Yet another example of the age-old saying: “If it sounds too good to be true, it probably is.”
Over the last few years, we’ve noticed an increase in people from around Australia becoming involved in property ‘investment clubs’. These clubs are often fronts for large development companies, who entice ‘club members’ with no-charge memberships.
According to property consumer researcher Steve Butcher, “the most common [property] scam involves property marketing companies, operating under the guise of investment groups or clubs, selling properties on behalf of developers, usually to first time investors and for much more than they are worth”.
The properties recommended by these clubs aren’t exactly A-grade investment opportunities, and often these off the plan buildings decline in value due to oversupply, lack of infrastructure, little to no amenities, and more. The worth of these properties are also exaggerated from the outset, meaning club members pay more than they should.
“He [Butcher] remembers a Western Australian couple who had bought a unit on the Gold Coast for $630,000, which the property marketers told them was reduced from $680,000 in a special deal. Two years later, they were not getting the high rental yield they were promised and realized they were losing money holding the property. Butcher had the property valued independently. The result was that when the property was sold, it was only worth $450,000 and in the two years since it had declined in value to $385,000.”
These clubs tend to serve the needs and financial gain of developers, rather than the club members, and are littered through property news sites, almost always due to negative experiences or legal issues.
In the current climate of economic uncertainty, you might be looking for anything to give you a jump start towards eventual financial security. Scammers know this and, being very well practiced at manipulating people, will play on your emotions to coerce you into parting with your savings.
If you’re looking to invest, you should get expert advice, research the business/club involved, have a comprehensive knowledge of the area and expected growth. We’re professional buyers advocates – meaning we search, inspect, review, bid, and if needed manage, and sell properties for our clients. We only recommend properties that we ourselves would be comfortable investing in!
learn more : http://www.abc.net.au/news/2014-08-12/property-investment-scheme-faces-claims-of/5666730