FLAG follows the widely adopted Six Step Property Investment Advice Process support by the Industry Association, PIAA.
Our qualified advisors firstly establish your key goals, and their importance to you. We discuss with you and other stakeholders the decisions for joint goals / any differences, particularly if there are any investment decisions to be made by you.
Our advisors help you quantify your goals e.g. “$1,000/week from passive investments in 15 years time to retire comfortably” rather than “have enough income to retire when I finish working”.
Then we advise on how we can help you close the financial gap between where you are now and where you want to be.
We describe to you how we add value – via a “Cash Flow Analysis” and planning process, and let you know what others have done in similar circumstances to your own.
Your Flag Property Advisor will provide you with a Property Investment Services Guide and confirm the scope of services that you require and an explanation of our fee structure. We then ask you for your commitment to proceed with a Letter of Engagement. Then, with you, we guide you through the remaining processes.
This step is about obtaining your current financial circumstances – your assets and liabilities and income, to establish the current baseline and starting point. So, having set your goals it is then very important to take stock of where you are now financially in relation to where you want to be in the future. It’s about identifying the gap to be closed through saving and investing.
The key to this step is knowing all about your current financial position – your personal balance sheet, profit & loss statement, cash flow, and your capacity to borrow to invest. This process is r is also designed to explore your risk profile (attitude/behaviour) and risk appetite (tolerance) to take action, because it has been shown time and time again that our psychology around risk determines what strategy works best for us, and this can be very different from person to person.
It is worth noting that:
This step is a “reality check” by making sure we have all your current facts and figures
Net wealth is the difference between your assets and liabilities (debts)
Net cash flow is the difference between your income and expenditure – your savings capacity
Being market ready involves up to date accounts, tax returns and no outstanding tax bills; knowing what your borrowing capacity is; and having appropriate investment ownership structures in place
This step is about creating and documenting a plan to model outcomes that will achieve the required result in the desired time frame. There are many things to consider at this point and the planning starts by determining what overall strategy will realistically work best for you, given the goals and timeframes identified in step 1, and an understanding of your current situation as per step 2. Having considered gearing levels, styles of property, ownership options, capital growth rates, required rental returns, holding costs and so on, initial cash flow modelling is done using real property examples to get a realistic picture of what is possible.
It is worth noting that:
Property types – each have different risk and return characteristics
Our proprietary Risk profiling methodology help determine the strategy that will work best for you
Investment risk can be mitigated through a diversified portfolio approach
Borrowing to invest has the potential to magnify losses as well as gains
Taxation and asset protection will vary depending on what ownership structures are used
Our qualified advisors then determine to achieve your goals sooner, more efficiently, with maximum flexibility to provide you with a large number of options to best maximise your investment returns. Such things considered are ownership of property, taxation reduction, asset protection, transfer of ownership tax effectively.
In this step we use optimization strategies to enhance the results of the plan. Using software, we create a Plan for your Property Investing goals. This enables us to explore the modelling of cash flow / capital gain of a selection of potential property opportunities in various markets and economic situations over time. Research and analysis tools are used to compare and contrast what will work best for you, within the context of your risk profile and appetite to take risk (that is, your willingness to purchase certain types of property).
Visual and numeric tools show a virtual “try before you buy” cash flow of all the estimated income and expenses required to own the property
Modelling of a more complex portfolio of properties is undertaken determine potential outcomes or determine what is required to improve outcomes
This results in a factual rather than opinion based understanding of all the issues and opportunities to be considered in the optimisation process
Independent research, vital to making impartial and unbiased assessments of the opportunities is provided
This step is about implementing the plan using the appropriate investment structure to maximize the opportunity and starts with the outcomes of the planning process being documented in a “Statement of Property Investment Advice”. This becomes your Personal Property Investing Plan, and just like in business, this document is used to determine what specifically needs to happen, by whom, and by when to implement the advice received. And the Written Advice forms the basis for monitoring progress to plan, and when necessary, taking action to stay on target.
The written advice will provide you with a selection of properties to choose from that are aligned with your investment goals
It is important to consult your tax adviser before making a final decision on the asset ownership structure. We do not give specific tax advice but guide you to ask your tax advisor. We are able to arrange that advice for you.
Implementation will involve the coordination of a number of other professional advisors including mortgage brokers, lawyers, conveyancers, accountants, insurers, property managers and real estate agents. We coordinate the entire process.
Your FLAG Property Investment Advisor and staff are here to help you with every part of the entire process including arranging the right tenant for you. We look after you and make it easy.
This step is about putting a management plan in place to protect and manage assets and risks. So, purchasing and settling on a property is not the end, but instead could be thought of as the end of the beginning of your investment journey.
At this point you have completed the acquisition phase and move into the holding phase where ongoing management becomes very important. Given that property investment is a longer term wealth creation strategy, it is likely that changes to your personal situation, the economy, and the law etc will occur during the time frame involved to reach your goals. And, many of these changes could affect your ability to continue acquiring properties, hold them, or exit your position as initially intended unless you work through the 6 step process shown, at set review points or as the need arises to keep on target.
Your Flag Property Investment Advisor is there to provide you with ongoing mentoring and support to ensure you are successful.
Formal reviews with your advisor at least annually will mean your plan remains current as progress is made and economic and other circumstances change.
This will involve cycling through the six steps of your Cash Flow Analysis and Written Advice and adjusting it after checking what has changed, what is steady, and what is new.