On April 1, the Australian Competition and Consumer Commission will be in court arguing that a real estate investor scheme claiming to show people how to buy homes for $1 is misleading.
In the article, Rick Otton and his $1 housing scheme We Buy Houses taken to court by ACCC, both sides share their understanding of the issues and my plan is to take some lessons from this for all of us.
For the record, I have no legal view on this particular case but have been moved to write this piece because it raises some important principles in the realm of real estate and investments.
Creative approaches to building wealth through property
According to the article, We Buy Houses’ approach to real estate investment involved attracting would-be investors to pay thousands of dollars to attend seminars or boot camps to learn how to ‘buy a house for $1’. And further mentoring was available.
The ACCC alleges the scheme and its promotion breach consumer law while Mr Rick Otton argues the ACCC has misinterpreted the situation.
The court will ultimately decide the matter and the hearing begins on April Fool’s Day.
The theme of the scheme
The main theme from this article that caught my attention is one that I have seen reoccurring throughout my career in conveyancing, the lure of the too-good-to-be-true deal and its power to short circuit a careful evaluation process.
Taken generally, any creative schemes that claim to help people find an affordable way into real estate ownership are certainly worth evaluating but that means holding back the rush of blood and being sure that proper evaluation actually happens.
I have many real estate agent friends who often marvel at how emotions often drive buying decisions in real estate, even though these purchases are among the biggest many of us will make in our lives.
In my opinion, if you are in the market to buy a house, you always need to exercise caution when you come across property investment opportunities that you don’t fully understand or that seem too good to be true.
Quite simply, you will be able to make a sound decision if you speak to a:
- registered financial advisor with an Australian Financial Services Licence about the financial aspect of the opportunity
- conveyancer about the property law aspect of the opportunity
It is also worth noting that while this action has arisen from Western Australia, there are restrictions on rent to buy arrangements in South Australia, which are covered in Section 6 of Land and Business (Sale and Conveyancing) Act.
The more things change, the more I think it is prudent to stick to the basics and surround yourself with trusted advisors who are experts in their field.