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Investors warned about buyer incentives

21 February 2014 Stefanie Garber

Investors should be wary of buying properties sold with “gimmicks”, even when it might save them money in the short term, the director of a property advisory firm has cautioned.

According to Greville Pabst of WBP Group, property spruikers are increasingly offering buyers inducements like tax benefits, rental guarantees or stamp duty savings.

“We like to advise our clients to be mindful and careful if a property is being offered for sale and it has all of these other reasons you should buy,” Mr Pabst said.

He likened it to receiving an expired giftcard, suggesting a property sold on the basis of short-term savings may not perform in the long term.

“The problem is you're being offered all these incentives to buy a particular property, but when you go to sell the property, those same incentives are not available to the next person,” he said.

Mr Pabst encouraged investors to ensure any property they buy is a good investment in its own right.

“Make sure that the performance of that property has occurred because of the property itself, not because of all the taxation reasons and rental guarantees,” Mr Pabst said.

He advised investors to carefully check the track record of a property to understand its growth potential.

“Whether it's a house or whether it's a unit, the key reason for buying it is for it to grow in value,” he said.

“Wouldn't you want to check the performance of that asset in the past before you buy it?”

Investors warned about buyer incentives
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