Working with Australian Defence Force Members for the past 8 years, I have seen and heard a lot of stories. Most members we sit down with are working hard to get ahead but not sure where to start or how to build their strategy. They are often referred to PACMAN – but lets be honest, its not the easiest read. There are so many exemptions, grants and allowances that it is often difficult to know what you can claim, when you can claim it and if the time to do so is actually beneficial to you.
The concept of wealth creation and how to make your money work harder for you is foreign to most. The education system does not teach it and financial literacy is lacking across most of the population. When members come back with money from deployment or receive a DVA pay out, many make the mistake of spending it on depreciating assets like a new car or putting it in the bank which at current is returning less than inflation (which essentially means you are losing money by having it in the bank).
In the property investment space, there are several companies that work with ADF Members. Some are good and some are very average. The biggest mistake we see members make is taking advice that leaves them purchasing in a state and voiding their First Home Buyer Benefits. For NSW Members, this could be a $45,000+ mistake. Because property law is state based and licenses are required in each state, most companies are focused on or forced into a particular area and or region because they only hold a Queensland license for instance. This limits the opportunities they can offer for purchasers.
Another mistake we see made regularly is a member pulling the trigger on a Principal Place of Residence in their posting locality to take advantage of HPAS and DHOAS. This works well in some cases, but a lot of the time, the property isn’t in the best growth location and proves a costly mistake in the long-term. Considering that you also loose RA or DHA accommodation and are now paying the full holding costs of a property without any tax relief – then financially, you are generally worse off. The other thing to consider is what tier of DHOAS you are receiving and is the benefit outweighed by more competitive rates with another lender?
As a client, you should always cross-check the advice you receive. Ask your ADF Property Specialist if you can speak with recent clients and always check reviews. You can also ask for case studies and client success stories. The fact is, just because someone claims to be from the industry, doesn’t mean they have the required experience, skills or breadth of knowledge to give you the right advice when it comes to your property investment strategy. So ensure you do your due diligence and make sure you speak to a Property expert that has proven experience.
Our team understands the strategies that work best for ADF personnel and we have built a streamlined process to ensure that your project is taken care of regardless of whether you are on deployment or out on daily runnings. Property investing is a complex and daunting process, but with the right support and the right education, the benefits will be long-term and ease the stress of transitioning out from Defence.