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Liberty & West “Premium Property Management”?

By Grail - 21 August 2010 34

I’ve recently been approached here in Canberra by a sales force working for “Liberty and West”. They’re proposing to put together property research, mortgage offers and tax calculations to help me build a real estate portfolio. The sales rep wanted a $200 payment to secure the next meeting where they’d supply a selection of properties they’ve researched that would be in my budget, along with a recommended mortgage to go with that property, mine to choose for the paltry sum of $2000.

The glossy brochure is high on gloss and promise and quotations from motivational speakers that I’ve never heard of. It’s very light on numbers, and the sales guy wasn’t particularly keen to go into detail about how much I’d be paying to whom and when.

Negatives that have my spider-sense tingling include: light on detail, high on hype, pithy quotes from unknown motivational speakers, brochure full of “ownership” and “wealth” imagery, push to get my money from me on the spot (sales rep had the EFTPOS terminal in his bag), and evasion of questions about the service. I cannot find a Product Disclosure Statement anywhere on their site.

While I really like the idea of having some folks out there doing the property search for me, and I’d be willing to pay them handsomely for their efforts, I want to know how many folks out there have had contact with this company, who does business with them and would you recommend them?

What’s Your opinion?


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34 Responses to
Liberty & West “Premium Property Management”?
georgesgenitals 12:07 pm 23 Aug 10

Oh, and the above numbers are before tax. Even if positive cashflow before tax, you still get to deduct a range of expenses, including building and fittings and fixtures depreciation, land tax and body corp, and interest on the loan. Once you add the depreciation, the overall costs will be greater than the rent, meaning you get a tax refund.

georgesgenitals 12:05 pm 23 Aug 10

troll-sniffer said :

georgesgenitals said :

http://www.allhomes.com.au/ah/act/sale-residential/84-northbourne-avenue-braddon-canberra/1316764448011

Cost $205k, gets $275 per week rent, which is about to increase to over 300. No management fees. Semi-commercial arrangement that means when it comes off lease in 12 years it will revert to standard residential (with associated price and benefits). About 7% before body corp and land tax, which comes out to about 3k per year.

They ARE out there.

And after body corporate and land tax the return is about 31/2% I believe, and these units have been way behind the capital gains in the same area. So no, they ARE NOT ourt there based on your example.

Disagree – if you include the $3k, the yield is 5.5%. The reason they are behind on capital gains is because of the lease they come with. When the lease expires, they revert to residential, at which time you’ll get all your capital growth in one hit.

Regular capital growth is only one strategy – there are others. Especially if you own multiple properties. If you aren’t planning on retiring for another 15 years or more, why would you not buy a property like this at a significant discount to the market it will be sold into? You can get your regular capital growth from other properties, which will rebalance your overall portfolio yield and growth.

troll-sniffer 11:14 am 23 Aug 10

georgesgenitals said :

http://www.allhomes.com.au/ah/act/sale-residential/84-northbourne-avenue-braddon-canberra/1316764448011

Cost $205k, gets $275 per week rent, which is about to increase to over 300. No management fees. Semi-commercial arrangement that means when it comes off lease in 12 years it will revert to standard residential (with associated price and benefits). About 7% before body corp and land tax, which comes out to about 3k per year.

They ARE out there.

And after body corporate and land tax the return is about 31/2% I believe, and these units have been way behind the capital gains in the same area. So no, they ARE NOT ourt there based on your example.

georgesgenitals 10:25 am 23 Aug 10

http://www.allhomes.com.au/ah/act/sale-residential/84-northbourne-avenue-braddon-canberra/1316764448011

Cost $205k, gets $275 per week rent, which is about to increase to over 300. No management fees. Semi-commercial arrangement that means when it comes off lease in 12 years it will revert to standard residential (with associated price and benefits). About 7% before body corp and land tax, which comes out to about 3k per year.

They ARE out there.

troll-sniffer 10:11 am 23 Aug 10

builder said :

Like basketcase said, do your own research. If you really want to make the largest returns possible do the following.

1. Buy your own block of land, make sure you can fit a 4 bedroom home on it (easy to rent) , Land min 400m2. Save on stamp duty.
2. Get a builder to quote to build the house, don’t go for the cheapest quote. Organise carpets, blinds, landscaping yourself.
3. Rent the property out and property manage yourself.
4. Organise a property depreciation schedule and find a competent accountant.

Play your cards right and you could be making 7 to 8 % return on your money, plus capital gains down the track. This system actually works but it involves a little bit of legwork. Once you have done one you can begin looking for your next site. Never pay too much for the land. Avoid apartments, the developer has sucked out the lion share of the profit. Become your own developer and control every aspect of the deal.

There is no bubble. The majority of people buying and building new homes are immigrants. At the recent land auctions/ ballots, every available block was snapped up.

If you can’t find a vacant block than buy a house and land package near infrastructure.

Mate if you can get 7-8% net return on an investment property in Canberra then I know of several international investment funds that would be keen to get involved.

In the real world, the return on an average property in Canberra in an area that would be still able in a downturn would be at best neutral and more likely -2 or -3%.

Consider:

Purchase price of a budget house ready to rent $450000. Rental return $450 per week tops, allow 50 weeks pa. $22,500 pa. Mortgage interest only repayments on $400,000 = $29,000 pa at 7.25% (best to allow for 8% rates at least). Rates, insurance, land tax etc allow $5000 per annum. (any less and you’re kidding yourself)

So, on a rental return of $22,500 pa you have expenses of $34,000, a gross loss of $11,500. If you’re able to negative gear against a tax rate of 40%, you’re still down $6900 per annum or $130 per week. The best most optimistic rate of return you could envisage is therefore -1.5% approx. That’s a far cry from 7-8% return.

If you can post demonstrated verifiable figures that show how you can somehow magically purchase a property in Canberra with investment finance and get a positive rate of return I and a million other investors around the world would love to see them.

Previous generations have done well out of capital gains and the trend may well continue, but when starting out in the property game you need to be aware that it will cost you a massive chunk of your lifestyle money for the first few years and will most likely take 12-15 years before you start to pull ahead of sticking the same money in a good bank account.

georgesgenitals 10:03 am 23 Aug 10

There are still properties worth buying, but you have to look hard and move fast. Also, there are plenty of investors who are happy with the current performance of their investments. A softening market doesn’t mean you should dump your assets – that exact mentality is what separates sucessful investors from the herd.

2604 10:55 pm 22 Aug 10

DeadlySchnauzer said :

Uh i would be staying away from investment property full stop at the moment, google “Australian Property Bubble”. While you will find a lot of hysterical doomsayers, certainly current conditions at least warrant hanging on the sidelines for a while.

x2

Houses are just too expensive for anyone to make any money renting them out. Just ask someone who’s purchased recently. We had a 20% deposit when we purchased in late 2009, and even then our minimum repayments ($1250/fortnight) are way beyond what our (renovated, well-located) house would rent for (~$450/week). And that’s before you factor in purchase costs (legals and stamp duty) and ongoing costs (rates, land tax, water supply, management fees, repairs and maintenance). I reckon rents would need to double for our house to be a net positively geared investment.

Builder, a “7-8% return on your money” is pretty weak. You can get an at-call savings account which gives you 6.51% interest with no effort at all, and most people salary-sacrificing into super get at least twice that without the need to speculate.

Felix the Cat 8:27 pm 22 Aug 10

http://www.wiseinvestment.com.au/htm/default.asp

I’ve used these people – no hard sell and no up-front fees.

milkman 8:04 pm 22 Aug 10

Get yourself onto an online investment forum. For property try http://www.somersoft.com.au. You’ll learn more from doing some reading and asking some questions, meaning you can make your own investment decisions. Forget using a managed service for this.

arescarti42 4:41 pm 22 Aug 10

DeadlySchnauzer said :

Uh i would be staying away from investment property full stop at the moment, google “Australian Property Bubble”. While you will find a lot of hysterical doomsayers, certainly current conditions at least warrant hanging on the sidelines for a while.

Agreed. I wouldn’t be touching investment properties at the moment, and if I owned any I would be looking to sell them.

Whether or not you chose to believe the bubble argument is up to you, at least be aware of it so that you can make an informed decision, rather than getting caught in the “property always goes up” hype from the media and building industry.

If you’re interested in some reading, Leith over at unconventionaleconomist.com makes some cogent arguments. (http://www.unconventionaleconomist.com/2010/05/debunking-australian-housing-shortage.html)

One last thing I’d point out, the west cost of the USA was apparently experiencing chronic housing shortages as a result of rapid population growth, and prices there are now as much as 40% below their peak.

builder 12:52 pm 22 Aug 10

Like basketcase said, do your own research. If you really want to make the largest returns possible do the following.

1. Buy your own block of land, make sure you can fit a 4 bedroom home on it (easy to rent) , Land min 400m2. Save on stamp duty.
2. Get a builder to quote to build the house, don’t go for the cheapest quote. Organise carpets, blinds, landscaping yourself.
3. Rent the property out and property manage yourself.
4. Organise a property depreciation schedule and find a competent accountant.

Play your cards right and you could be making 7 to 8 % return on your money, plus capital gains down the track. This system actually works but it involves a little bit of legwork. Once you have done one you can begin looking for your next site. Never pay too much for the land. Avoid apartments, the developer has sucked out the lion share of the profit. Become your own developer and control every aspect of the deal.

There is no bubble. The majority of people buying and building new homes are immigrants. At the recent land auctions/ ballots, every available block was snapped up.

If you can’t find a vacant block than buy a house and land package near infrastructure.

DeadlySchnauzer 8:50 am 22 Aug 10

Uh i would be staying away from investment property full stop at the moment, google “Australian Property Bubble”. While you will find a lot of hysterical doomsayers, certainly current conditions at least warrant hanging on the sidelines for a while.

basketcase 6:45 pm 21 Aug 10

They sound like a con job mob. Give them the big miss. For starters you can probably do most of your own research, try allhomes.com.au

Try the Canberra Times on Saturday, give you an idea of what’s going.

Wander into a few real estate offices and tell them what you want.

Join the house inspection crowd and go round visiting open houses.

Try your own advertisement if you have a real good idea of what you want.

realityskin 6:25 pm 21 Aug 10

Wealthbuilders are the only place to go to for investment property, no dodgy upfront fees. Give Dirk a call in Weston.

http://www.wealthbuilders.com.au/contact_us.php

Felix the Cat 6:07 pm 21 Aug 10

Sounds like you have already sussed them out, save your money and stay away from them.

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