Emma Allen is a savvy Sydney-based buyer’s advocate and she admits to persistently encouraging two of her best friends into buying property.
For her, work got personal and when that happens the stakes get even higher.
FINANCY HQ asked Emma, who heads up Active Property Investing, what are the inside tips she shared with her closest pals before they bought into the property market?
Rule one: Keep the conversation casual
Best friends don’t want to be sold to. Emma said the chat she had with her mates about buying a property, came up routinely over drinks.
“I did initiate the topic and would often tell them stories about my clients and how they’ve done it. Stories from clients as young 24. But we never scheduled a meeting and sat down with a paper and pen in the formal sense.
“My girlfriends and I were in our early 30s and had been in and out of relationships and no one was married.
“The reason why I pushed them into property is they needed to make the most of what they had and if they did it within their means they could still have a life, and now as time has passed those properties are creating more opportunities for them.”
Rule two: Share the process
Emma, who owns four properties herself, says she recommended that her girlfriends use professionals such as a broker to help them with the loan-side of things and to also start researching the types of properties they were interested in themselves.
“Their choice of property needed to suit their financial capacity and personal objective since they were going to live in these properties to start. It’s crucial people are clear on what they want from the property, so my friends are different from my clients who purely look for investments as their objective and strategy.
Rule three: Accept all outcomes.
While two of Emma’s girlfriends ended up buying property as a result of her advice, there were still those who didn’t.
“At first three of my girlfriends were keen but in the end only two went ahead, and our third beloved friend still lives at home at 37 years of age. But she’s comfortable with that,” said Emma.
Rule four: Apply what you know.
Location and afforability matter. Emma’s two girlfriends who bought apartments did so in the popular Sydney areas of Chiswick and Potts Point and did so within their means for around $500,000 – that was five years ago.
Now those properties are valued at around $800,000.
“They have created a few hundred thousand dollars each. Which may not have been impossible to do on a salary.
Both girls have paid a little off the mortgages but in the context of what they are now worth, the debt is a lot smaller than what it was at the start.
Rule five: Know how to benefit from the rules.
At the time of advising her girlfriends on buying property, the first home buyers grant was available, and this is something that Emma definately wanted her mates to make good use of.
The properties were initially bought as principal places of residences before being turned into investment properties.
“I didn’t advise them to live in it as such. It was more so that they were doing so well in their careers that rather than continuing to rent, taking the step into becoming a home owner made sense.
They had the chance to make the most of the home buyers grant and acquire an asset that was going to get them ahead financially, and it did in such a short period of time.
Rule six: Declare the risks
Emma said she put her friends on a “step-by-step journey” and one that she would have taken herself to buy property.
“It comes back to affordability, the risk is less if a property is within a person’s means. The market will fluctuate, so investing within your means in always key.
“Vacancy and interest rates are also two of the biggest variables as are political issues.
“While I don’t think negative gearing will happen as a result of the upcoming election, the hype does get people into a panic and it’s something to be mindful of.
“And a lot of these risks can be mitigated by such things as having cash buffers to protect against long periods of vacancies, insurances getting the right advice.
“There is always risk, even experienced investors can be vulnerable.”