Beware of Property Spruikers!

A recent article written by Noel Whittaker in the "On the Road" magazine grabbed our attention and we wanted to share it with you.

In the article, Noel writes that there is a real danger of people being sucked in by property investment schemes where there is little protection and even less objective advice. The good news is that once you know what to look for, you'll be able to spot them from a mile away! Here ate the key things to be aware of when approached by players in this totally unregulated market.
  1. The approach will usually be in the form of a "free" seminar showing you how you're going to make millions in the property game, or a phone call inviting you to their premises for an information session where they'll dazzle you with how you can save lots of tax and pay off your mortgage faster.
  2. The spruiker will make it sound like they are the only people that can find you the "perfect" investment property which will typically be overpriced and wholly controlled by them.
  3. You'll be convinced to go with a building contract resulting in a new home with better tax benefits, but the reality is it's an opportunity for the spruiker to bump up the price and as a result their margin.
  4. You'll have the convenience of a 'one-stop' shop with access to their lawyers, their agents, their finance brokers, and their builders meaning they maintain control of the entire process.
  5. The location of the property investments will often be interstate or in areas of lower socio-economic demographics and outer suburbs
  6. You'll typically need a mortgage over your own home because the spruiker will want to avoid a valuation being done on their overpriced property and they'll use two lenders to make sure one isn't aware of what the other is doing
  7. The practice of leaving the interest on the investment to capitalise so that you can use the rent to reduce your mortgage on your non-deductable home loan faster will be encouraged, but this is not approaved by the Australian Taxation Office, therefore exposing you to scrutiny.

There is a final point we'd like to make in relation to this matter and that is that if you're encouraged not to speak to your accountant for any reason whatsoever, turn and walk away! Chances are it's just another tactic to lock you into a scheme that could end up being totally wrong for you. 

If you have any questions or would like to discuss any investment opportunity you might have in front of you, please contact us and we'll be happy to give you the right advice for your circumstances.