Episode 28

How to not get screwed over in property, the warning signs of scams and how to do your property research

Warning signs of scams

  1. 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
  2. Free trips/offers with the property
    • 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
  3. 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
        • e. – Rental yield is low
  4. 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

  1. Work out your property criteria
  2. Research your suburb and the surrounding area
  3. Research Rental Income per week
  4. Calculate (potential) Rental Income
  5. Research similar sales in the area
  6. Determine the property’s value
    • Research the history of your home
  7. Confirm the property’s value with a free RP Data Valuation

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