10 Feb A valuer’s tips on smart investing – Angeline Mann
Angeline Mann, director at Herron Todd White, said now is the perfect time to establish practises that will ensure an excellent outcome over the next 12 months. So when a valuers wants to give me some advice – I listen. Today we get her top 6 tips.
Kevin: Well, there’s never any shortage of people who are telling us their tips for your resolutions for the new year if you are a property investor. But I’ve got to tell you, if a valuer gives me a tip, I’m going to take notice of it because not only are they conservative, most times they’re pretty right actually. Joining me to talk about this, Angeline Mann who is a director of Herron Todd White, probably the most respected firm of valuers in Australia.
Kevin: Angeline, thank you very much for your time.
Angeline: No problem at all.
Kevin: Yeah, when you guys talk, we take notice. Valuers have got a very good feel for the market and you, I guess, as opposed to other professionals especially real estate agents. You put a lot on the line when you come with a valuation on a property Angeline.
Angeline: We do. I think the other big part of it is that we’re very active in the market every day. And usually valuers are locally based so they just cover a particular patch and they’re just looking at that all day, every day. They’re not going from one side of a city to the other. They just sort of stay where they’re based and that gives them a really good local knowledge.
Kevin: It was interesting to note that your first tip was about doing your budget, particularly at a time when the banks are getting tough, are getting a lot more information and they’re looking very, very closely at what borrowers and investors are doing. I know that valuers work very closely with the banks. What are you hearing and what advice would you have for investors about their budgets?
Angeline: Yes. I think it’s … it’s quite widely covered in the media that it’s definitely tougher. And certainly the banks that we deal with, that we are talking to everyday they’re certainly finding it harder to get deals across the line. And really they’ve being very strict and they’re scrutinising your spending and savings and that sort of thing. So it is definitely tougher.
Kevin: Yeah, we’ve heard reports too that the banks are even monitoring that discretionary spends. Like the things that you might use on your credit cards and paying for pizza and takeaway food. So you’ve got to be very, very careful. Second part of your list of tips is checking your leases to making … Is this to make sure that you’re prepared come renewal of lease time, that you can meet what the market is really saying?
Angeline: Yes, definitely. I think the rental market’s changed and you can’t, at least at the moment, you can’t just expect that your tenant is going to stay on or that you’ll be able to release it at a higher rent so it’s really important to know when the lease expires and then what’s happening in that market.
Kevin: ‘Cause if the lease isn’t renewed and then you got to turn around and get another tenant into it, sometimes it can take weeks, even months. And that’s a huge loss of income over the year.
Angeline: That’s right.
Kevin: Even if you have to sacrifice rent a little bit on a weekly basis, it’s still going to, over the 12-month period, give you a better net return.
Angeline: That’s right. Definitely in the long run you’d rather have a tenant than have a long period of vacancy.
Kevin: Absolutely. Looking around getting stats, getting sales and rental information, where would you suggest people should go to do that?
Angeline: I think these days if you’re looking at sort of any of the major online advertising for real estate, they’re pretty good now at reporting what properties have sold for and obviously even just going through the paper and having a look at the auction results. You just have to really get your head around what’s happening, what’s selling, potentially what they were asking for initially and then what they ended up with.
Kevin: I think it’s important too when you are gathering facts that you don’t just rely on one source. ‘Cause if you just read the paper, you’d probably get three different versions of what’s really happening. You’ve really got to do your own research and come up with your own determination about the market.
Angeline: That’s right. And I think if you develop a … In particular, if you were looking in a particular local area and you were talking to the local agents, then they’d be able to give you some information too on what the results have been.
Kevin: There’s been a lot of focus on the Sydney and Melbourne markets. Our two prime markets. And admittedly, most of our population lives in those two areas but they’re a lot of regional markets too when you’re doing your research to give you a bit of a feel about where the market is heading. You shouldn’t just focus on those two major markets.
Angeline: No. That’s right. There are certainly some opportunities at the moment outside of Sydney and Melbourne. And again, you have to do your research and have a look at what your overall strategy is. If it’s a long term investment strategy, then looking at the rental returns is really important. If it’s more of a short term capital gain strategy, then you really need to focus on that and looking at the opportunities in those regional areas.
Kevin: All of this research of course is going to lead to your fifth tip which is about revisiting your investment goals at a very important time. But I find that most people do it around at the end of the year or at the start of the year to look at what’s ahead for the year. But certainly those heading towards retirement, it’s never too early and never too late to keep an eye on it.
Angeline: That’s right. I think generally people sort of have a little bit of a break in January or they’re a little bit quieter so it gives them a good opportunity to look at their goals for the year and beyond the year. I guess it’s really important too.
Kevin: Yeah. And of course the final point that I wanted to mention was about your advisors or a board or your group that you actually discuss with. ‘Cause bad advice can bring about absolute disastrous outcomes so you got to trust who you have as your group of experts.
Angeline: That’s right. Certainly, obviously from my point of view, having a valuer is a good point of contact but having all of your professional advisors ready to go. Particularly if you’ve come across an opportunity and you want to act fast, if you’ve got all of those people in place then you’ll be able to take on that opportunity.
Kevin: Great chat, thank you very much for your time. I’ve been talking to Angeline Mann who is a director of Herron Todd White. Angeline, thank you so much for your time.
Angeline: No problem at all.