With our property markets performing well over the last few years there are more people interested in getting into property investment. However if history repeats itself, and it most likely will, while some will develop financial freedom through property, many investors won’t get past their first or second property. So how do you succeed? In the show you will hear the 10 things you must consider when buying an investment property with Michael Yardney.

Buyers agent Shannon Davis explains why it is not as simple as deciding to buy a house or a unit, we catch up with a valuer who takes us to task over some advice we have given about getting valuations and we also hear from an agent who explains the pros and cons of auction and private treaty sales.

Our feature interview this week is a chat we have with Margaret Lomas who we asked to answer a question from Matt about investing in property in one of Brisbane’s outer northern suburbs. Apparently Margaret said in her Sky TV show that it is not her preferred area. We were surprised when we spoke to her that she revealed that she still has her worst performing property in her portfolio. Why doesn’t she get rid of it? Find out today.

With so many changes occurring, particularly with lending, have the principals around successful renovation changed? That is the question answered this week by Jane Slack-Smith.

 
Transcripts:
Jonathan Millar
Kevin:  We’ve spoken before on the show about getting valuations done if you’re a buyer or a seller. Interestingly, the difference between the valuation you might get done and the one that the bank gets done was explained to me in a comment from Jonathan Millar, who is a valuer with JDMA Valuers, in a message he sent to me through the website pointing out that the bank may complete a valuation but it’s one that will keep their lending risk in check.

Jonathan joins me. Jonathan, what do you mean by that?

Jonathan:  With regards to that, each valuation completed for a bank has about eight risk factors that they will include in that report. That’s obviously just to help the bank make a lending decision with a particular client.

Sometimes there is a misconception that if a valuer is completing it on behalf of a bank that he’s going to be conservative, because that might then help them with the risk side of things. But to be honest, the valuer shouldn’t be conservative; he should just value it as he sees it in the marketplace, and then the bank makes its own decisions on lending in line with all these risk comments and factors that are in each valuation report.

Kevin:  In reality, is it a myth then that the valuation the bank does is actually more conservative than any other valuation?

Jonathan:  I can’t speak on all valuers, but certainly the valuation report shouldn’t be conservative; it should be at its fairest market value. The valuer determines that after looking at sales of similar properties in the location, then he works through why it’s worth a certain amount of money.

He certainly shouldn’t be conservative, because obviously the client then potentially loses out on a percentage of equity in their property. The bank obviously looks after themselves by lending to 80%, and then they have to include mortgage insurance beyond this figure.

But yes, I’ve certainly heard that many times before, that sometimes they believe that the valuer is conservative. It may be the valuer didn’t get close to what they thought it was worth. That sometimes can occur. But whether it’s someone engaging a valuer to complete a private valuation or whether it’s for the bank, the two figures should be exactly the same.

Kevin:  I’ve heard other stories as well, Jonathan – you might be able to clear this one up for me, too – that when a valuer does a valuation, they’ll ring around real estate agents in the area to get a feel for what’s been selling, what’s been listed, and so on. Is that fair that they should be