Home' API Magazine : January 2015 Contents 46 n APIMAGAZINE.COM.AU n JANUARY 2015
roperty expert Margaret Lomas
and her husband Reuben have
built a multimillion-dollar
portfolio by researching and
discovering ‘hotspots’ before they take
off. They’ve also helped thousands of
investors find affordable properties,
with the idea to purchase a nest egg that
will more or less pay for itself, but also
experience capital growth.
That’s why it’s hard to believe that
Australia’s royalty of real estate could
even contemplate buying a lemon, let
alone go through with the purchase.
It’s also a sign that even the dodgiest
of spruikers can sometimes persuade
the savviest of investors to pay far too
much for a property. Unfortunately for
a younger and somewhat naive investor,
Margaret, along with Reuben, also fell
prey to glossy brochures and promises of
instant riches overnight.
“Reuben and I had been running
our company Destiny for around three
years,” Margaret explains.
“When we began Destiny, our focus
was on assisting people to get ahead with
their debts, and mortgage reduction
was our main agenda. We would teach
people how to better manage their
budgets and how to better utilise their
funds to reduce debt. At the same time,
we were practising what we preached
and getting streets ahead with our own
equity in our own home.”
That was back in 1998 when little had
been written about property investing.
We l l , Australian Property Investor
magazine was already established, of
course, but not much else.
Margaret completed a diploma in
financial advising, read what books
she could, and then declared herself
to be fully educated and ready to
purchase what would be their very first
investment property, apart from their
own principal place of residence.
“I started to put the word out that
I was in the market to buy some
property,” Margaret says. “At the time,
I knew a loan broker who, interestingly
enough, I didn’t trust much, but he said
he ‘knew a guy’ who could get me a great
deal on a fabulous investment property.
They say that a fool and his money are
easily parted and this was to prove true
That was the first red flag. The next
one came when a call was made for
Margaret and Reuben “to get in at the
“We excitedly looked forward to the
day we felt was going to change our lives
and shower immeasurable riches upon
us,” Margaret recalls.
Most spruikers go out of their way
to personally drive to the would-be
investors’ house or location of choice.
This was no different.
The slick and well-presented man,
Harry (not his real name), arrived at
8pm one night after their five children
had gone to bed, wearing a brown suit
and an even bigger smile.
“What was it my dad told me about
men and brown suits? Mistake number
one was written in indelible ink. ‘Trust
your instincts’ had been pushed to the
back of my mind as I focused on the
presentation,” Margaret says.
Over the course of two and a half
hours, Margaret and Reuben were
introduced to what was “the best
investment there ever was”.
The deal, to die for apparently, was for
an off-the-plan, brand spanking
new two-bedroom apartment in the
up-and-coming town of Cairns.
“Wow, this place had everything!”
Margaret remembers. “About 10,000
people moved to the area every year!”
They were told the airport was being
tripled in size, the beach was being
cleaned up and the area was also on the
verge of becoming Asia’s main gateway
into Australia as well as the country’s
most thriving financial hub. Best of
all, they didn’t have to take just the
developer’s word for it. It was all there
in the ridiculously expensive, colour
glossy brochure, complete with artists’
impressions of the finished product.
There were beautiful people frolicking
on white, sandy beaches in the dazzling
sunshine. What could possibly go wrong?
“We were excited, and I couldn’t get
my hands on the chequebook quickly
enough, parting with the $1000 deposit
and signing what amounted to an
unconditional contract to secure some
of the last apartments left in, seemingly,
the entire town,” Margaret says. “We just
had to get in before we were too late,
and before someone else swooped in and
nabbed the deal from under us.”
The Lomases paid $161,000 for the
apartment, which was completed within
12 months. They also paid $16,000 for a
furniture package, to take advantage of
itinerant workers moving to the area, so
the total buy-in price was $187,000.
Unfortunately, the couple later found
out the furniture package was actually
worth just $6000. But even worse, after
two years, the property was valued at
“At the time, I had already become a
whole lot smarter and had worked out
that the salesperson had received around
$22,000 in undisclosed commissions
on this sale,” Margaret says. “We hadn’t
really overpaid, we had just paid Harry’s
commission, even though he assured us
THE LOMAS LEMON
Even the experts get it wrong sometimes. Just ask Margaret Lomas,
whose property in Cairns is only worth $11,000 more than the price
she paid 16 years ago. LAUREN DAY [@laurenanneday]
The Cairns apartment block
MY BIG FAT PROPERTY MISTAKE n Margaret Lomas
Links Archive December 2014 February 2015 Navigation Previous Page Next Page