Unreal Property - Finance

The Unreal Property Tips for Finance.

1. Speak to a broker or a bank early in the process.
2. Preserve capital by using bank guarantees or deposit bonds for 10% deposit for off the plan purchases.
3. Discourage cross-collateralisation or cross-securitisation. The principal should be to have one loan secured with one property- (not always possible).
4. Consider interest only loans
   
   Many investors refinance their family home to release equity when purchasing investment property. This process does not have to be completed before purchasing, but it is prudent to have a clear indication it is possible.
   
   
    

"The One Stop Shop"

Companies selling investment property make a virtue out of a one stop shop services whereby everything to do with the property is handled “inhouse”. The finance is organised inhouse by our “experienced and well trained consultants”. The conveyancing is handled by our “impartial solicitor” and the management is done by our “skilled and experienced management team.” While marketed as a benefit to the investor, they benefit the marketer by:

1.  Control over the purchase process- if everyone the investor speaks to in relation to the purchase is "linked", there is no objective assesment of the transaction.
2.   Provides an additional income stream for the company.

One Stop Shops rarely deliver a impartial service to the investor. The groups who promote them most vocally are probably the ones to be most wary of.

Unreal Property believes the investor should deal with different businesses in the process of purchasing an investment property. Businesses do what they are good at and it is essential there are no arrangements (ie kickbacks) between businesses, unless fully disclosed.

"The Magical Appearance Trick"

The moment it is known you are considering purchasing an investment property, all sorts of people will "appear" to sell you one. Be particularly wary of accountants, financial planners and mortgage brokers who suddenly produce a hot property somewhere for your consideration. For reasons only understood by them, their property is better than anything else you might be looking at. (Hint- it has something to do with a fee!)

Make sure you ask how much commission the property marketer makes out of the transaction. There is no reason for this not be fully disclosed. If the commission level is unusually high, two tier marketing is a strong possibility.