How to not get screwed over in property, the warning signs of scams and how to do your property research
Warning signs of scams
- Off the plan/cold calling companies
- Buying off-the-plan, or purchasing a property that has yet to be built –
- The time between the sale and completion and settlement of the dwelling means that "buyers are essentially paying today's prices for a product in tomorrow's market"
- Makes sense in what looks to be a rising market – most off the plan are oversupplied at the moment though
- Likely be overpaying
- Inbuilt commissions of up to $40,000
- Sales tactic of reciprocity – “I do something nice for you, so you feel the need to do something nice for me”
- Can blind to shortfalls in a property
- Free trips/offers with the property
- Sales pitches – Tax breaks, gurantees on rent and future growth
- Government concessions – FHOG
- Negative gearing/tax breaks being the focus point of the sale
- If tax is the only gain from the property, then look elsewhere
- No point paying $12,000 into a property to get a maximum of $6k back
- Better to put money into something that will grow
- Plus, sometimes they are only negatively geared as they are overpriced
- Guarantees
- Rent – Rental returns sometimes have 12 month rent guarantee
- Seems nice now, but what happens afterwards?
- Growth – The one unknown
- Assume that property will grow with inflation
Due Diligence – What you need to do to find a property
- Work out your property criteria
- Research your suburb and the surrounding area
- Research Rental Income per week
- Calculate (potential) Rental Income
- Research similar sales in the area
- Determine the property’s value
- Research the history of your home
- Confirm the property’s value with a free RP Data Valuation
- RP Data / Corelogic
- Research if your home has gone swimming (i.e. flooded in Brisbane)