This is information for you to decide what to do with.

Through Michael Sloan, we purchased a property in 2015 for $434,900.

With stamp duty, etc. total purchase cost was $450,000. In 2020 we sold the property for $430,000. After selling costs we ended up with $413,470 in our pocket.

Rent less interest, maintenance, rates etc., plus tax depreciation resulted in an annual running surplus of $1900.

Total loss over the period was $28,930.

Rental growth over the 4 years was 0%.

A very poor asset.

Before engaging them, questions to ask:

Who pays them. Tip: whoever is paying them is whose interests they are acting for (the developer). Pay someone to act on your behalf if you don’t have the knowledge yourself - they will then look after your interests.

How much will a brand new property reduce in value in the short term – you are paying for the developers and TSI profit margins.

How will the other land released for subdivision in the area impact my property price? Tip: it will increase supply in the area, therefore reduce demand for your property resulting in price stagnation.

Just because it is a growth corridor, does this mean that prices will increase? Tip: no, it won’t. If there is continued release of land then supply will exceed demand, and prices will stagnate.

Why is a Rental guarantee needed? Someone pays for this (you). If the property was good it wouldn’t be needed as there would always be strong demand from tenants.

They will spruik plans for railway stations, etc. in the area. Don’t buy in to this unless the assets are physically being built, as chance are they won’t go ahead or be significantly delayed.

How will this asset standout from others in the area so that it encourages competition from potential buyers?

Areas to research:

Research the suburbs Demand Supply Ratio - if it’s below average don’t touch it

What attributes make up a buyers advocate? Do they qualify, or are they property spruikers?

Research what types of properties are attractive to both investors and owner occupiers. This is what creates an investment grade asset.

Research what factors drive property prices up (income growth, scarcity), and will those factors happen in the area you are purchasing?

If you don’t have the knowledge yourself, look for industry recommended buyers agents – The Property Investors Council of Australia (PICA) is a good place to start.

Google property investment advice, and research independent property investment advice. There are plenty of podcasts which do not try and sell anything, but offer a good education of the property investment process.

Not only did my mistaken investment cost me $28,930 in losses, the opportunity cost I’ve lost if I had invested in an asset over this period that was truly investment grade well exceeds $100,000. This is my first investment mistake in over 23 years of property investing, I will stick to buying quality properties, in areas with high demand, and close to major cities with high owner occupier appeal.

Comparing it to the sales brochure which they forecast 6% annual price growth, and above inflation rental growth, the asset underperformed by well over $100,000 in the time which I owned. Also, the data which I am now able to access shows the area will continually underperform the market for many many years.

Be careful, and do your research.

They have a slick sales operation, look for reviews after they’ve held an asset for a long time before deciding to invest with them. This will give you a getter indication of success.

I am posting this so other investors make informed decisions, and don't go in blindly.

Do your homework, get educated before engaging anyone.

Note: I emailed this to Michael Sloan on 08/04 prior to posting on 14/04 without receiving comment.

Scott

This is information for you to decide what to do with.

Through Michael Sloan at The Successful Investor, we purchased a property in 2015 for $434,900.

With stamp duty, etc. total purchase cost was $450,000. In 2020 we sold the property for $430,000. After selling costs we ended up with $413,470 in our pocket.

Rent less interest, maintenance, rates etc., plus tax depreciation resulted in an annual running surplus of $1900.

Total loss over the period was $28,930.

Rental growth over the 4 years was 0%.

A very poor asset.

Before engaging them, questions to ask TSI:

Who pays TSI. Tip: whoever is paying them is whose interests they are acting for (the developer). Pay someone to act on your behalf if you don’t have the knowledge yourself - they will then look after your interests.

How much will a brand new property reduce in value in the short term – you are paying for the developers and TSI profit margins

How will the other land released for subdivision in the area impact my property price? Tip: it will increase supply in the area, therefore reduce demand for your property resulting in price stagnation.

Just because it is a growth corridor, does this mean that prices will increase? Tip: no, it won’t. If there is continued release of land then supply will exceed demand, and prices will stagnate.

Why is a Rental guarantee needed? Someone pays for this (you). If the property was good it wouldn’t be needed as there would always be strong demand from tenants.

TSI will spruik plans for railway stations, etc. in the area. Don’t buy in to this unless the assets are physically being built, as chance are they won’t go ahead or be significantly delayes.

How will this asset standout from others in the area so that it encourages competition from potential buyers?

Areas to research:

Research the suburbs Demand Supply Ratio - if it’s below average don’t touch it

What attributes make up a buyers advocate? Do TSI qualify, or are they property spruikers?

Research what types of properties are attractive to both investors and owner occupiers. This is what creates an investment grade asset.

Research what factors drive property prices up (income growth, scarcity), and will those factors happen in the area you are purchasing?

If you don’t have the knowledge yourself, look for industry recommended buyers agents – The Property Investors Council of Australia (PICA) is a good place to start.

Google property investment advice, and research independent property investment advice. There are plenty of podcasts which do not try and sell anything, but offer a good education of the property investment process.

Not only did my mistaken investment cost me $28,930 in losses, the opportunity cost I’ve lost if I had invested in an asset over this period that was truly investment grade well exceeds $100,000. This is my first investment mistake in over 23 years of property investing, I will stick to buying quality properties, in areas with high demand, and close to major cities with high owner occupier appeal.

Comparing it to TSIs sales brochure which they forecast 6% annual price growth, and above inflation rental growth, the asset underperformed by well over $100,000 in the time which I owned. Also, the data which I am now able to access shows the area will continually underperform the market for many many years.

Be careful, and do your research.

TSI have a slick sales operation, look for reviews after they’ve held an asset for a long time before deciding to invest with TSI. This will give you a getter indication of success.

I am posting this so other investors make informed decisions, and don't go in blind.

Do your homework, get educated before engaging anyone.

Note: I emailed this to Michael Sloan on 08/04 prior to posting on 14/04 without receiving comment.

Scott