Thursday, October 01, 2009

Scam involving Australian property

A lawyer told me about this scam involving Australian property. A developer marketed the property in Singapore through a Singapore property agent. The property carried a rental guarantee which was provided by another company, having a similar name to the developer, but with no funds to back the guarantee.

On completion, the invetors did not get the guaranteed rental. The company that provided the guarantee declared insolvency.

The Australian banks that provided the 70% loan to the Singapore investors took over the property at a discount of 30%. The Singapore investors lost the 30% that they invested.

The Singapore investors went to see the property agent, who said they were only marketing the property to earn a commission, and was not responsible for the loss.

Lesson: Never invest in overseas properties, even with rental guarantee. The risk is too high.
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5 comments:

Anonymous said...

Good to learn of this scheme. More will come given G20 is going to restrict Top Mgt bonus and salary. In order to increase profitability, I would think that financial institution will create more schemes to get retail investors money...

October 01, 2009 9:20 AM
Anonymous said...

I had read such news in Australia in 2003 - Aust cheated Aust !

October 02, 2009 12:56 AM
Tan Kin Lian said...

I wonder if the lawyer and the property consultant handling the transaction in Singapore could be considered as being negligent in not warning the investors about the risk that the guarantor cannot meet the obligation.

After all, they are considered as professionals and should have the duty to alert the consumer who pay them a professional fee.

October 02, 2009 6:53 PM
rentinsingapore said...

Risk is very high in overseas property investment.Lot of precautions to be taken before taking a decision.Every govt supports their own citizens not overseas investors.

October 05, 2009 12:39 PM
Anonymous said...

The guaranteed rental for first two years is quite common and not normally a scam its just a mark up. The same as any cash back scheme or "free gift" it simply comes out of the cost of the purchase. It is also much easier to rent a brand new place than a place a few years old.

My view is that if you plan to buy overseas property or land you should fly to the country and buy it there. The savings will more than pay for the cost of the flights and you get to see what you are buying.

October 05, 2009 8:19 PM

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