Investors have been reminded to do their research when considering overseas investing, after a South African national fled the country in an attempt to avoid facing court over fraud charges,
Alistair Frank McCreath was due to stand trial in the Maroochydore
District Court on 30 November after being charged with fraud, wrongful conversion of trust money and improperly dealing with trust money following an investigation by the Queensland Office of Fair Trading (OFT) and other local and international consumer and police agencies.
The OFT alleges a Sunshine Coast based investor provided McCreath with $320,000 to purchase five properties in the United States city of Detroit before asking for the money to be returned after McCreath said the properties were no longer for sale.
McCreath then allegedly used the money to buy five different properties and told the investor he would return their money after re-selling them.
McCreath allegedly sold four of the properties but failed to reimburse the original investor.
Despite having bail conditions limiting his international travel imposed on him, McCreath fled to South Africa in August and a warrant has been issued for his arrest.
Todd Hunter, founder of buyers’ agency wHeregroup and experienced US property investor himself, said the case is prime example of why people need to ensure they're dealing with reputable people when considering investing overseas and even a simple Internet search can be a good place to start.
“There are a lot of online forums that are a good resource to look at and just looking at somebody’s online presence like there website and social media is a good way to see if somebody is trustworthy,” Hunter said.
“If somebody’s got an overwhelming amount of negative feedback on their Facebook or Twitter then there’s probably a reason for that. Talking to past clients if you can is a pretty good way of finding the truth as well,” he said.
Rebecca Barnes, presenter at property investment advisory firm Property Women, agreed with Hunter and said people need to take an active role in the investment process to ensure they are happy with the outcome.
“If something’s too good to be true, then it probably is. But the thing that I find gets people in trouble is when they abdicate all responsibility and just let somebody make decisions for them” Barnes said.
“People investing overseas often get caught up in the hype. They get hit with all this talk about cash flow or capital growth and it’s exciting, but is it what they want? Before they even start looking for something to buy or somebody to help them, people need to sit down and come up with a strategy that specifically suits them,” she said.
Part of that Barnes said, is making sure investors have an understanding and appreciation of the location they wish to invest in.
“You need to look at the culture and the systems where you’re investing, especially in a place like the US. Their property management system is completely different, so if you’re buying and holding you need to find the right person to look after your property,” she said.
“If you’re looking to flip, then you need to make sure you have the right tradies as their standards of work can be different to ours. You need to understand how the transfer of property works and how their property taxes do as well.”
Hunter expressed a similar view to Barnes’ and said while he doesn’t believe people need to have visited the area they’re investing in, most of the clients he has bought for in US have spent time there.
“I wouldn’t necessarily say you have to. We’ve worked with people who visit there a lot for work or that sort of thing, but then we’ve worked with a few people who haven’t spent that much time there and if you’re working with someone you can trust then you can do that.
“But you do need to recognise the differences. In the US they have completely different terminology they use and completely different monetary system and different forces of nature like tornadoes.
“The other thing is that the bad areas in major cities are typically in close to the CBD, whereas the wealthier suburbs are out further, which is about the complete opposite to Australia.”
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