How Do We Charge for Our Services: Property Investment Strategy Fees
Many prospective clients naturally want to know, “How do you charge for your services?”. We’ve experimented with several fee models over the years and eventually found a model that works for us and works for the client. Here’s how we charge and how we arrived at this point.
If our initial recommendations 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
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.
Upsides:
- Clients were deeply committed to the process and motivated to cooperate to get the best possible outcome.
- We could devote a lot of resources to consultation and research to provide a thorough strategy plan.
Downsides:
- Many investors were hesitant to invest $5,000+ before fully understanding every detail of the process.
- We spent most of our time in meetings rather than preparing strategies that made 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 they needed excellent property recommendations.
Considering 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.
Findings:
- We could only afford limited time for specific property research for each client. As a result, our recommendations were less personalized.
- Many clients were happy to see our recommendations but had very little commitment to the process, essentially wasting their own time and ours.
- We spent most of our time preparing these “Lite” Property Strategy Documents, and less time actually helping clients 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.
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 to proceed.
Benefits:
- Ensures genuine commitment to the process from the client
- Allows us to provide deeper and more customized analysis and recommendations
- Impresses the client with 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. To resolve that, we decided to refund 100% of the Strategy Fee once the client proceeds with any of our property recommendations.
That’s the “back story” to how and why we charge what we do.
Get Started
Get in touch today to arrange your Property Investment Strategy Session.
Smart Property can assist in formulating and executing a comprehensive commercial property investment strategy, including effective property marketing techniques. Our approach focuses on investment analysis, acquisition, and maximizing the visibility and appeal of your investment in the competitive market.
