THE OFF-THE-PLAN STINGERS

The reality is that investors seldom make profits
from off-the-plan purchases

Ironically, it's one of the oldest of the 'modern' spruiking scams. It's been around since the explosion in the construction of apartments back in the early 1970s.

Investors are told that, if they agree to buy an apartment before it is built (through what's called an 'off-the-plan' purchase), they can enjoy two big financial advantages. First, they are told that they will be buying at "pre-completion prices". Second, they are told that, if they wish to sell at (or prior to) completion, they can make a substantial profit.

The spruikers will use [false] figures to "prove" that property prices always increase in value and that, by buying now, the investors can reap big rewards in a year or two's time when the apartment complex is completed.

Here's how it is all supposed to work. An investor buys an off-the-plan apartment for, say, $700,000. The investor pays a 10% deposit of $70,000 (sometimes the investor will pay a few hundred dollars for a 'deposit bond' instead of outlaying the physical money).

No matter how the investors 'secure' the off-the-plan properties, they have committed themselves for a huge financial outlay in the very near future.

The spruikers tell the investors that, if property prices rise by "just 10% a year", then, in, say, two years time, when the apartment complex is completed, their $700,000 apartment will be worth $840,000.

The reality is that investors seldom make profits from off-the-plan purchases (and, even if they do, some developers have sneaky 'sunset clauses' that allow the developers to cancel the contracts).

So, either way, many of these off-the-plan investments are designed to be 'lose/lose' for investors. If the prices go up, the developers cancel the contracts, if the prices don't go up, the investors are forced to buy an over-priced property.

Here is one specific example where the investors contacted Neil Jenman for help…

A young English couple were considering migrating to Australia. They attended what they believed was an information session in London on how to buy property in Australia. Instead, they found themselves being pressured into buying an off-the-plan apartment which they were assured would show tremendous capital gains.

Three years later, when the apartment was completed, it was valued well below the price the couple had paid. They claimed they had been cheated. They wanted to be released from the contract.

No way, they had signed a legally binding contract. They were told that unless they proceeded, they would lose their deposit plus legal costs, plus the costs of re-selling the property. In all, this couple were facing the loss of around $200,000.

They approached Neil Jenman who had some inside information on the sales strategies of the spruikers and their developer mates. The information showed that the spruikers had been deliberately misleading investors.

With the help of a legal firm, these investors were able to escape from their contract. They received a full refund of their deposit.

Neil Jenman receives many requests for help from investors caught in off-the-plan stings. It's one of the easiest ways to get caught because it seems so tempting - for just a few hundred dollars investors are told that they can "secure millions of dollars worth of property".

In reality, however, the investors are placing themselves into a dangerous investment. They may have only paid a few dollars to get in, but, once in, they are committed to pay hundreds of thousands of dollars.

Often, in order to complete their off-the-plan deals, investors are forced to sell other assets, sometimes even their own homes.

The next time you are offered a tempting off-the-plan investment, just remember that high rise often means high risk.

Check with Neil Jenman BEFORE you commit yourself.