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How to spot (and avoid) property investment scams
If it sounds too good to be true, you might want to be careful
Some dishonest companies and people will take advantage of property investors. Check out our tips below on how to spot a property investment scam and what to do if you suspect a scammer is targeting you.
What does a property investment scammer look like?
It can be surprisingly easy for scammers to find potential victims. Investment scammers contact targets via phone, email, SMS or social media. They may even be someone you know or have been introduced to you by a contact. In short, they could be (or pretend to be) anyone.
What does an investment scam look like?
Investment scams come in all shapes and sizes. It might be an offer that does not exist. Or, someone may claim to represent a reputable company when they don’t. Basically, if it’s a scam, the money you're ‘investing’ goes to the scammer not towards any investment.
Scammers might promise quick returns, tax-free benefits, offer an opportunity with little risk, or claim to have insider information. An increasingly popular tactic is to invite you to a property investment seminar, then use high-pressure sales tactics to rush you into making a big property investment decision.
Property investment red flags
Here are a few warning signs that an offer may not be legitimate or legal:
- The scammer claims to be a professional broker or portfolio manager, but they don’t have an Australian Financial Services (AFS) licence or say they do not need one
- They call you repeatedly for lengthy conversations or email you a lot
- They pressure you to make quick decisions
- They say they’re associated with a reputable organisation or name, but you can’t find proof
- They show you slick marketing brochures and documents, but they aren’t registered with ASIC.
What to do if you suspect someone is trying to scam you
If you’re suspicious that an offer is a scam, get independent legal and financial advice. You should also do independent research and ask questions of people contacting you, including proof of licenses and employment. Do not rely on the information a salesperson gives you. Be persistent and resist the pressure to make quick decisions.
