Tips for financial advisers choosing direct property
Forrester Cohen chief executive officer John Moore provides financial advisers with some recommendations on how to help clients choose the right direct property opportunities.
1. Start with the end in mind
Think about timeframe, the purpose of the investment (is it for capital growth? cashflow?), the required return, and the investor’s risk profile.
2. Consider demographics when looking at residential investments
Population trends can be a great predictor of capital growth.
Each city has its own microeconomic climate where growth can continually outperform nearby areas – for example, in Melbourne, Prahran is popular with limited new apartment supply, while Docklands gets more apartment blocks on top of struggling demand.
3. Use the right research
Financial advisers need to refer to useful data to make a clear-cut decision, rather than real estate agent opinion or meaningless data on median house prices and average rents. Sources of data need to be interpreted through trends analysis to predict future results.
4. Get the risk profile right
With uncertainty at the front of investors’ minds, advisers need to understand more about the risk profile of their clients to be able to address their concerns and deliver what is required.
5. Consider costs
The holding costs of older properties are greater than new buildings, with higher maintenance costs and more time required to oversee maintenance work – diluting cashflow.
Reduced cashflow could be an issue for people holding investment property in retirement.
Recommended for you
In this episode of Relative Return Unplugged, hosts Maja Garaca Djurdjevic and Keith Ford are joined by special guest Shane Oliver, chief economist at AMP, to break down what’s happening with the Trump trade and the broader global economy, and what it means for Australia.
In this episode, hosts Maja Garaca Djurdjevic and Keith Ford take a look at what’s making news in the investment world, from President-elect Donald Trump’s cabinet nominations to Cbus fronting up to a Senate inquiry.
In this new episode of The Manager Mix, host Laura Dew speaks with Claire Smith, head of private assets sales at Schroders, to discuss semi-liquid global private equity.
In this episode of Relative Return, host Laura Dew speaks with Eric Braz, MFS portfolio manager on the global small and mid-cap fund, the MFS Global New Discovery Strategy, to discuss the power of small and mid-cap investing in today’s global markets.
