Check The motives of advisors
Generally, in life, most people you will go to for advice are honest and will give you the best information they can, within their level of competence.
But it is true that in the world of buy to let, as in all walks of life, not all advice is of equal quality.
Check the Motive of Advisors
It is not that many people are out to deceive you, though undoubtedly, these people do exist.
Rather it is the fact that many people you may meet may think they are giving you decent advice, but the problem is that they lack the experience or competence to appreciate that what they are telling you is incorrect.
I illustrated this in my first book, “Successful Property Letting” (see link below) when I discussed getting information from letting agents and others, on what type of property to buy to let.
What type of property to buy and the best area to buy into should be influenced by whether you want capital gain or income (yield). Some areas/properties are better for one than the other – and there is not space here to go into the type of areas and type of properties that produce one or the other.
Ideally, I like to invest to get both capital gains and yield.
My view is one should buy the type of property and area where demand from tenants is high both now and can be expected to stay high or get higher still in the future. And where the supply of such property in that area will be restricted in the future too. I also like places where there is a strong demand from both buyers/sellers of property (both landlords and non-landlords) and from tenants.
This all means it is easy to buy (get a good price on the way in) and sell and that the yield now is good and will increase in the future, plus there will be good capital growth too.
Choosing how to find such areas and types of property is explained in my book and I also offer one-to-one consultancy to finesse the details with clients.
If you consult a good letting agent, if they know their patch and have lots of business, a good track record and experience, they will tell you what sort of property you should invest in to achieve your goals. They may already even have other properties on their books but may advise you to wait until a better one that more suits your needs comes along.
If you consult a less experienced agent or end up with a keen (but green) new sales agent, he/she may recommend any old property, especially if the agency or him/her is under pressure to make sales and/or if the agency is holding a lack of stock on the books.
So, that is why I suggest in my book that as part of your overall research, a good course of action is to seek the views of letting-only agents as they will not be influenced by the pressure of selling you a property and earning commission. They will be able to tell you what lets fast, which will help build up your picture. Many of these letting agents will also be investor-landlords themselves, of course, so that will also make it worth listening to them.
Of course, this can only take you so far. Many agents will keep at least some of the best stuff for landlord-investors they have known for years. But that is just the way the game is. You have to start somewhere – and you will still find most people are kind and helpful, as long as you are polite and respectful in return.
Tip – Go in and meet them midweek, when it is quieter and they will have more time for you. Avoid Fridays and Saturdays.
Tax advisors are an interesting bunch and a group that demonstrates this superbly.
Tax Advisor Motives
I have noted how most tax advisors advise people to put their existing property investments into a company structure – and sure, this will be the right advice for many people.
In June 2020, I wrote a piece questioning whether the company structure was really the best option for all the many people who were claimed to be moving existing property investments into company structures. (Well, “many” were claimed to be doing so by the advisors!)
I contacted Carl Bayley, who is a well known writer of excellent property tax books for comment on my piece. Bayley’s views matter, because he is regarded as an expert and may be less into the business of actually setting up property companies. Hence, a real independent.
He provided some excellent commentary, which was very realistic and which was much more sceptical of the benefits of moving to a company structure.
Unfortunately, many other tax advisors may be influenced by the fact that there is a lot of fees to be had in moving a client’s property portfolio into a company structure.
Now, I am not saying they are giving wrong advice, it is just that this is an area where one’s views of the likely future trajectory of tax law will have a big part to play . How any one advisor might interpret this future is key. And those that can see the big pound signs from the work to transfer into a property company may well have a view of the future that tends to lead them to recommend just that, as a course of action.
Here is the link to that piece from June 2020, which quotes Carl Bayley:
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