Hi Taku,
We have just gone through the process of purchasing our first IP, and we worked with a buyer's agent. There are some good threads on questions for BAs that I recall reading when I did my research so I won't repeat all of those, just the key things we've learned over the past few months that may be relevant to you:
- I agree with what the previous posters have said, I think you definitely need to have a strategy locked in before you engage with a buyer's agent. I didn't have a firm strategy in mind when I first met with a few different BAs, which was hard because some of them had different specialties or areas of focus, which all seem attractive when they explain the reasons why they prefer certain strategies over others (e.g. blue chip apartments for growth but highly negatively geared versus conservative growth suburban houses but neutrally geared). You have a wealth of knowledge and support available through the forum to help you refine your strategy, so I recommend just throwing ideas out there in new threads (Tulla style) to see what other people say, and you'll definitely get there.
- Personally, I didn't feel comfortable with using a BA that either gets a commission as a percentage of the IP purchase price, or one that is also involved in selling properties. I just saw these as conflicts of interest that I'd prefer to avoid. Have a think about whether either of those things matter to you.
- Think about how much you can afford to be out of pocket each week (assuming you don't end up positively geared), and make sure that you communicate this with the BA. Our initial focus was just on borrowing capacity, but as we went along we realised that two similar properties with the same purchase price could differ significantly in out of pocket expenses, e.g. an average 2 bedroom apartment versus an art deco 2 bedroom apartment (where the 2nd bedroom is too small to use as a proper bedroom so in terms of rent it's close to a 1 bedroom), renting at $450 per week compared to $400 per week. Setting a limit for both purchase price and weekly out of pocket costs can help a BA find something suitable for you.
- Another difference I found between some BAs is how much they are willing or able to educate you on the process. Some may be willing to do more hand holding and bring you out on property tours so you can learn first hand what they look for and the thought process that goes in to evaluating each property, whereas others may have more clients/less time to spend on educating you while also locating a great property that meets your criteria. So it's worth thinking about whether you have the time (including the ability to get away from work during the week to look at off market properties for example) and desire to learn, or would you prefer a set and forget relationship with your BA. Then ask any prospective BAs if they are happy to work whichever way you prefer.
- Are you comfortable with using a BA in a different state and buying interstate? We weren't, but in hindsight now that we have been through the process, I think limiting yourself to BAs and properties in your own state is a mistake. Primarily because you are significantly restricting the pool of properties available to you. I would imagine many BAs have lots of experience working with interstate or overseas clients, so I don't see this as a significant drawback. Again, work out your preference and make sure that any interstate BAs you talk to are comfortable working remotely.
- Think about why you want to use a BA. With enough research, many people can get to the stage of feeling confident enough to make a purchase without hiring someone to assist them. Also, working with a BA doesn't absolve you from needing to carry out your own research and due diligence, because ultimately they are just making a recommendation based on your criteria, and there are no guarantees that they can make around how well the purchase will work out for you. So you still need to do a lot of self education and analysis to make sure you can make informed decisions when you are ready to pull the trigger and buy.
- In terms of finding a reputable BA, my advice would be to listen to recommendations from the credible Somersoft posters (I don't consider myself a credible poster on this forum yet, hence the lack of a specific recommendation). Once you have a strategy in mind, you could even start a thread asking for recommendations for a BA that people with a similar strategy have used.
Hope that helps.