Many prospective clients naturally want to know, “How do you charge for your services?”.
We’ve experimented with several fee models over the years. Eventually we found a model that works for us and works for the client.
Here’s how we charge and how we arrived at this point…
Beginning with the end in mind
We started by asking, “what does our ideal client really want to experience as a result of engaging our service?”.
Common answers to this question include:
• Building wealth through investments, as opposed to hours-for-dollars work
• Paying less tax
• Generating cash flow to supplement, replace and eventually exceed their current income
• Starting or building a high-return property portfolio
• Selecting high-performing property assets that outperform the general market
• Building assets as a nest egg for retirement
• Creating a legacy for their family
With these goals in mind, we tested a few different ways to deliver the best outcomes to the most clients.
What we tested:
Model #1: Complex Strategy, High Fees
We used to offer complex property investment strategy and implementation advice for fees of $5,000 to $10,000 per client.
The upside was that the client was deeply committed to the process and motivated to co-operate as much as possible in order to get the best possible outcome.
What’s more, at these prices, we were able to devote a lot of resources to consultation and research in order to provide a very thorough strategy plan.
There were also some downsides:
- Many investors were (quite reasonably) hesitant to invest $5,000+ before fully understanding every detail of the process.
We typically needed to hold multiple meetings with each client prior to getting their go-ahead to proceed.
As a result, we found that most of our time was spent in meetings, rather than actually preparing strategies that would make a difference to clients.
- For most investors, this depth of advice was “overkill”. For example, it wasn’t necessary to review the client’s accounting and tax situation in great depth, when what they really needed was excellent property recommendations.
Taking into account these factors, we decided to test the flip side of the coin…
Model #2. A “Lite” Strategy For Free
With this model, we offered to present free property recommendations to any client who cared to review them.
What we found was:
- We could only afford to devote limited time to specific property research for each client. As a result, our recommendations were less personalised to each investor’s situation.
- Many clients were happy to see our recommendations, but they had very little commitment to the process. Essentially, they were wasting their own time and ours.
- Again, we ended up spending most of our time preparing these “Lite” Property Strategy Documents, and less time actually helping clients to achieve great outcomes.
This wasn’t ideal either, so we tried a third model that has proven to work very well for all involved:
Model #3. A Customised Property Investment Strategy, With A Low And Fully Refundable “Strategy Fee”
With this model, we offer a free no-obligation discussion to any prospective client to assess their situation, answer their questions and provide some high-level suggestions.
Then if there’s a mutual desire to explore further, we offer to formulate a Customised Property Investment Strategy including:
- A summary of client goals and objectives
- Recommended investment structures, timing and price points for immediate and future property purchase(s)
- Detailed analysis of recommended property(s) available on today’s market that meet the client’s objectives
- Supporting due diligence information and documentation (e.g. valuations, rental appraisals, suburb analyses)
- Full financial model for each property including projected cash flow, tax benefits and capital growth.
- Purchase implementation plan.
Each Customised Property Investment Strategy takes around 15-20 hours of our time to prepare.
In exchange, we ask clients to invest a “Strategy Fee” of $500 in order to proceed.
This small “filter” ensures that:
- The client has genuine commitment to the process
- We are able to provide deeper and more customised analysis and recommendations
- The client is impressed by our recommendations because of the extra time and effort that goes in
This works really well, but there are still a few otherwise qualified clients who are a little nervous or hesitant about the Strategy Fee.
So to resolve that, we decided to refund 100% of the Strategy Fee once the client proceeds with any of our property recommendations.
(If in the unlikely event that our initial recommendation(s) are unsuitable, we’ll redo the process for free until you’re satisfied.)
Our income comes from the property vendor, who pays us a commission for each completed sale.
This structure makes the strategy formulation process “free” to the client and:
- Makes it easy for clients to say “yes”
- Deters people who aren’t ready for or committed to property investment
- Enables us to devote more time and focus to each strategy
- Delivers great client outcomes
So, that’s the “back story” to how and why we charge what we do.
To get started on your own Customised Property Investment Strategy, get in touch and we’ll be glad to help.
Or if you have any questions, feel free to ask away.