Issue Date:  -  Thursday, 28 August 2003

Investment seminars could spell ruin

Smooth talking promoters of property investment schemes are putting WA consumers at risk and the Consumer Protection Commissioner is worried that the attractive presentations will snare those least able to afford it.

"We are very concerned about the way property investment schemes are being promoted to consumers", Patrick Walker said.

"Consumers are receiving unsolicited contacts to attend seminars about property investment courses designed to increase their wealth.

"There has been some suggestion that the seminar costs $45 to attend but we have not been able to establish if anyone attending has actually been charged this amount. We suspect that this could be a ploy to make consumers think they are getting something for nothing," he said.

Those who get talked into doing one of the many types of courses could find themselves out of pocket between $5,000 and $50,000. A far cry from $45.

"Interwoven with these courses are promoters who are looking to lure investment buyers into high-rise apartments in other cities such as Melbourne.

"The Reserve Bank's August Bulletin noted that the investor market for Melbourne apartments is waning. The report observes that prices have been flat for some time and rents have been under downward pressure.

"Investors are being enticed into interstate properties where they may have little knowledge of local market conditions.

"This has all the signs of the property marketeering we saw in Queensland" Mr. Walker said.

Not only are people being connected to `ready-made investments opportunities', deals to get around normal loan financing are being suggested. These options not only potentially involve false declarations to banks they also put the investor at great personal risk.

They involve the developer selling off the property at a marked up rate and then giving back a rebate to the investor to use as a deposit. The only problem is the investor's capacity to service a loan in a downward rental market.

There is a very real danger of the buyer not being able to service their loan and losing both their investment and their underlying equity", the Commissioner said.

It is not clear where the promoters of these schemes are obtaining their hit lists. Many of the targets are young, newly married and employed. That suggests they could not only be interested in wealth creation but also be able to afford the price of participating in one of the courses on offer.

"It should be remembered that there is no sure fire way of getting rich easily, if there was we would all be doing it. Always obtain independent financial advice before investing the type of money being asked by these schemes", Mr. Walker said.

Consumer Protection would like to hear from anyone who is concerned about the information being promoted at these seminars or has information about schemes designed to use land and property valuations improperly. Telephone 1300 30 40 54.