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Doctors and property scams- how to avoid them

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.


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