Are property plans worth paying for?  

Several businesses in Australia provide property planning services. Generally, a property plan starts by evaluating your borrowing capacity and cash flow. It then strategically allocates these resources towards building a property portfolio. This might involve borrowing to purchase multiple properties, diversifying across various property types, and possibly investing in different geographic locations. Typically, these property plans cost between $4,000 and $5,000. 

In this blog, I’ll outline the pros and cons of paying for a property plan, so you can make a fully informed decision about whether it’s appropriate for you.  

Full disclosure: I have a vested interest  

Throughout this blog, I have consistently emphasised that investors gain the most value from a holistic approach. Financial decisions are rarely isolated. Instead, they are multifaceted and often have long-term implications. For example, someone considering property investment must also evaluate alternative uses for their cash flow, including how different strategies impact their retirement goals. This naturally involves considering broader factors such as insurance, debt management, tax planning, superannuation, and share market investing. 

As the owner of a business that provides holistic investment planning services, I acknowledge that I have a commercial interest in critiquing property planning services. In fact, around 10 to 15 years ago, my firm also offered property planning – but we deliberately stopped, as we felt the limited scope was too restrictive, ultimately compromising the quality of the advice clients received – which I discuss below.  

Therefore, while I openly acknowledge my commercial incentive to question the value of property plans, my concerns genuinely arise from an understanding of how restricted advice can negatively impact investors. 

If you have already decided to exclusively invest in property  

A property plan will not evaluate whether you should be investing in property in the first place. It also will not consider how much of your resources should go into property versus leaving some capacity for other investments, like shares or additional super contributions.  

Typically, property plans will allocate all your available financial resources towards acquiring as many properties as your budget allows. 

If you have already firmly decided that you only ever want to invest in property and have no interest in other asset classes, then a property plan could suit you. However, in my experience, most investors tend to be more open-minded. 

“I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail” – Maslow 

Also, often, investment preferences reflect gaps in knowledge rather than permanent beliefs. For instance, some investors initially avoid shares because they perceive them as inherently risky. While it’s true that certain share-investing methodologies are risky, the evidence-based, rules-based approaches I regularly discuss in this blog are significantly less risky. Once investors understand why this is the case, they are usually more comfortable diversifying into shares. 

Taking an asset-class agnostic approach is valuable because it helps investors genuinely explore why a diversified portfolio might ultimately serve their goals better.  

Therefore, you need to decide whether holistic advice is more suitable for your situation, or if property-only advice will be sufficient. 

Significant limitations and disadvantages  

As I discussed above, choosing whether to invest in property has complex, wide-ranging implications. To make an informed decision, you will need to thoroughly consider and optimise several key areas, including: 

• Borrowing arrangements 

• Cash flow management 

• Taxation, both now and in retirement—including potential capital gains tax (CGT) if you need to sell property 

• Asset protection and risk management, including personal insurances like income protection, life and TPD 

• Retirement strategy, including matters such as whether you will need to repay debt before retirement and to what extent, how superannuation fits into your broader strategy, and whether investing in other asset classes might also be beneficial 

While all these considerations are essential, property plans typically have a limited scope due to restrictions under Australian law: 

• Tax advice can only be provided by Registered Tax Agents who are authorised by the Tax Practitioners Board (TPB). You can verify a practitioner’s registration on the TPB’s public register. 

• Credit advice, which usually involves recommending specific lenders or loan contracts, can only be provided by individuals holding an Australian Credit License or by authorised representatives. Property plans might include general borrowing capacity assessments and loan structure guidance but typically cannot offer lender-specific recommendations. 

• Property-specific advice does not fall within the definition of a “financial product” under the Corporations Act. Therefore, advisers that draft property plans do not require an Australian Financial Services License (AFSL) when providing advice solely about property. This extends to related cash flow analysis and financial modelling, provided these do not involve financial products such as shares, ETFs, managed funds, superannuation, bank accounts, or life insurance. 

As a result, property plans can assess your borrowing capacity, perform cash flow modelling, and outline your property investment budget, allocating your investment capacity across one or more properties. However, you will likely need additional, specialised advice from a mortgage broker and tax accountant at least. Furthermore, if your questions extend to investments beyond property, engaging a financial adviser may be necessary. 

Geographical limitations  

Back in February, my colleague Campbell Wallace wrote about the key attributes that separate an exceptional buyers’ agent from an average one. One of the critical attributes he highlighted was local market knowledge. The primary reason for engaging a buyers’ agent is their experience and expertise – a deep understanding of the specific market or location you are investing in. Every property market has unique characteristics and nuances, so applying a uniform approach can result in mistakes or missed opportunities – property investment is as much an art as it is a science, and that why local market experience is so critical.  

This leads to an important consideration: Does the individual or business preparing your property advice have geographic limitations? They are unlikely to have experienced buyers’ agents actively working in every Australian property market. Therefore, you should question whether you are potentially missing out on better investment opportunities simply because they lack representation in certain markets. Or, put another way, are they recommending locations primarily because that’s where they have staff available? 

The potential advantages of a property plan  

If your goal is to invest in multiple properties, developing a property investment strategy from the outset is worthwhile, and a property plan can assist you in this process. Specifically, you’ll need to carefully decide how best to allocate your investment budget. Important considerations include: 

• Geographic diversification: Owning properties across different markets helps reduce portfolio risk, smooth out investment returns, and can also minimise your future land tax liability. 

• Property type, price point, and tenant profile: Holding a mix of property types, such as houses, townhouses or villa units, and apartments, can be beneficial. Different property types typically sit at different points within the market cycle and attract different tenant demographics. 

A cautionary note here: investors often find the idea of owning several properties appealing. For instance, acquiring four properties valued at $500,000 each might initially seem attractive. However, it’s crucial to remember that the quality of each investment is far more important than the total number or even the total amount invested. Personally, I would much prefer to own one high-quality property valued at $1.5 million than four average-quality properties worth a combined $2 million. That said, not all buyers’ agents share this perspective, particularly those whose experience is primarily within markets dominated by properties around the $500,000 price point. 

Is it just a sales document dressed up as advice?  

Providing property plans as a service is commercially attractive for businesses because it’s easy to systemise and scale. The advice itself can be largely templated, making it straightforward to produce consistently. Additionally, the business risk involved is minimal, as the service is largely unregulated and doesn’t require any specific licensing. (However, this also means consumers don’t benefit from regulatory oversight or consumer protections). Furthermore, offering this service often leads to multiple buyers’ agent acquisition fees, adding to its commercial appeal. 

However, I seriously question whether property plans are worth paying for, given how limited their scope tends to be. Investors might instead achieve a better outcome by engaging an experienced mortgage broker or accountant, who can assess borrowing capacity, provide strategic loan structuring, and introduce them directly to reputable buyers’ agents in their desired markets. This will be next week’s blog topic…