My journey: How it started / How it's going

Of course you should ask - a BA should work in your best interests and not be a glorified OTP sales spruiker. I have declined developers/sales agents offering me $15-$40k kickbacks to recommend their properties to investors.... not ethical

 

Much appreciated! This is what I'm here for and I can't tell you how much this advice means to me. The concerns are absolutely valid and were raised during the selection process. I have also spent a lot of time reading about the pitfalls involving buying new vs buying established. The thread here by (forgot his name) that outlines his 7 year property journey and the cool side posts about new vs established etc were gold. Very consistent with the research I have done thus far. The assets have been on the teams watch list since 2016 and at the industry was opening up however it was still very heavy leaned towards military contracts. However over the years the area has become more multi industry, and population / growth has increased steadily. I'm quite impressed with the cashflow and the fact that it has helped us expand our portfolio in such a short amount of time. I will definitely keep an eye out of how it progresses in line with the strategy though.

Again that was just a gold post and I appreciate it.

 

All loans are separate. None cross-collateralised.

 

Apologies if you misunderstood my message in the post you were replying to. The assumption was yes - there is a developer premium. So why ask if you know the answer? That was the meaning there. We went in this entire arrangement knowing very well from the start that developer premiums were involved in the purchase of new properties. In my experience and with confirmation from many folks with collectively 40 years of property experience (I'm going to stop saying the word "advisor" thanks to advice from the founder), not every property attached to a developer premium is a bad deal.

I would love to also leverage your expertise if that's even possible at this point. If an asset that a developer wants to give you kickbacks aligns with a strategy of one of your clients, why is it unethical if you then pass those kickbacks on to the client? I would only see it as unethical if you didn't pass those on to your client. Without factoring in the client's situation or strategy, how is it automatically unethical to pass kickbacks to your client (if that's what you were referring to apologies if I got it wrong)

 

Buyers agent should NOT be receiving fees from a developer and then recommend that developer's stock to their clients. The conflict of interest is huge and it's definitely unethical if this is not disclosed to the client from day 1. If you're suggesting that the kickbacks the BA receives is then somehow passed on in cash to the buyer that may be a different story, perhaps. But the whole relationship between the BA and developer then recommending the same stock to clients sounds at best, very suspicious.

However @Tjolobal you stated, "There's no need to ask the buyers agent if they receive fees from the developer. Of course they receive fees from the developer. It's not surprise knowledge." That suggests you don't see an issue buying property from a BA who gets paid by the developer to sell to you. Huge, huge, conflict of interest there.

Why any investor would willingly submit to such a set-up is beyond me.

 

I absolutely agree. My question was around the ethics of the BA passing those down to the buyer.

 

If the BA gets no financial benefits from the developer at all to sell to you, then that's a different story.

 

Oh, at least! Then if we add in @Sackie as well, there's maybe another 20 there, but he'd have to confirm. Then there's @DaveM who's been around the block a few times as well. Getting close to 100 years from just the four of us, I think.

 

Just because it's not legal, doesn't mean it doesn't happen though.

 

Yep! There's a few of us 'old timers'.

 

31 years....I must be really old and stuff.

 

40 years of experience or one year of experience 40 times?

 

Or we were just late starters.

 

Hey, @Tjolobal would it be possible to give us an update of how things go. Adelaide pushed up significantly since last year. It should be good story to hear. Please share.

 

I have spent fifty years of property mismanagement so your 100 years is reduced to fifty !

 

Only if we agree to add you to the count.