Rick Otton

G'day All

Has anyone had anything to do with Rick Otton or his strategies of offloading problem houses or the likes. Sounds a bit dodgy to me. Anyone got any experiences positive or negative. I find it hard to see how you could sell a house that's dropped considerably in value without too much of a loss with his system. Especially in a mining & gas area that has lost confidence at present.

 

I think Consumer Protection WA has some feedback:

WA ban for property investment promoter (We Buy Houses Pty Ltd / Rick Otton)

 

2 of the 3 websites are down.

Nice review by the Consumer Projection WA wrote.

 

Having some understanding of what Rick does, I'm surprised that misleading advertising is all they're going after him for. I'm not necessarily saying he's doing the wrong thing, but he's a very long way into the grey area and I imagine the regulators aren't very happy with his ideas.

My understanding is he'd sell a property to someone who can potentially afford it, but can't demonstrate this to the banks. He offers finance on vendors terms. The property is generally sold well above the current market value as these people are willing to pay a premium to own a home.

What this means is that whilst the property is sold, you'd also provide finance to the purchaser as well, so you don't get the money from the sale in the short term, instead you receive regular payments (as you'd also be making to your bank).

In theory it's a reasonable system, you sell an under performing property for a profit, the purchaser gets a home that they might not otherwise ever get. It also has so much potential for abuse.

 

I think it's more an indication of that although they might not like what he does , there was nothing illegal about his concept but advertising it as buying a house for $0 was incorrect , so that's what they went for .

As far as I know he was the first local to run courses on how to " wrap " properties , which is what he promoted .

Rick was active on Somersoft many years ago and was a regular attender at the " freestyler meetings " and there are several long term members who know him quite well .

I met him several times and always felt that ( although I had no interest in wrapping ) that he was quite ethical with what he did , though I never went to any of his courses . I'm not aware of any concerns raised about any unethical behaviour outside the advertising , though I'm happy to be corrected .

Cliff

 

I know Rick personally and find the concept very interesting in terms of being creative. It has the ability to help a lot of people get into property if they fall under the normal banking criteria.

Rick is a great person.

The system does however get abused by a lot of people with no concept of ethics and any system that does not have regulations and structures to keep it fair and ethical is not a good system because it is subject to abuse.

It's not really the system it's the kind of people that it has the potential to attract that make it wrong.

I was in business years ago with a group of people who were doing lease options in SA - privately on their own property, nothing to do with any business I was involved with.

There was an option in place and a tenant was paying premium rent and an option consideration towards the purchase of land which was to be subdivided. The option was for the subdivided land.

All good until they were unable to get the subdivision through, they took the council to court and the answer was a stern NO.

An ethical person would have approached the tenant and paid back the option consideration - and rent too because this meant that the tenant was now paying towards something that did not exist.

Not these guys - they allowed the poor guy to keep paying - dishonest and misleading conduct.

The tenant then allowed the option to expire and walked out on the deal and they thought all sweet, they can keep all the money as he did not excercise the option.

Later on the tenant found out that he was not able to purchase that land anyway even if he wanted to.

It ended up in court, he won, they had to pay back all option consideration and rent (they should have volunteered to do that anyway - this is the honest thing to do) and the option laws got changed in SA due to this one case.

They still have their agents license as they were trading as induvidul investors and not as agents but people like this should not be in business.

This is how the system can be abused. It's not Ricks fault.

All other real estate transactions are regulated and audited - if options are to work, they need to be done as a new financing tool or somehow be regulated to avoid abusers.

 

I remember writing this piece about Rick Otton and his students. From seminar to success story… to getting fined in the Supreme Court of Western Australia: How it happened

 

I wonder if he ever signs off as R.Otton

 

Thanks everyone for your comments

 

R Otton back in the news

Real estate guru ‘mislead’ investors

 

reaped income $2.8 million from real estate in 2003. That fell to just $62,000 in 2013

That would hurt!

 

I like the way Consumer Affairs and ACCC are going after some of these people.

 

Steve McKnight was actually doing wrap courses before Rick. I recall I went to one course at UNSW by Steven and Rick was attending as a participant.

 

Anyone who knows Steve McKnight or who has read any of his books would know he used vendor finance as his launching pad.
I am sure he could provide many examples of this in a win/win situation.

Vendor financing is just not in fancy anymore but with recent tightening and by all accounts some policies here to stay then it could be a creative option again.

 

I assume this one is a wrap . Been on the market for a LONG time .....

97 Alice Street Goodna Qld 4300 - House for Sale #120020093 - realestate.com.au

Cliff

 

Rick Otton found guilty of deceptive conduct

 

Was big around the time of Henry Kaye...advocated Vendor Finance deals.

Haven't heard much of him for a number of years....I think his business is wrapped up?

 

I heard he was over in the UK doing something similar.

 

Spruiker gets taken down

Like late last week he was convicted of offences and is awaiting sentencing

 

The way ASIC, ACCC and Fair Trading approach these cases is they attack misleading claims often made verbally in a public forum such as a seminar. Spruiker says - I have ten clients who made $XXX doing this. The Federal Court judgement seems to indicate some of the "student testimonials" were false and could not be supported...Many statements were found to be false and lacking any substance. The regulator asks for proof of who these people were. They are required to substantiate the statement. No proof - Its a offence under consumer law. A statement intended to mislead and deceive. Its not any different for a drug company - They must test their product to ensure they can prove it does what they say and does no harm.

The Federal Court seemed to focus on the "buy a house for $1" claim too. ACCC argued it NEVER happened. Court agreed. Also some issues were conditional on the apparent scheme - Nobody was told the person needed to already own property and have pre-approved finance. Many budding attendees could never replicate what was promised.