Foolish Mistakes Brokers Make.
There are many fools out there in the property market. Brokers are responsible for some pretty big blunders when it comes to dealing with investors – which is why it really pays to use a finance strategist instead. We’ve seen a lot over the years so we put together a list of some foolish mistakes brokers make.
You need money to build an asset base.
Since most of us don’t have enough cash to buy ten properties, we turn to lenders to make it happen.
But because many people aren’t strategic with their borrowing, they quickly get stuck after one or two purchases.
In fact, only 20,000 people in Australia own six or more properties.
So how do they do it? Well, becoming successful through investing is not just about the type of properties you buy, it is also about how you structure your finance, says Nathan.
Avoiding costly mistakes is key. This is why you shouldn’t trust any old broker to line up your loan.
Here are some common mistakes brokers make when dealing with portfolio building investors.
1) Fixing interest rates – this is a common factor that stuffs up a lot of property investors. If they are locked into a fixed rate it means they don’t have much flexibility until the end of the term. Many get stuck because they can’t access equity to make their next purchase – unless they pay some hefty break fees, that is.
2) Cross collateralising properties – according to Nathan, some brokers do this because they are lazy, others want to trap the borrower into the property. Others have to do it because of the lender’s terms and conditions. Whatever the reason, cross collateralising properties can really stuff you up further down the track and prevent you from using capital gains to move forward.
3) Not aligning with the goals of the borrower – there are plenty of brokers out there who have got no idea what it takes to purchase ten properties. Instead of developing an understanding of the client’s goals and position, they simply choose whatever product suits them on the day. This goes nowhere in helping the client – in fact, it usually works against them.
These three simple mistakes can have costly implications for investors who want to build an asset base. A good finance strategist can align to your goals and help you to strategize a finance plan with enough mileage to get you there.
Have you ever become stuck with your borrowing thanks to a foolish mistake made by a broker? Please share your experiences in the comments section below.