Like performances of Shakespeare, when it comes to property spruikers the players may change, but the stories always remain the same.
Self-Managed Super Funds being opened up borrow to buy property has breathed new life into the real estate spruiking game and the shonks are back with a vengeance.
It’s important to remember the game always follows a similar pattern.
Some spruikers cold call like mad, there’s a suggestion some companies make up to 20,000 calls a week trawling for fish.
Once on the line there will be a mixture of fear (retirement poverty) and opportunity (reduce tax, minimal cost and the need to act) thrown at you.
The next step will be to come to your house for a consultation where the heavy sell begins, after this they’ll want to organise to fly you to their offices in a capital city at ‘their expense’.
Once in their clutches the pressure really begins, an information session with cherry picked figures to support endless capital growth, guaranteed rental income and minimised carrying costs.
And they’ve picked out the property (often newly built) and being you’re in another state you’ll have no idea on its value, suburb profile or vacancy rates.
But you’ll need to sign up on the day (they’ll have contracts and lawyers ready) because other investors are apparently desperate to secure the same property.
Here’s where it goes wrong, the price you pay will be inflated to cover your trip, their expenses and any vacancies in the first few years, lest you get suspicious.
Sooner or later there will be a hitch, you’ll get the property valued for sale and the awful truth will be revealed – it’s actually worth up to $100,000 less than you paid.
I’ve seen it happen and so have many other advisers.
Unfortunately, it’s always in the aftermath because second opinions and independent valuations are like kryptonite to these spruikers.
They don’t want you seeking professional advice because their schemes never stand scrutiny.
Peter Mancell is a director of Mancell Financial Group and FYG Planners AFSL/ACL 224543, www.mfg.com.au This information is general in nature and readers should seek professional advice specific to their circumstances. Searching for the top financial adviser in Australia?
