The ugly truth about high-pressure property seminars

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Invest in the world's most liveable city, Melbourne (or Sydney, Brisbane or Perth), and earn Qantas points, the ad screams. Use tax rules to your advantage. Come to our seminar and we'll show you how. It's so easy.

All residential property is a good investment, right? You'd think so hearing property spruikers ad nauseam warn that you will miss out if you fail to act now.

We'll start you on your first investment property, they promise, and build a portfolio for you over the next three or five years. Soon you will be the owner of multiple properties and never look back.

The property investment seminars are "obligation free" and the spruikers jump out of their skins with enthusiasm. It all sounds so easy. Just come to the seminar, listen to how it's done, look at our portfolio of properties for sale, choose one, sign on the dotted line, we'll help arrange the finance and you will be a property whiz in no time, the envy of your friends. So easy.

Well, no, it's not that easy. Not if it's a one-size-fits-all push. What's wrong with this approach? Lots.

Property is a good investment if you do your research, can afford to fund the loan to finance its purchase, have a steady job or income stream and buy it in the right area where renters will line up. And if you buy at the right price.

Plenty of things can go wrong. The first risk is buying sight unseen. Those lovely pics shining on the board behind the spruiker are no substitute for visiting the property, driving around the area and talking to local real estate agents about the market.

If you are not familiar with the area, you won't know how many properties are available for rent, what the vacancy rate is and whether rents are steady. Each week the property isn't let means you lose income. Months of vacant property and you are seriously out of pocket.

So should you bother attending a seminar? Go along by all means but don't take your credit card or cheque book with you. Take a sensible friend. Be prepared for high-pressure selling because, after all, the spruiker flogging property is getting a commission or some payment from selling overpriced property, as are the mortgage supplier, the conveyancer and the tax adviser. There are a lot of hands looking for a cut from your investment dollars.

As NSW Fair Trading says, suggestions that a scheme is "government approved" in frequent references to the tax office or the Australian Securities and Investments Commission (ASIC) are not factual. Also avoid offers of personal loans or credit so you can "get in quick" and not miss an opportunity.

Then there are strategies using current equity - mostly your existing home, or your parents' home - to borrow a significant amount of money.

Remember that all borrowed money has to be repaid and if you lose your job or your pay is cut, or your partner drops out of the workforce when you rely on two incomes, you could not only lose your investment property but also the equity you put up as security.

Beware of claims of capital growth which may not be independent or credible, particularly if they are supposedly "guaranteed".

By whom? Remember those massive capital growth rates freely flung around for Perth and mining town properties a couple of years ago? Those days a long gone and plenty of sellers there are keen to offload properties to east coast people attending investment seminars.

Similarly, properties in Brisbane's outer suburbs and regional areas are suspect. They may be fine properties but they may also be difficult to let.

Ask about all other costs involved in the purchase. Spruikers like to sidestep questions and downplay risks and costs involved, such as stamp duty and annual running costs.

Ask the spruiker if they are receiving a commission, or have an undisclosed interest in the property.

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