What difference does a buyer’s agent really make?

Occasionally we receive referrals from financiers of investors who have purchased "cash cows", or properties often advertised with "positive cash flow". Financiers generally refer these investors to us when they run into financial difficulty and are having problems selling their "cash cows", so we can advise the investor on true market value if they are to achieve a sale.

All too often these properties are worth no more (or possibly less) than the investors paid for them five years ago, and they are generally located in areas flooded with similar new properties competing for buyers' dollars. They can take a long time to sell - even with bargain asking prices.

"If it sounds too good to be true, it probably isn't true"

Investors should be wary, and resist being tempted by the promise of "positive cash flow". Capital growth with this type of property will most likely be harder to achieve for a few reasons. Firstly, the basics of higher return = higher risk applies, so generally the potential for substantial growth is less. Secondly, newer properties are built in newer areas with scarcity of land not an issue and many other similar properties to compete with. Finally, an area which is bought up heavily by investors with a low percentage of owners will have slow growth, because it is the owners that compete for property, while investors are dollar driven.

Take a look at the two properties compared below, to see what difference a buyer's agent really makes when it comes to buying an investment property. Get our advice and find out the benefits of investing in an "A Class Property Asset".
 

"Cash flow positive" properties generally offer:
High rent returns initially
Modest rental increases over time, as the property ages
Low (or negative) capital growth over time
Long re-sale periods, as the property is competing with new stock for buyer's dollars

"A Class Property Asset" investments generally offer:
Modest to Average rent returns initially, due to higher buy-in price
Strong rental increases over time, as few new properties get developed to compete for tenant's dollars
Above Average to High capital growth over time
Short re-sale periods, often with competing offers from buyers

To ensure your hard-earned money really buys an "A Class Property Asset", call or email us at Property Searchers to arrange a free consultation:
Tel. +617 3368 1604
Email:  askus@propertysearchers.com.au

Comments by:  Scott McGeever, Director - Property Searchers
Data from:  Actual case studies

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