Get-rich quick schemes are usually only good for one person – the property “guru” promoting them. Here’s a quick guide to spotting a swindler.
Anyone with a sign and hotel suite can hold a property investment seminar. Fortunately dodgy property investment hucksters usually share several character traits which make them easy to spot once you know what to look for. Here are some classic signs:
- They are a one-step shop: Beware of property deals that involve a mortgage broker and conveyancer all supplied by the salesperson. This set-up is usually designed to speed up the sales process giving you less time to review the deal or consult with other professionals. Prospective investors should always seek independent property assessment and financial advice.
- They’ve sent you an “exclusive” invite to a “free event”: This is a good indication that you are about to be misled. Other verbal or written cues include phrases like: “premier wealth event”, “secret”, “only for a limited time”, “exclusive” or “once in a lifetime”. And while the initial seminar might be free, you could be pressured to buy expensive books or reports or to attend further seminars or educational courses at a high cost.
- They drive an expensive sports car: According to the Barefoot Investor, Scott Pape, many promoters will try and convince you of how effective their strategy is by making a real display of their own personal wealth. These “self-made millionaires” also usually boast bogus credentials. Don’t get sucked in – the car is probably leased.
- They offer above average returns at little or no risk: No investment is risk-free. Property typically offers a 6% return annually, but beware of anyone promising you’ll receive more than that. Other property claims might include “rent guarantees” or “discounts” for buying off the plan, but can involve hidden fees and commissions. These properties can also be over-valued.
- They are located far, far away: Be wary if the person selling the property is located a long way from the location of the house and land. According to property consumer advocate Neil Jenmanthis is a classic trademark of scam artists peddling house and land packages to investors at greatly inflated prices.
- They are marketing an unregistered property scheme: Be wary of any investment scheme no registered with ASIC.
- They offer to lend huge sums of money to buy property: The devil is always in the detail.