Last week, we reported on the Western Australian government’s warning against dodgy property investment seminars.
The warning didn’t specifically name any particular group or individual, instead seemingly blanketing the entire industry under the term ‘spruikers’ – and many of our readers, judging by the comments the story generated, appeared to agree.
However, Blue Wealth Property founder, Dr Tony Hayek, says this sweeping generalisation is unfair and that there are, in fact, reputable property investment advisers in the market.
“For us, it’s an absolute world of difference. Number one, our seminars are never advertised; they’re not actually open to the public. You can only attend one after being invited by a business, because our clients are businesses – they’re financial planners, accountants and mortgage brokers.”
Furthermore, says Hayek, attendants aren’t able to commit to anything on the night.
“You can’t buy a property [at the seminar], we don’t sell courses – we don’t do courses…Our seminars are more education and research-based.”
However, East Coast Accountancy Management Services accountant, Brian Clarke, says there are ‘many’ property spruikers presenting seminars and telemarketing prospects and that, for the sake of the average consumer, the industry must be regulated.
“Borrowing to purchase a property in a SMSF is the latest investment property sales market, with some companies setting up the entire trust structure with the property to plug in,” says Clarke.
“My advice to consumers is to stay away from property investment seminars…ASIC needs to regulate the industry similar to financial planning and mortgage broking.”
Surprisingly, Hayek agrees.
“I live for the day when it happens, because what happens in markets like the one we’re in now is every charlatan and every person who thinks they can get out there and get their hands on some property will build some sort of rubbish story and sell it to a naïve Australian. Fortuantley, for us, we’ve been able to push past that…I hate the word ‘spruikers’ because not all of them are spruikers – I’m certainly not a spruiker.”
However, valid concerns remain when it comes to property investment adviser commission structures. Clarke claims that advisers like Hayek collect, on average, 6% commission of the sale price from vendors of off-the-plan properties and pass up to 3% to referrers – an obvious conflict of interest. Hayek wouldn’t confirm commission rates, saying the figures are commercially sensitive, but claims the relationship between property investment advisers and vendors mirrors that of a broker and a lender.
“The client ultimately buys the property from us and we get paid money by the vendor – and we’ll share some of that money with the referrer.”
When asked how he manages the possibility of advisers at his firm building up ‘relationships’ with particular real estate agents and developers, potentially pitching their properties to investors above other, better options, Hayek says he falls back on ‘research methodology’.
“We’ve built a very significant research methodology that essentially adds a scientific approach to the approval of property. We are in the unique position that we don’t have to take on properties in order to be commercially viable …Our statistics show that, over the past five years, 77% of everything we’ve assessed has been rejected. That’s why publically-owned organisations like [one of the big banks] and Mortgage Choice have put us on their panels."
"You can imagine the due-diligence they would have gone through. They did everything but turn us upside-down and shake us.”