Evening PCs Just wondering if as anyone has had any dealings with 'Merlot' in QLD ? I have older family members who have done a map session and are considering going with them for a house and land package on the Gold Coast. Merlot have a 9 year rent guarantee (with 3% increases each year), 12% management fees and an establishment fee which works out to be about $7k per house. The product is a 4/2/1 on 300 sam (something I personally am not interested in). The family member has very poor finance skills and believes this company will help them pay off their house faster (but is yet to demonstrate how) and will set them up for retirement (in 8 years). This company cold called them on the home phone. They asked my opinion as I "understand numbers". I have never heard of this company but they sound similar to other spruikers. I would be interested to know if anyone else has used this company or is doing house and land packages in on the gold coast.
I would like to know why a 9 year rental guarantee is required? This alone is enough for to run away before even getting to the management and establishment fees. Is it even close to market value?...I bet its not.
Sounds delicious I'd avoid anything with a rent guarantee though. If it was a worthwhile investment it wouldn't need one. When you say map session do you mean Nathan birch or Steve McKnight? They both have a program of similar name.
They look a lot like your normal one stop shop. These type of groups will also organise your loans and legal (big red flag!!). I've spoken to people who have done this kind of thing and it's a nightmare. You often end up with a poorly built property with instant negative equity due to the inflated purchase price and things like the financed legal fees, loan fees, accountant fees, etc which are carefully hidden in the paperwork so only the most careful client will find them (let's face it, the target market for these guys don't generally have a trusted lawyer to run the contract by, and who needs one when the in-house legal team will sort it out for you?) and to top it off it's usually fully financed via cross collateralising with your home. Then top it off with slow capital growth and you're stuck with a property you can't sell. Lucky your rent is guaranteed.... Of course, a condition of the guarantee is that they'll manage the property for the full nine years, at a high rate (12% is very high for QLD I believe) and make no mistake, the rental guarantee you actually pay for yourself upfront in the inflated purchase price, via your brand new poorly structured loan. It's a hugely expensive way to invest in property, I actually think you'd be better of pointing a dart at the greater Brissy area, buying the first property you see and finding your own tenants and PM. That's not to say these guys are bad, just go into it with eyes wide open, and most importantly, get your own legal and loan advice. And ask the broker to disclose the bank valuation! Because they use equity in existing property, it's easy to end up with a huge loan on a property with a low valuation.
For someone wanting this level of hand holding DHA might be better. At least they shouldn't go broke.
Thanks - yes I was thinking that DHA may be better for them as they want complete hand holding. I also offered to do the whole thing for them with an established property as I already have a team of legal, broker, pm etc that I use. They are very keen on a new build as they have built several PPORs themselves and can understand the process.
