LAST year’s property news was full of enthusiastic agents spruiking the opportunities in the rural property market but one adviser isn’t so sure.
At 29, Andrew Morello owns nine properties but none of them are rural.
He’s the head of business development at Yellow Brick Road Wealth Management, an Australian company which offers home loans, financial planning and investment advice. In the span of his short career has been involved in more than 1000 property transactions here and overseas.
Jessie Davies picked Mr Morello’s brains to find out what advice he would offer to investors and farmers in 2016.
Jessie: Investors from all sectors want to cash in on the beef boom, what’s your advice to your clients?
Andrew: Big and small investors want to ride the agriculture wave right now, but my advice to them is to stick to what they know. Farming can be seriously risky business if you have no background in farming and you don’t have a team of analysts behind you. It could be safer to invest in a regional town which is experiencing an agribusiness boom. Towns like Orange, Mudgee and Tamworth are really the epicentres of the beef boom.
J: What should investors look out for when buying in regional towns like the ones you mentioned?
A: Always look at the region as a whole. Ask yourself: What are the neighbouring towns like? What will the next 10 years look like for that region? As a whole, has the region got good infrastructure?
J: What advice would you give farmers looking to expand their operations by buying additional land in 2016?
A: Think to yourself, do you really need to buy? Could you lease it for one or two years with a view to purchasing the property at the end? Be conservative because you could have that land and make full use of it without the burden of owning it outright. I’m seeing more and more farmers in South Australia lease their additional country and it excites me because it’s a good, safe strategy.
J: What advice would you give to farmers who are considering selling their property in 2016?
A: Collaborate. The best thing you could do is get two or three neighbouring landholders together and sell your land as one parcel. You’ll have a much bigger chance at having a big corporate investor look at the offering.
J: How should multi-generational farmers come to terms with cutting ties with their land?
A: Corporate property buyers won’t take into consideration that you’re a fourth generation farmer, so you need to remove all emotions form the sale. The fact of the matter is the numbers need to stack up and you need to make sure they do.
J: You have an extensive property portfolio, but it doesn’t contain any rural property – why?
A: I stick to what I know. I know the inner city markets of Melbourne and Sydney very well. While I don’t have rural property right now, I’ll be looking in the future.