Investors urged to beware of property spruikers
Investors have received a timely reminder that if it sounds too good to be true, it probably is, as a property buyer shares his story about scammers.
In a recent episode of The Smart Property Investment Show, property investor Vu Hoan Minh Ngo explained some of the lessons he has learnt over his property journey.
Mr Ngo shared how he landed at the mercy of a spruiker, what led to the decision to cut his losses at $23,000, and why he would advise other investors, “If you see a rental guarantee, run a mile.”
“I wasn’t born in Australia. I came here as an overseas student. So, about three years ago, I got the permanent residency here and I started looking into property investing. But I never actually thought that I could do something like property investment until my parents gave me $150,000 for a deposit,” Mr Ngo said.
“So, $150 grand as a newbie, exciting. Oh, I’ve got so much money. I want to just buy something. I looked around and joined a property seminar around Melbourne.”
Mr Ngo explained that at the time he had never heard of property spruikers, falling for the old adage of property doubling every 10 years.
“I just thought, buy the properties, put the deposit 20 per cent, borrow the money, then 10 years doubling the money.”
Mr Ngo explained that after going to a seminar, they told him that not only would the property double, but his rent would be guaranteed for 10 years.
“At that time, I was so naive,” Mr Ngo said.
He used the entire $150,000 as a deposit for the property.
“The property was valued around $400,000, so $150,000, 30 per cent, anything would be cash flow positive with that much deposit into the house,” Mr Ngo continued.
After signing a contract for a second property, things turned for the beginner property investor.
“I got a problem with valuation because of all the planned properties, they give low valuation. The first one was $50 grand below the contract price. The second one in Queensland, $100 grand below the contract price,” Mr Ngo noted.
He also explained that the broker told Mr Ngo that he could borrow more money than he actually could.
“The broker said, ‘Oh, unfortunately with all APRA’s changes, you can no longer borrow $1 million. You can only borrow $800,000,’ so I was $200,000 short.
Mr Ngo said he walked away from the second property, giving up the deposit on the second place, which cost him $23,000.
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