Doctors and property scams- how to avoid them

Yves SchoofInvestments

It is no secret that many Doctors have a love affair with property. There are some very simple reasons for this: property is perceived to be safer than shares, doctors can easily borrow money for property, and property investment offers many tax deductions.

Yet, there is also such a thing as a bad property investment, and I have seen many doctors lose money by investing in property, or fall victim to what I would label as property ‘scams’.

Why are doctors and property not always a successful combination? Well doctors are incredibly intelligent, but also incredibly time-poor. Hence, when a property spruiker offers a one-stop-shop, such as a brand-new property, with high depreciation benefits, the finance all organised, settlement agents lined up…that sure does look like an attractive proposition!

The problem is that at no point in this process you are getting independent advice, and quite often this means that you get taken for a ride. The result is a poor investment decision, where you have over-paid for an average property and all the other fees and charges. You are setting yourself up for a serious capital loss.

Doctors and property scams – warning signs

1) Heavily marketed

First of all, these types of property investments are generally highly marketed, through slick salespeople, with glossy brochures and websites, and flashy, high-powered seminars.

2) They need to sell

Secondly, they always have a property to sell, typically a new property or apartment, or a property that still needs to be built; generally, it would also be an interstate property. They never just provide advice – they need to sell you a property to make money. As a result, the property that you buy will typically be over-priced, particularly if they throw in a ‘rental guarantee’.

3) One-stop-shop

Thirdly, the company selling the properties will offer a one-stop-shop: they would have lined up the builders, the lawyers, finance brokers, property managers, etc. This way, they can control the entire process and prevent you from getting non-conflicted advice. Every one of these people or companies will take their cut – again, you are paying for this through an inflated purchase price.

4) High pressure

Finally, they will exert a lot of pressure on you, and will try to get you to make a quick decision, in the excitement of the seminar! After all, who doesn’t want to become a millionaire?

Doctors and property – the keys to success?

1) Big picture
Well, first of all property investment needs to make sense as part of your bigger plan. Is it going to work for you? It needs to be a long-term strategy that is not solely being implemented to access tax benefits.

2) Objective Advice
Secondly, you need to seek objective financial, tax and property advice, in particular with regards to the actual property selection – you need to source an independent buyer’s agent. Read more on the Real Estate Buyers Agents Association of Australia website (https://www.rebaa.com.au).

If you are a Doctor who is interested in property investment as part of your wealth creation strategy and would like to discuss your options, please contact me on 08 6160 5918 or yves@affluenceprivate.com.au.

Yves Schoof
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Yves Schoof

Author | Specialist Adviser for Medical Specialists and Surgeons at Affluence Private Wealth
I specialise in managing and coordinating the financial affairs of medical professionals and have been recognised as one of the best financial planners in Australia. I am a Certified Financial Planner and member of the Financial Planning Association of Australia.

As I understand your time is extremely valuable and scarce, I am able to offer flexible meetings times, including outside business hours and during the weekend. I can even come and meet you somewhere convenient, or talk via videoconference on Skype.

My first consultation is free. I allocate up to 90 minutes to discuss your personal circumstances and to establish how I may best assist you. Where you already have an existing adviser, I would be happy to offer a second opinion. I always quote a fixed dollar fee before we start working together.

Please contact me on yves@affluenceprivate.com.au or call me direct on 0432 885 295. You can follow me on Twitter @YvesSchoof or connect with me on LinkedIn to receive new articles.

DISCLAIMER
Yves Schoof and Affluence Private Wealth are Authorised Representatives of Synchron, AFS Licence No. 243313. 

The information posted is intended to be general in nature and is not personal financial product advice. It does not take into account your objectives, financial situation or needs.
Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. In particular, you should seek independent financial advice and read the relevant product disclosure statement (PDS) or other offer document prior to making a decision.
Yves Schoof
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