In a fast-moving market like Istanbul, there are many opportunities. But where there's money to be made, there are unfortunately going to be scams.
Capitalising on the naivety of investors unfamiliar with the market, property scams have been around since year one.
Lately, Property Turkey director Cameron Deggin has become aware of a new scam that's been gathering steam over the last few months. "A few weeks back I read about this in a newspaper, highlighted by a real estate and economy columnist. We're not the only one who has realised this is going on. But this has become quite serious now; our advisors are telling me we have to talk about this," Deggin says.
The Turkish citizenship scam
"It's saying, you get a Turkish passport, citizenship by investment by investing $175,000."
With the legal threshold for investment $250,000, how does this work?
While the client will still put down $250,000, the agent offers a $75,000 cash back over three years, Deggin explains. They also offer a 10% rental guarantee.
However, the property will not be valued at $250,000. "If you're lucky it's worth 150,000," Deggin says.
An independent survey will inflate the property value at $250,000. While this puts the investor in reach of citizenship, it also puts them, and the agent on shaky legal ground, Deggin says.
"Whoever is doing this is falsifying the documents. This is not legal, and I can only call it a scam. It's a matter of time before the authorities clamp down on this."
Deggin is worried that unsuspecting investors get swept up in something over their heads.
"Their citizenship will be revoked, [and the authorities] will hold them accountable for perpetuating a scam."
The rent guarantee red flag
Rent guarantees are something Deggin has talked about extensively. "First of all, 10% rental guarantee: there is no such thing. It's a gimmick. The moment you see rental guarantee like this, run a mile."
What happens is that the property's value is over inflated, so the investor effectively receives the money as a cash back, Deggin explains.
"They don't rent the property at all: the rent guarantee is nothing, just the packaging."
Tread with caution
New investors are ripe for scams, Deggin warns. "There are potential investors who may fall for this, and we know people who have. Most people who have gone for this have done it in good faith, they're just naive investors."
As well as doing their due diligence, would-be investors should rely on their instincts and look to the old adage, Deggin says. "If something sounds too good to be true, it most often it is."
As well as catching unsuspecting investors out, Deggin dislikes the way scams bring the industry into disrepute.
"Not only do these things have a way of coming out and biting you, they tarnish the whole market."
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