Property investment seminars
Property investment promoters, or spruikers, invite people to their ‘wealth creation’ seminars, often for free, with the promise of investment tips or opportunities.
They typically promote a property investment system or market a specific property development.
The seminars are often promoted through letterbox pamphlets, on social media and by email.
At the seminars the spruiker may urge you to buy investment courses or materials such as books and DVDs.
They may also offer to provide the finance to buy a property or arrange this through a third party.
Property spruikers are motivated to gain money at your expense. Don’t risk your money and assets because of their misleading advice. Always get independent, professional advice before making any investment.
Be wary of:
high pressure sales tactics rushing you into decisions, signing contracts or paying fees (including discounts offered to seminar attendees who sign up on the day)
property deals where the spruiker supplies mortgage broking, settlement or tax advice
the suggestion the spruiker’s scheme or system is ‘government approved’ by frequent reference to the Australian Taxation Office (ATO) or Australian Securities & Investments Commission (ASIC)
spruikers offering personal loans or credit to help you pay the enrolment fees for training courses
property investment strategies that put your current home at risk by using the equity to borrow significant money to invest
claims of capital growth rate that may not be independent or credible
spruikers who side-step questions or downplay the risks and costs involved
the promotion of a particular property development as the spruiker may be receiving a commission or have an undisclosed interest in it
offers to buy properties interstate which you have not seen, or off-the-plan properties which do not yet exist.
Fair trading agencies across Australia have found many property spruikers cannot substantiate the success stories and claims of profits they promote.
While the Australian Consumer Law (ACL) prohibits misleading, deceptive and unconscionable conduct, you should not rely on a property spruiker’s advice. Many consumers have had to take legal action to try to recover losses after relying on deceptive claims.
Australian regulators recommend you don’t attend these seminars. If you do go, do your own research and get independent financial and legal advice from licensed professionals (such as lawyers, accountants, financial advisers and real estate agents) with their own professional indemnity insurance.
Self-managed superannuation funds
Some spruikers sell information about investing in property using a self-managed superannuation fund (SMSF).
While some experienced investors may benefit from this kind of arrangement it is not to be undertaken lightly.
Some spruikers promote potentially risky land banking schemes where blocks of land are offered before the land has been approved for development.
If the land is not rezoned or approved for development buyers may be left with an unsaleable investment worth less than their original purchase price.
Vendor terms property sales
Spruikers often promote these transactions to buyers and sellers who are unable to obtain bank loans due to their poor credit history or unstable employment record.
The buyer pays a relatively small deposit for the property and must pay the balance of the purchase price to the seller in regular instalments.
Sellers are effectively locked into an extended settlement period during which the property may increase in value.
A buyer’s name only goes on the property title when the final payment is made; only then do they have access to the equity their instalments have created in the property.
Conversely, a buyer with a mortgage from an authorised lender is likely to have much greater security with the finance offered to them.
This is a high-risk scheme for buyers because their name only goes on the title of the property when they have purchased the property outright.
Some rent-to-buy contracts may indicate the buyer will lose all payments made and have no claim over the property if even a single payment is not made on time.