Certain property investment methods can carry significant risk, buyers should be wary of:

Property investment seminars 

Property investment promoters, or spruikers, invite people to free 'wealth creation' seminars. They promise investment tips or opportunities to make money. They typically promote specific property developments and push you to buy courses, books, or DVDs. They might also offer financing options. Be cautious, as spruikers are motivated to profit at your expense.

What to watch out for

• high pressure sales tactics
• property deals where the spruiker supplies mortgage broking, settlement or tax advice
• the suggestion the spruiker’s scheme or system is ‘government approved’
• spruikers offering personal loans or credit
• investment strategies that put your current home at risk by using the equity to invest
• claims of capital growth rate that may not be independent or credible
• spruikers who side-step questions or downplay the risks and costs involved
• the promotion of a particular property development. The spruiker may be receiving a commission or have an undisclosed interest in it
• offers to buy properties interstate which you have not seen, or off-the-plan properties which do not yet exist.

ASIC's MoneySmart website has more information on its investment seminars page.

Rent to buy property 

In a rent-to-buy schemes the buyer:

• rents the property form the seller at above-market rates
• has the option to buy at the end of the rental period
• must secure financing and meet contract terms.
• typically pays an initial 'option to buy' fee
• pays ongoing option fees,
• still has to pay rent and cover bills

Buyer’s risks in a rent-to-buy scheme

Rent-to-buy schemes can be high-risk for buyers because:

• you only gain title after full payment
• contracts may say you lose all payments and claims if any payment is missed
• if the seller defaults on their mortgage, the lender may repossess the property. This could end in a significant financial loss to the seller.

Seller’s risks in a rent-to-buy scheme 

A rent-to-buy scheme can also be a high risk for sellers because:

• you are locked into the price and the property may increase in value during the contract time
• you remain legally responsible for the property until the property title is transferred
• you may have to find another buyer for the property if the renters cannot or choose not to buy it after the rental period.

Buying from a licensed real estate agent

Fidelity guarantee protections offered to those who buy or sell through a licensed real estate agent. They are not available to those who participate in rent-to-buy schemes.