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11 tips to protect yourself from a property investment scammer
Real estate investment seminars are in the spotlight again with the competition watchdog instituting proceedings against property training company We Buy Houses and best-selling author Rick Otton.
The Australian Competition and Consumer Commission (ACCC) has repeatedly warned consumers to be cautious about real estate investment seminars in general. It urges people who have been scammed or come into contact with a seminar or real estate investment that “doesn’t seem right” to report it to the ACCC through the SCAMwatch website.
In the latest case, the ACCC alleges We Buy Houses and Otton contravened the Australian Consumer Law by making misleading claims in promoting property investment seminars and training programs at costs ranging from $2997 to about $17,000.
Otton, who wrote the popular book How to Buy a House for a Dollar, says the ACCC is taking a literal interpretation of the book’s title while members of the public would understand that the dollar was just the start of the process.
But the ACCC is concerned the seminars target vulnerable consumers who don’t qualify for bank loans or who are having difficulties meeting their mortgage repayments.
The latest action follows an investigation with New South Wales Fair Trading. We Buy Houses and Otton have previously been under scrutiny in other states with Victorian consumers warned about the seminars in 2012 and Otton being banned from conducting seminars in Western Australia in 2013.
The ACCC frequently warns would-be investors that many consumers have paid thousands of dollars to a wide range of property investment seminar promoters to receive advice. In many cases the strategies presented have been high-risk, involving borrowing excessive sums or borrowing on risky terms, and inappropriate for the investor.
In some instances, people with self-managed superannuation funds have been specifically targeted, although proposals to ban SMSFs from borrowing may curb that.
Some investment seminar promoters use high pressure tactics to coerce people into making investments without independent advice. Some charge unexpected fees and commissions or make false or misleading promises about rent guarantees or discounts for buying off the plan.
Here’s a list of tips compiled from the ACCC’s ScamWatch website and the Australian Securities and Investments Commission’s (ASIC) MoneySmart website on how consumers can protect themselves from losing money as a result of advice from a property investment seminar: