This article first appeared on Propertypricetag.com.
With property being one of the favored investment choices in Malaysia, it is not surprising that many have fallen for property investment scams.
From below-market “connected” property purchases to “zero cost” property investments, here are the top 5 shocking property scams that Malaysians have fallen for.
1) “I am connected” PR1MA housing scam
You may earn too much to qualify for those special affordable housing projects, but here comes the well-connected agent with the right “cables” to get you a bargain investment. So you sign that cheque and wait to hear the good news … kissing goodbye to your money forever.
That’s what happened when four women claimed to be agents of the government’s PR1MA housing scheme, meant for first-time home buyers and those earning below RM10,000 a month. They told several “VIP” clients that they had “director’s quota” units for sale, through a private company, even showing application documents from the Kuala Lumpur City Hall.
These agents managed to con the buyers of more than RM 150,000. The victims only became sceptical when the government announced that it had not appointed any agents to sell PR1MA houses. When they went to the “project site”, they only found houses that were already occupied.
Key takeaway:
Anyone can claim to have “shortcuts” and “connections”. Don’t let your greed to make a quick buck get the better of you.
2) The “Booming Nanning” Property Investment Scheme
In 2014, at least 100 Malaysians were lured to invest in the “Pure Capital Investment” property investment scheme in Nanning, a fast-growing city in China, near the Vietnam border. However the investment turned out to be an MLM Ponzi scheme.
Victims were attracted by the all-expense-paid “site visit” trip to Southern China, where they were brainwashed into believing that they could become multi-millionaires in a short time.
All they had to do was invest 69,800 renminbi (RM38,474) up front to get a 100-fold return—7.8 million renminbi (RM4.3 million)—in two years. The catch? They had to get at least three downliners (new investors) to get their money.
However, most investors were left empty handed by the empty promises.
Key takeaway:
If you want to invest in overseas properties, do so directly with the developer, as much as possible. If the company or agent offers too-good-to-be-true guaranteed returns, that is a red flag to back off.
3) Low-Cost Home Reservation Scam
In 2014, a woman who claimed to be a property agent allegedly cheated 18 victims of RM544,000 in “reservation” fees to secure units in a low-cost apartment in Kepong.
Victims were offered units worth RM150,000 for only RM40,000. They were brought to the building but were not allowed to enter as it was not ready for viewing yet. The prospective buyers paid RM20,000 as advance payment to reserve the properties.
When there was no news after a month, the victims spoke to the developer, who had no idea who this “agent” was.
Key takeaway:
When buying uncompleted properties, be sure to purchase directly from the developer. For low-cost housings, go through the proper channels such as the official government bodies or your local councils (DBKL or MBPJ, etc).
4) Asean Paradize Ponzi Scheme
Another property investment Ponzi Scheme in 2014 was run by Asean Paradize. This marketing investment organisation was set up to cross-search for investors for Asean Paradize Savan City, a mega project located in a new special economic zone in Laos. It sounded credible enough—a JV involving the Laos government and Malaysian and Thai companies.
Asean Paradize offered 3 different packages, from USD$1,000 to USD$6,000 worth of units, promising 0.3% to 0.9% monthly dividends, with extra bonuses if investors recruited others into the scheme. One investor who put in RM10,000 was promised a return of RM85,000 within a year.
Following several complaints and investigations, Asean Paradize Incorporation has been blacklisted by the Security Commission Malaysia in 2015 and is not licensed to collect any deposits or monies from the public.
Key Takeaway:
Developing governments with strong growth potential have access to low cost capital from various development banks in the region. They would, generally, not opt for high interest rate private capital directly from individuals. Also, if you don’t know where the city is on the map, don’t invest there.
5) The Auction Property Scam
A con couple was arrested in May 2016 for raking in almost RM500,000 from their victims in a property scam, which spanned Johor, Penang and Kuala Lumpur.
The husband-and-wife team began luring their victims into investing in a bogus auctioned homes scheme from October 2014. Investors were promised handsome returns. To create some credibility, they legally registered their business and opened an investment office in Johor Bahru.
Key takeaway:
There are good deals to be found in the auction market. However, with syndicates intimidating or paying off genuine buyers and other dirty tactics, con artists are ready to step in to “help out” unsuspecting buyers hungry for a good deal. Remember, there is no short cut.
Red Flags of Property Scams
1. Returns are better than any financial product you have ever encountered.
2. It involves a very attractive get-rich-quick seminars (Rest assured, the only ones who will get rich quick are the organisers themselves).
3. The pitch includes “connections” or “shortcuts”.
4. Returns are dependent on you recruiting more family and friends into the scheme.
Property is a great investment option for Malaysians, but do be wary of these scams. If you or your family was recently approached by such suspicious proposals, be sure to report it to the police or the authorities as follows: Malaysian Communications and Multimedia Commission and Security Commission Malaysia.
The article was first published here with the original title “5 Shocking Property Scams Malaysians Fell For”. It is republished with permission.
Feature Image Credit: scmp.com