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supposed to get this’. I didn’t question
anything until I went to work with him.
“It was then I heard the amount of lies
he was throwing out to these guys. I
started to question everything. I was
thinking ‘what am I involved in?’ I spent
a week with him and said ‘no this is
enough. I’ve got to get out’.”
Mark still owns the property he bought
through Phil and is self-managing it.
“I’m looking after it myself and trying to
work out where to go from here. I had an
agent come out and give me an idea of
what it was worth and he said I could get
about $320,000 or $330,000.”
With a rental return of $355 a week and
an estimated equity loss of about $20,000
in addition to Phil’s fees, Mark’s situation
is bad but it could have been a lot worse.
His advice to other
is to make sure
you use a property
lawyer and do your
“My words of
wisdom would be to
and don’t settle for
Phil is no longer
working in the real
estate industry. API
*Names have been
Mark* was just 20 years of age
when he first met Phil* – an older
colleague working at a call centre,
who later tried to convince Mark to go into
business with him selling property.
Phil assured Mark he had years of
experience in the real estate industry and
knew a lot of developers who would help
them make their fortune.
“He told me he had multiple properties of
his own, more than 15,” Mark says.
“He came to me and said ‘listen when
you’re ready come to me and I’ll help you
get a house’.” Phil told Mark he’d get him
a good deal on a property and act as a
buyers’ agent for a fee. Mark says that fee
ended up costing him $20,000.
“He told me because we were friends
I could pay him off over time and I did
pay him the whole $20,000. He told me
he was setting up his own company as a
property developer. I told him I wanted to
buy a house and he came back to me with
a bunch of contracts and I signed them
subject to finance. All of the properties we
looked at and signed contracts for were
empty lots,” Mark says.
He ended up buying one of the older
blocks, not that he knew it at the time,
as Phil took him to view a new property
and led him to believe this was the block
“He took me out to one property and
he told me this was the property I was
buying. And I thought ‘oh this is a nice
block’ and then later he told me ‘no
it’s not that property anymore’. I said
‘oh okay, but didn’t I sign the contract
for this block?’ and he said ‘yes, but
we didn’t get it so we got this other
“The reason I think he sold me the old
block was because the property had been
vacant for a couple of years.
“He was trying to look like a better
salesman in front of the property
developer because he was trying to start
his own business and by getting the
properties off the developer and selling
them he was saying ‘look what I can sell’.
But they didn’t know he was selling them
all to his mates. He made his girlfriend
buy one as well.”
Mark had a $20,000 deposit that he’d
managed to save by working two jobs. He
paid $340,000 for the property, taking out
a loan of $315,000.
The original asking price on the block
was $360,000 so at the time Mark felt he’d
got a good deal.
Along with the purchase, Mark also
signed what he thought was a two-year
rental agreement with the developer.
“Phil would just come to me and
say ‘sign this, sign that, send this to
the bank’. When I asked questions he
wouldn’t really explain and would just say
‘don’t worry about it’. I had no idea what
was going on.
“He came back to me one day and said
‘the bank valuation has come under
what we want. The developer isn’t going
to drop the price and keep the rental
agreement, but they’ll drop the price if
you drop the rental agreement’.
“I didn’t really understand what that
meant, but he said ‘just do it. Just get
it done so that you can still buy the
property.’ I said ‘but they can’t take back
the rental agreement. I signed it. It’s a
legal contract that was stipulating I was
DILIGENCE IS VITAL
Inexperience combined with the smooth talking of a crooked
businessman left this first-time investor out of pocket and
far more cautious about his next property deal.
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æWhen I asked questions he wouldn’t really
explain and would just say ‘don’t worry about
it’. I had no idea what was going on.Æ Mark*
WHY DUE DILIGENCE IS VITAL \\ MY PROPERTY NIGHTMARE
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