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Warning & Beware

by David

Yes, that’s right, a big WARNING and BEWARE of the some of the despicable and unhanded tactics used in the property investment industry occurring each week in Australia. Below we have listed some of the current unethical practices, greed and selfish behaviours that are used by people and property investment companies that we believe lack integrity and professionalism.

We urge you to be careful when you encounter these types of people and companies and ask yourself some fundamental questions. Why are they doing business this way? Why are they acting this way? Can this business be trusted and do they genuinely have your best interests in mind?

You already know the answers before you have read the rest of this page.

So, remember – BUYER BEWARE!

Property Investment Spruikers:

Beware of the unethical Property Investment Spruiker!

The property investment spruikers that you need to be aware of and be very careful with when you talk to these people and companies are the ones who are spruiking a “Property Investment Product” at a seminar.

What they will do is disguise the seminar as possibly an educational night, networking event or information night where you can get some information and knowledge about the current property investment market. However, when you get there you will quickly find out that’s it’s all about selling you a property investment on the night and buying under pressure and with emotions running high can turn into a major disaster.

Now, there is nothing wrong with purchasing an investment property. It’s a great idea, and we encourage you to do it as many Australians have built tremendous wealth from doing so. However, it’s much better if you purchase the investment property from a professional, honest, ethical, reliable and trusted company that has integrity. You want one that tells you the truth, upfront, from the day you meet them, not a deceptive person or company that hides behind a curtain and has another plan.

Dealing with a company that disguises what they do and hides behind a seminar or so-called information night to trick you, can be very dangerous for you. Their intentions are just to sell you a product (and make their commissions as quickly as possible) and not help you on your path to building a successful long term property investment portfolio.

Property Marketers:

Beware of product-driven Property Investment Marketers!

These types of people and companies will sell you any kind of product and generally a very low-grade property investment, which is usually from only one or two or maybe three different developers or builders to which they have access.

They generally have very limited access to a multitude of different product options, and this in turn limits your options and increases your risk. When you are looking for property investment to purchase, you should deal with a professional property investment company that has access to quality property investments from a nationwide selection of builders and developers. You want a company that has resources in all the five major states, including New South Wales, Victoria, Queensland, South Australia and Western Australia.

If you deal with one of these property marketing companies that only have minimal stock, the chances of you making a wrong property investment decision will increase dramatically. If you only have limited options of product types and areas to buy properties in, then you might purchase a property that’s not suited to your individual needs and circumstances.

You also might not be getting all of the current up to date information and data of what’s available across all of Australia. The property investment markets in Australia runs on specific cycles, and sometimes it’s better to buy in different States when they are performing well. There is lots of macro and micro pieces of research, data and information that need consideration when purchasing a successful property investment. Having a minimal choice will affect your chances of success.

Perfect Property Investments:

The ideal property investment does not exist. Nothing in life has zero problems!

Beware of the property investment person or company who is advertising and promising you that they can find you or they have the perfect/best residential property investment because it’s just a straight out lie. Also, if they are saying that they are the only ones to have access to the perfect/best property investment in Australia too, it’s another lie as there are thousands of different property investment opportunities available around Australia. There is no such thing as the perfect/best property investment. It all boils down to your individual needs, wants and current circumstances because it’s not a one size fits all product and industry.

The facts are clear & simple. There is no such thing as a perfect/best property investment. Don’t try to find one. Remember nothing in this world is perfect and property investing is no different. The key to purchasing a successful property investment is to buy one that suits most of your needs, objectives, current circumstances, your goals and desires of what you’re trying to achieve when building up your property investment portfolio.

Try using our Property Analysis Form to help you work out if the property you are looking to purchase has acceptable parameters.

Finance & Mortgage Brokers:

Beware of the Finance or Mortgage Broker.

In Australia, there are a lot of finance and mortgage brokers that are masquerading as finance and mortgage broker specialists. However, they are just a property investment spruiker and marketer that are hiding behind the curtain of being a finance specialist. These types of people & companies will advertise to get you in the door and look at your finance options when they are trying to get you to purchase a property investment through one of their affiliates or builders they know.

Now, as we have said before, there is nothing wrong with purchasing a property investment just do it from a professional property investment company that is honest with you from the start. Purchasing a successful property investment needs to be done with integrity, and you should not be buying a property investment through anybody else except a property investment specialist company. These companies have experience, knowledge and will act with your best interests through the whole transaction.

If a person or company has to act with deception and lies in the first place through bogus bait-and-switch finance options, then you know chances of them providing you with a quality product is very limited.

Rent Guarantees:

Beware of all promising Rent Guarantees.

When you’re looking at purchasing a property investment, always be very careful and cautious of a builder or developer or property investment company offering rental guarantees. Sometimes, developers will provide rental guarantees to sell products to people because they have no other way of selling and offloading that product. Most times, the rental guarantees are already built into the purchase price of the apartment, or even a house and land package. And if that’s the case, you are not getting any rent guarantee you’re paying for it yourself.

The other thing to remember with rent guarantees is why do you need to offer one in the first place? If you do your research thoroughly and collect the correct information for the area you are looking at, you should not need a rent guarantee if the vacancy rate is low enough.

If you research correctly and have a professional property investment company provide you with the current data, you can select a property that will rent out by the time you settle on it. You will have little or no vacant periods at all, thus negating the needs for a rent guarantee.

Buyer’s Agents:

Beware of Buyer’s Agents and what they stand for.

In Australia, buyers’ agents purport that they work only for you, the buyer of the property and publish some very interesting information saying that most real estate agents and property investment companies saying that you should not buy from these types of businesses because they are working for the seller of the property, for example the vendor, the builder, the developer.

Now, part of this is correct where the real estate agent and the property investment company may receive the compensation or commissions from the seller/vendor of the property. However, that does not mean that a buyer of a property cannot conduct a very profitable and successful purchase using these types of businesses. Buyers agents have grown their business on the rights of bagging others when, in fact, they don’t have the proof that some of these types of companies are not working for the buyer as well. From whom they receive their money isn’t the only deciding factor there. 

It’s a fact that buyers can still get great value from buying from these people.

Some buyers agents are charging ridiculous fees of $10,000 – $15,000 – $20,000 to find and secure your property and you have no guarantees that you are happy with what they locate for you, so it’s a huge upfront cost with massive risk.

If you are looking to purchase a brand new property investment, then in a lot of the cases you can buy the same brand new property at precisely the same price as the buyer agent can get for you. So, in effect, you’re wasting $10,000 – $15,000 – $20,000 to use a buyer’s agent. Why would you do that?

Now, if you’re looking for a second-hand property, then a real estate agent can help you buy that property. You can go and make an offer and negotiate your terms without needing the expense of a buyer’s agent. Not all buyers agents are skilled at negating a better price.

Financial Planners:

Beware of the wolf in sheep’s clothing called a Financial Planner.

In Australia, the majority of AFSL licenses held and owned by the banks or by insurance companies. The majority of financial planners that are operating and using the AFSL documents from these two types of institutions are only giving advice to people and advising them and suggesting that they buy products from their authorised suppliers. Funny enough, those suppliers are other banks and insurance companies.

So, beware of a financial planner that suggests you buy some insurance company shares in their property trust that might only pay you 1%, 2% or 3% dividend or yield each year. When sometimes the insurance companies could be making 10 % to 15% out of the investment but remember, they need to make a profit to pay their shareholders and that’s at your cost!

And you need to realise that you have the option to purchase property directly yourself and make a rent yield of 5% 6%, sometimes 7% for dual occupancy or duplex properties, and then also receive the capital growth on that property of 1%-5% per year. So if you add up these numbers correctly, you will quickly find out and see that sometimes buying a property investment directly yourself is a far better option than buying shares in a property trust from a bank or insurance company. In the latter case, they make the majority of the profits, and you don’t.

Only One Type of Product or Area:

Beware of the property marketing company that only has one type of product to sell in one area.

Suppose you meet a person or company that only has one type of property in Southeast Queensland. They are pushing the run to the door and don’t look back. In Australia, there are thousands and thousands of different types of property investment products in various suburbs, towns, and states. Houses, townhouses, apartments, units, duplexes, dual occupancies are all available so you don’t have to settle on just one from which you can choose.

If a person or a company only has one or two types of products in one or two different areas let’s say “Queensland”, then you have to be extremely careful if you’re purchasing from them. The reason being is that investment property that they are selling you might not actually suit your needs or wants and what you are trying to achieve.

What you should be looking for is dealing with a professional property investment company that has access to all the different types of products in the five major states of Australia. That way, once you determine what your goals and needs are, plus the outcomes that you want from building your property investment portfolio, then you will be able to select a suitable property investment that’s right for you.

Fake and False Promises:

Be wary of the fraudulent, false and misleading promises and guarantees that are being made by a lot of property investment companies.

Remember if something generally sounds too good to be true, guess what? It probably is too good to be real, and property investing is no different. When you are looking at purchasing a property investment, take your time, do your research and get the data and facts checked before making a decision.

Slow down, don’t rush the purchasing process as this is a massive investment of dollars and can ruin the rest of your life if you make the wrong decision. When these types of people and companies tell you that they have such an unbelievable deal, or it’s the best property investment in Australia. When they ask you to act quickly and purchase, or you’ll miss out, is guaranteed to make you money, you can’t lose on this product or anything remotely similar to comments like these then run for the hills and DO NOT BUY IT.

Don’t let the fear of missing out drive you to purchase a sub-standard crappy property investment that you’re going to regret for the next 5-10-20 years of your life. There are tens of thousands of different property investment options available in Australia to purchase, and you will not miss out, so don’t worry.

You will find the right property investment once you know for what you’re looking. So, don’t be fooled by these fake and false promises.

Secret Hidden Kickbacks:

Warning and Beware of the property investment company that making multiple commissions and kickbacks from being a “one-stop-shop”.

A professional property investment company that you want to deal with will do one and one thing only. They will listen to what you want. Then they will research the market for you. After that, then they find and source the correct property investment product that is suitable for you based on your needs, your wants, your desires and help you purchase it.

They WILL NOT be a “one-stop-shop” that tells you that they can handle all your finances, your accounting, your financial planning, your property management, your pest inspection, your building inspection. If a property investment company is calling themselves a “one-stop-shop” then in most cases, they are doing it for the wrong reasons. Usually, they are doing it so they can make 3, 4, 5, 6, 7 different lots of commissions and hidden/secret kickbacks about which you don’t even know. They do this by having everything in-house, and they will do things to make deals happen so they can make all of those commissions.

There is no integrity whatsoever in dealing with most of these people or companies that are making multiple commissions as they don’t have your best interests at heart, they have what we call “commission breath”.

Don’t take the chance! Always deal with a professional property investment company that runs and operates with ethics and integrity. Choose one that will help you with third party supplier introductions if needed, to qualified and independent businesses/suppliers (like finance, accountants, financial planners, property managers, etc.). Make sure, though, that they will not take a kickback or secret/hidden commissions or payment for referring you to them.