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investors. It’s a bit like a sausage factory.”
¿ HOW THEY LURE YOU IN
There’s a saying that goes, “If you didn’t
ask for it, you probably don’t want it”.
Queensland solicitor Tim O’Dwyer
believes an unsolicited invitation to
attend an investment seminar or “take
advantage of an unbeatable deal” should
probably be ignored.
Whether it’s a letter in the mail or a
phone call during dinner, he says most
pitches will be peppered with emotive
language that’s designed to fuel an
“Be wary of any spiel that mentions
your children’s future or their education
costs, your financial future, wealth
creation, retirement security and the like,”
Margaret Lomas, author and founder of
Destiny Financial Solutions, says most
invites use typical emotional persuasion
tactics and slick operators will make it “all
“They’ll tell you about education,
building your personal wealth and how
to find so-called ‘safe’ properties,” Lomas
says. “The invitation will be personal and
understated, so as to not raise any alarm
bells when you get it. The words ‘no
obligation’ will also find their way in there,
At a seminar itself, the room will
probably be filled with ‘students’ or clients
who have experienced great success
and are willing to provide glowing
testimonials, she says. They’re likely to be
actual investors, but ones who haven’t yet
realised they’ve been stung.
The Australian Competition and
Consumer Commission (ACCC) warns
that the investments offered at these
seminars are often overvalued or require
the payment of fees and commissions that
often aren’t disclosed until later.
A number of extra incentives are
usually included, like rent guarantees
and discounts for buying off the plan.
All might not be what it seems though.
The cost of providing these bonuses
has probably been tacked on top of the
purchase price of the property.
Other warning signs include the
promise of learning “secret and exclusive
techniques”, insider tips about so-
called risk-free investments or offers of
unofficial loans or finance arrangements
to cover the cost of the property, the
Scam bait could also come in the form
of emails from reputable-looking clubs
or marketing outfits, glossy junk mail or
æForget a methamphetamine lab – a dodgy property
investment spruiking company will make more money
with little-to-no chance of going to jail.Æ Neil Jenman
that are often deliberately overpriced by
$50,000 to $70,000 or more, he says.
Jenman concedes there’s almost nothing
that can be done to stop the practice or
get justice for those who’ve been done
over, and so it continues – every day, right
across the country.
“What we have in Australia is a $550
billion a year property investment industry
with absolutely no regulation,” Jenman
says. “Anybody can set themselves up as
a property investment adviser.”
The Financial Services Reform Act
doesn’t view property as a financial
instrument, so ‘experts’ doling out
investment advice usually aren’t
supervised by the Australian Securities
and Investments Commission (ASIC).
They’re not accountable for making
outrageous claims, giving dangerous or
inaccurate advice, significantly inflating
the price of properties or ripping off
“Gone are the days when developers
would market their own properties.
Now they give that job to specialised
marketing outfits that receive hefty
commissions per sale.
“Of course, that’s tacked on top of the
price of the property so you’ve got a
situation where an investor might pay
$435,000 for a house that’s only worth
The practice is so widespread that
he believes there are just as many
dodgy property transactions each year
as legitimate ones. And spotting the
difference is becoming more difficult.
“The investment rip off industry is just
as big as the illegal drugs trade. Forget a
methamphetamine lab – a dodgy property
investment spruiking company will make
more money with little-to-no chance of
going to jail.”
No part of the country is immune from
these types of rackets, but there are some
locations – like southeast Queensland and
the outer suburbs of Melbourne – where
it has traditionally tended to be far more
prevalent, Jenman says.
“There are entire streets that have been
created purely to rip off unsuspecting
Some of the signs of a dodgy deal
Con artists have a whole bag of tricks
to sting you, but there are some things
you should be on the lookout for.
> Unsolicited invitations to events or
information about an investment
opportunity you didn’t ask for.
> Emotive language and claims that are
too good to be true.
> Slick salespeople who are pushy or
make you feel uncomfortable.
> One-stop shops where the
salesperson, solicitor, financial
adviser, valuer and broker are all
under the one roof. Seek your own
> Properties that are over and above the
average price for comparable homes in
the area. Be cautious of claims about
expected rental return.
> Investment ‘experts’ with a poor
reputation. Often a simple Google
search will reveal their unhappy
> Rent guarantees or other bonuses
that only last a short time.
> Unexpected fees and charges or
confusing conditions hidden in the
HOW TO SPOT A PROPERTY CON \\ FEATURE
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