Getting clarity on your investment strategy

Kev Tran – Director and Principal Buyer’s Agent at Kev Tran Group – understands that the property market has evolved significantly over the last decade with the introduction of more robust responsible lending measures, and a requirement for banks to apply a minimum serviceability buffer of 3 per cent above the housing loan interest rate under APRA’s prudential framework.

Moreover, with the cash rate at a 12-year high of 4.35 per cent, it has constrained borrowing capacity for many investors.

While these factors have made property investment challenging in some ways, Tran said buyers’ agents are well positioned to provide tailored strategies so clients can navigate these conditions and understand the hallmarks of successful property investing in the current market.

“During our initial strategy conversation, we ask clients to take a step back from all the crazy success stories they hear online,” Tran said.

“Then, we unpack why they’re investing in property. It might be because they want to become financially secure to set them up for retirement. But we need to iron out how they can achieve that.”

Tran said he does this by asking a series of questions in the initial meetings to uncover his clients’ specific goals for their investment portfolio.

“I ask them how much passive income they want to generate from their investment,” he explained.

“They may throw out a random amount like $200,000 a year, which in many cases is an unrealistic goal. I ask them how they got that number. Does it reflect today’s figures? Is it adjusted for inflation in 15 to 20 years’ time? Is it a gross figure? Is it before or after expenses?”

Tran often discovers that clients would not have considered these factors when setting their financial goals.

“When they factor in their lifestyle and expenses, they may end up at a much lower figure like $80,000. This might even give them the opportunity to reduce to part-time work or stop working altogether.”

He said that as a buyer’s agent, he plays a critical role in defining the purpose of his clients’ investment portfolio by understanding their financial circumstances, and managing their expectations.

“This is important because if a client’s goal is too aggressive, they’ll have to commit a lot of resources towards their property. They’ll find that they can’t have a life outside of that,” Tran emphasised.

Alongside this, Tran said he helps clients understand their borrowing capacity, how much a lender may be willing to lend to them, how much equity they have accumulated from previous investments, and how much cashflow they have at their disposal. This enables him to help clients choose their investment property with greater confidence.

Tran uses a combination of free and paid data sources, as well as rigorous research conducted by both him and his team, to identify properties that offer strong yield and growth prospects for his clients.

“First, I ensure that the area the property is located in has a solid local economy and healthy demographics. I would avoid mining towns or cities with just one or two industries because they’re too volatile for us,” he said by way of example.

“The area has to have a good mixture of employment and strong GDP. I look at all the infrastructure projects that are currently under construction or in the pipeline.”

Following this, Tran said he assesses the supply and demand metrics to shortlist locations at certain price points and ensure that his clients purchase well-positioned properties.

From there, having a comprehensive and strict due diligence process is crucial to avoid buying properties with detractors which will affect its long term growth. Some examples would be to avoid flood and bushfire risk zones, main roads, and watching out for concentrations of public housing, to name a few.

Ultimately, a good buyer’s agent value will equip buyers with a well-rounded investment portfolio strategy, Tran explained. That’s so much more than finding properties – it’s about defining goals and securing a desired financial future.

Promoted by Kev Tran Group.

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