said.
“Probability says some have turned over and don’t need more than one property, but with the vast majority of those people, it’s because they’ve bought a lemon,” he said.
Mr Kingsley believes investors would have to spend around 100 hours on research to gain a full understanding of an area.
The degree of risk is particularly high with property investment, property author and lecturer Peter Koulizos said.
“You’ve got $350,000 in one asset. So you better make sure you get the decision right because if you’re getting it wrong, you’re not losing $5 or $10 bucks,” Mr Koulizos said.
Ultimately, Ms Lomas believes property advisers have the knowledge and resources to help investors make better decisions.
“By the time I buy a property in your area, I will know more about your area than you do and I won’t even have to come here to find that out,” she said.