Blue Wealth Property

Hi all... so I am new to the educational journey and have spent the past months researching property investment through, this forum, podcasts, books etc.

There is certainly a lot to learn and I am pretty risk adverse when it comes to my future. Without getting into specifics of my personal factors I wanted to see if anyone from the forum could cast light on Blue Wealth Property?

I attended a Seminar recently at which they provided an interesting overview of the key elements to consider when investing entitled 'Principles of Property Investment', many of which are reiterated through my research to date.

However, I am dubious as to the use of a group like this hearing about inflated pricing of off plan developments, risks following first tenant guarantees and the fact these sports of organisation may be more focussed on their profits than genuinely guiding clients to realising wealth..

Does anyone have any insight, experience or valuable opinion on Blue Wealth?

 

Blue wealth pay 'broker partners' huge commissions to help sell OTP apartments. I'd avoid on the whole, like you I have a healthy distrust of OTP sales companies.

Their research into location and so on does seem sound, but my thought is that the nature of the business means you'll be paying too much.

 

I must admit their research and details provided were compelling. Focussing on knowing your numbers, macro and micro factors, holding costs and leverage. The seminar included some graphs on comparisons of the properties they promote vs the rest of the market in terms of capital growth and, in encouraging clients to hold for at least 10 years... saw vastly better gains across locations. Obviously we all do our own research.. however, with limited time there is a definitely attraction to having a company focussed on property investment research doing the hard work for you. Paying a little more at the front end may be insignificant if the property is what they say it is (provides great capital gains and cash flow).

For the record I have not bought an investment property as yet.. have steady incomes, about $200K in equity in our PPOR which I would use as leverage for a deposit on our first IP.

 

The only thing that will be left 'blue' is your mood. Don't walk. Run.

Me 2 cents.

 

Thanks for your feedback... any chance you can elaborate on the reasoning behind your statement?

 

To me its very simple. Huuuuge conflict of interest and lack of transparency.

When a property education company is also in bed with developers and other key players, and then they are recommending stock of those same key players. That's an unhealthy threesome in my books.

Whatever you decide, just know all the facts before you jump in. Personally I'd run far and fast.

 

What ever you do, don't allow them to organise the finance for you. Get independent valuations done and don't cross collateralise your PPOR.

This is how most people come unstuck - they never know what the valuation comes in as, and because they've got heaps of equity to put in the short valuation never gets felt as the loan amount looks correct.

You might benefit more from a BA - they'll find you exactly what you're after and you won't be stuck with an overpriced OTP.

 

Agree with @Leo2413 and @Jess Peletier said above - while I haven't dealt with this company specifically, but I have come closed to purchase an off the plan from a similar company like this.

You'll find that their macro research is sound, for example, in my case, they were suggesting Brisbane due to property cycle and then pinpoint few areas like Chermside, they even said to avoid CBD due to oversupply. They offer us properties on the recommended areas and they can get "significant" discount from the builders plus "inclusions" that they were able to negotiate for us. Oh, I bet they mentioned depreciation benefits and rental guarantees too?

I decided not to pursue it - simply because after doing my own research I found that we'd better off buying property with land for similar price to the off the plan unit that they are offering.

Time will tell whether our purchase performs better than theirs - but at least I own the decision and research.

 

Rule #1 - Never pay more than it's worth. If you pay too much going in, it's harder to recoup.

Rule #2 - 'hold for 10 years' - it's going to take you that long to recover from overpaying.

 

Great point, and therefore your risk of negative equity to the markets is a lot more sensitive.

 

Jess... thank you for the guidance. I was thinking that a BA would provide greater benefit and a better outcome for us.

 

Great feedback.. yep you are on the mark in terms of the promised discounts, inclusions, depreciation benefits and first tenant guarantees.

 

No such thing as a free lunch, especially with these types of businesses.

Someone has to pay and pretty much always ends up being the end user... You.

Inclusions were already factored into their price.
First tenant guarantee was also factored into the price.
Free car with the purchase was also factored into the price.
Rental guarantee was also factored into the price
Deprecation was also likely factored into their price even though it is a cost you incur.
The agents commission is also factored into the price.

I haven't used them and there is a number of warning bells that you may want to listen to, end of the day it is your decision but if it talks like a duck, looks like a duck and eats like a duck and you call it a chicken doesn't make it one.

 

Seminars like this [nearly] always say hold for at least 10 years or preferably forever - that way people don't find out how much they overpaid vs established stock.

Seminar results always look good because they exclude the duds e.g. Gladstone in 2013.

 

I've encountered a lot of companies offering free education and helping people buy off the plan companies. I have encountered a couple that were quite good in how they went about it, but the vast majority I wouldn't trust to do business with at all.

I don't recall anything about 'Blue Wealth Property', but if they offer a rental guarantee, it's a huge alarm bell. Rental guarantees are usually them managing the property and guaranteeing a specific amount for a period of time. Usually what happens is the rent is nowhere near what the guarantee states, but they've built the difference (and more) into your purchase price. Inevitably the rent drops drastically after the guarantee period.

Odds are you'd be paying too much for the property. As a broker I've been seeing a lot of problems with off the plan properties (at least in Melbourne). OTP is a sector of the market I'd stay away from in general, but even more so when they're being marketed by a company offering a 'one stop shop' solution.

 

Thanks everyone for the feedback which consistently supported my thoughts about the "opportunity" presented. As I said I am in a learning phase and have greatly benefitted from this forum. I am pretty keep to purchase in the coming 6 months and likely will look to a reputable BA in the area I am looking toward.

Can anyone confirm whether you are able to add the cost of a BA onto the items to claim against taxable income associated with the cost of purchasing the IP?

 

It goes to the cost base for capital gains.



Here are some of the guidelines. For a full read of what can be allocated to the cost base, here is the website: What is the cost base?

Second element: incidental costs of acquiring the CGT asset or that relate to the CGT event
There are ten incidental costs you may have incurred in acquiring the asset or in relation to the CGT event that happens to it (including its disposal). They are:

• remuneration for the services of a surveyor, valuer, auctioneer, accountant, broker, agent, consultant or legal adviser (you can include the cost of advice on the operation of the tax law as an incidental cost only if the advice was provided by a recognised tax adviser and you incurred the cost after 30 June 1989)

 

Leo2413 that is brilliant... thanks for providing this link.

 

No problem.

 

Same concept applies for new apartments, be wary of oversupply and overpaying on the back of false promises - New vs Old - What do you think?

A lady told me yesterday that she 'was about' to purchase an off the plan investment property because the adviser told her she could greatly improve her cash flow by completing a tax variation form, thus making this a great investment opportunity.

I asked the lady if the 'adviser' talked much about the property's layout, position in the block, natural light, outlook, privacy, supply in the area, price point relative to older properties close by etc..........

She answered no!