Real Estate Financial Planning service?

Hi All

Long time lurker, first time poster

I am wondering if there is any company/entity (BA, Broker, Accountant) that offer a complementary or fee-for-service or part of a one-stop-shop of a bigger service.. that will do one/all of the following:
1. Assess our current financial/portfolio position - including finance structure etc.
2. Define a (realistic) long-term goals/objectives based on our family situation e.g. $100k passive income in 15 years time, etc.
3. Assess and recommend what our options/next steps are in terms of reaching that goal.
4. Monitor and (annual) review if we are on track. Rinse and repeat step 1-3

A little about me just to give context
- Me and my wife have been doing some/all of the above independently based on our (limited) knowledge of financial planning/property investment
- In the property ladder since end of 2011, we have 1x PPOR and 2xIPs all in Victoria. Plan is long term buy and hold
- Currently in the process of acquiring pre-approval for our next purchase (Next purchase will be around 350-450k)
- We are wondering what our next IP will look like that will suit our portfolio, can keep us sleep well at night with the potential of a steady CG. Keen to be able to add value through (cosmetic) renovation, granny flat, subdivide, etc.
- Looking at various markets across the country: Hobart, Adelaide, Brisbane, Geelong, etc.
- Listeners of all Property podcasts and readers of all Property Magazines and PropertyChat addict (of course)

I have heard that Ben Kingsley's Empower do offer such a (paid) service
Keen to hear from others if you know anything/have had any other similar experienes
Thanks!

 

Hi, and welcome to the forums!

I would pause with the pre-approval and get your current portfolio reviewed ASAP if sleeping at night is important to you.

With a few properties already, it's likely that you're getting close to your servicing limits so it's really important to make sure your existing structure is optimised before you go to buy again. If you have IO terms expiring, you need to know what your cash-flow is going to look like at that point, and whether you have any options in terms of refinancing, extending IO terms, refinancing loans back out to 30 years and paying P&I and so on.

It's critical to do this now to make sure you can hold your portfolio long term - once you buy again, you may find servicing won't allow you the flexibility to do this properly and with the ideal lenders.

I recently made a video on the topic for my facebook page, as it's something I'm finding investors simply aren't considering and the recent lending changes have made it a really big issue.

 

I've thought about this a lot of the years. Today I think a property based plan sounds like a great idea but in practice is probably quite useless.

Part of the problem is the finance. I can tell you what you can borrow today, but the past 2 years have taught me (repeatedly) that the lending environment is constantly changing. Any assessment made today will likely be invalid fairly quickly.

The market is also a concern. We're in a little bit of an uncertain place at the moment and I don't think this will get easier. Prices in some parts of the country may be approaching their peak, others could have a long way to go. Predicting some markets isn't too difficult, but the current growth markets may not be the traditional growth markets.

Then throw in the political uncertainty. Labor wants to get rid of negative gearing. It's very hard to say what effect that will have. Others want to 'reform' rental laws which could make it very risky to lease a property.

The bottom line is it's very difficult to make a plan that will work reliably. Long term I believe people will continue to do well out of property but in the short to medium term there's enough uncertainty that I wouldn't be willing to pay money for a plan, nor would I want to accept money to put one together.

I have seen some plans of this type. Someone I know shared with me a plan they paid a few thousand dollars for. The plan essentially repeated back what the persons goals were, did a lending analysis and highlighted the various risks and their mitigants to those risks. There was no actual path to achieving the goals, it was a complete waste of money IMO.

 

I've also seen one that was done by a local broker/BA/PM one stop shop. It cost the client $6500 and was 90% proforma rubbish.

I was astounded. It basically gave him his borrowing capacity, and told him to sell one of his houses (which was the only way he could fund his next purchase, which their BA was going to source for him, for extra $$ of course!)

Mind blowing.

 

Empower wealth do this

 

Definitely empower wealth do this - I've had an initial free buyers agent meet up with them before and they're really good - I think they're busy enough so they don't need to be pushy for your work.

If you are considering them I'd recommend you to book an initial free catch up and see what they have to say.

 

IMHO the best thing to do is to meet with other successful investors who have achieved similar to what you want to achieve and have a chat with them. I would also do your own DD on where to invest. I wouldn't leave it all up to 1 company.

Do all your research, talk to investors on here, hone in on some strategies you are keen on and then read up on it. If it were me, I wouldn't waste my time with a FP for what you need.

Also you said " Keen to be able to add value through (cosmetic) renovation, granny flat, subdivide, etc.". Usually investors who go for add value deals are very proactive and hands on and have a higher risk tolerance. So just be aware of that.

 

There are NO licensed financial planning firms that offer this service as a regulated, insured and formal service as a ASIC license does not cover these services - At all. Buyers agents sell property possibly looking after your interests. Wealth advisers sell property etc. So do REAs. Mortgage brokers sell loans. Anyone selling property makes money from that service..Financial advisers deal with regulated finacial products and their license will specify what they are. Proprty is NOT one of them. There is no such thing as a financial qualification to sell property or property wealth.

You will be dealing with a self interest issue no matter who you deal with. Take care.

 

I disagree with this if you are talking about property advice. I know of one group that do offer advice which incorporates property into their financial plans (the SOA), they encourage the advisors under their licence to advise on property and other non-financial products. This advice is also covered by their insurance and all the SOAs are signed off by a law firm. They won't allow for the advice to suggest a client buy an off the plan property or allow for any kickbacks.

 

I agree and it's a damn shame more financial planners do not advocate property as part of their strategy.
Most just care about writing risk insurance.

 

Hi Jess, good to meet you!
Thanks for the advice, I did have a look at your Facebook video and agree with you 100%!
The loans on our 2 IPs were fixed Interest-only for 2 years since end of 2016 for under 4%
We have now about 1 year ahead of us to closely monitor how the lending market is going and hopefully get a "suitable deal" at that point in time

 

Hi Peter,
Thanks for your input.
I work as an IT Project Manager and we have a saying.. "Failing to plan is planning to fail".
We plan what we can with managing any risks within our control and a plan is always 'dynamic'
Yes, there are many external factors affecting our current market direction - APRA, Government, the Feds, China.. etc etc
At the end of the day, I think we all here agree that the "right" property as an asset class in Australia, in 30, 40, 50 years will be a steady investment.

Like you, I am still wondering if these thousands of dollars of a financial plan is worth it/justified
That's why my initial post, how can I plan and get an independent view/assessment of this, without paying ridiculous amount of money
For some, few thousands of dollars for this kind of plan is 'Value', but for 'others in the know' (e.g. finance-savvy individual) this might be a tad much

 

Hi @Madcatters Thanks, yes I am aware of this. Do you know any other company out there doing similar things?

 

Very insightful Jess, just wow...

 

Thanks mate, will definitely consider. If I decide to look outside Victoria, I might lean towards more local BAs

 

I also have a background in IT, I certainly appreciate where you're coming from. Planning is great, but this isn't something you can plan much further a certain point. For that you don't really need anything other than a sit-down with a broker that understands investment strategy.

The challenge is that you appear to be looking for a definitive roadmap and there really isn't one. I appreciate better than most that a few thousand dollars is fairly trivial compared to your financial future, but of all the examples I've seen, even a few hundred dollars is a waste of money.

In many cases, strategy reports are little more than a sales pipeline tool for the company providing it. I've actually got software that generates some great reports with lots of useful information. It's part of the lead to active client conversion section of the software.

If any provider out there thinks otherwise, they're welcome to publish a 'sample' report. If they don't want to give away their secrets, then a table to contents would suffice to demonstrate how flimsy most of these documents are.

The secret to property investing is the same as the secret to any other investing. Spend a lot of time educating yourself, spend a lot of time doing your research and then act. The more you do this the more likely you are to recognise an opportunity when you see it. Outsource a lot, get professional advice, but understand that advice and realise that you are ultimately responsible. You will make mistakes, that's all part of it.

 

I've attached a sample of a strategy report I came across a few years ago. It talks in very general terms with no real meat in the content.

Page 8 discusses the potential strategy, but there really is no strategy discussed here. The strategies discussed are so basic that any mortgage broker that doesn't offer this as standard is questionable in their conduct (IMO). The tips are incredibly obvious to even the most novice investor.

Fundamentally this document is a template. The only customisation is the numbers used and a few highlights. There's really no individual strategy in there...

... but if you want to pay me $5,000 + GST for this, please give me a call and I'll send an invoice. I'll even donate half to charity.

 

That's a lot more in-depth than the one I saw.

 

Leo, thanks for your recommendations. Agree, at the end of the day, you yourself is accountable for all your actions. If (and when) I use a BA, I really want to make sure I do all my DD as well, not just trusting blindly on the deal. I have never used a BA before but thinks I might have to use one if we decide to go outside the Melbourne market for our next purchase. I can do all the DD, research, readings on PC, etc, but will need some presence/local knowledge "on the ground". Is that fair to say?

 

precisionwealth.com.au have done this for us, its good that they're not associated with a BA like some of the other financial planners are. If they are, it makes it seem like they're massaging your criteria / capability to fit the properties they can find.