Warning; Investors Club

Often there are threads and posts that pop up where newbies are asking for advice about various investment companies and clubs.

Here's a recent article on Neil Jenman's site relating to the Investor's Club:

http://www.jenman.com.au/news_article.php?id=151

I generally don't go for organisations like The Investors' Club, but Jenman's article sounds like an ad for them to me! The guy bought back an investment gone bad for $50K over market value and $19K more than Christine paid for it! I think that's amazing.

Does Jenman believe that people have any responsibility for their own investment decisions?

How on Earth did Christine "have" to sell her $480K PPR to keep an IP costing her $7K per year to hold? Surely she could have refinanced her PPR and used the proceeds from that to pay for many years of holding the IP? Sounds to me like Christine regrets selling her PPR, and somehow she and Jenman see that as TIC's fault.

TIC have done more than one could reasonably expect to attempt to rectify Christine's poor decision-making.

She should have kept it another 2 years.....

Christine had been talked into buying the one-bedroom apartment in October 2001 for $313,000

Kathy Young, bought Christine's apartment for $332,000. That was in June 2006

Christine had been told that property prices double approx every seven years.

Seems she made one poor decision.

Hi All,

I am in the process of purchasing a 3x2 tri level - townhosue in Carina Heights from TIC, which is scheduled to be settled on the 13th June 08. After doing all my due diligence, it is a reasonable good deal, so I went ahead with the purchase, this is my first purchase from TIC.

I am a very thorough person, and I have almost turned the club upside down and personally happy with their way of doing business and also the services they are providing. I live in Perth and am flying over to Brisbane to do the final inspection, which the club will reimburse me the flight after the settlement.

By the end of the day, no one will do things for free. TIC advertised all services are free for their members, which is true, they get their commission from builders and sellers, which is very obvious and disclosed (QLD property with 27c, not sure about other states).

See page 9 of http://tic.com.au/Portals/0/Newsletters/Newsletter_NovDec07-FINAL_(for_email).pdf and you tell me which organization / club / agents can provide all these services? Especailly, their leasing department service, can you personally achieve that?

The only downside about TIC is that you do not have the opportunity to negotiate the purchase price, but hey, they have a big list of stocks and you are the one picking them. If you pick a wrong one which does not suit you protfolio and plan, who can you blame?

Yerfdog said:

I am in the process of purchasing a 3x2 tri level - townhosue in Carina Heights from TIC, which is scheduled to be settled on the 13th June 08. After doing all my due diligence, it is a reasonable good deal, so I went ahead with the purchase, this is my first purchase from TIC.

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Hi Yerfdog,

Out of curiosity whats your IP experience prior to this current purchase?

Thanks for sharing.

Yerfdog said:

this is my first purchase from TIC.....I have almost turned the club upside down....

The only downside about TIC is that you do not have the opportunity to negotiate the purchase price, but hey, they have a big list of stocks and you are the one picking them. If you pick a wrong one which does not suit you protfolio and plan, who can you blame?

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Yerfdog, despite your self proclaimed thoroughness, perhaps it would be prudent to reserve your judgement and opinion about TIC until such time as you have fully transacted a property off them, and held onto it for a few years. At that stage, you'll be in a much better position to say either way whether big Kev's personal plaything, Lisson Pty Ltd, really is such a pally pal.


May I suggest that a lack of negotiation on the purchase price (i.e. in a two party contract, you as one party having zero power) is definitely not the only downside to buying a property with TIC.


Apparently, the local parlance goes something like "as long as you're 'happy'....that's the main thing", regardless of exactly how loooowwwww your criteria bar is set to actually achieve that stated happiness.


...but then, fortunately, I've never purchased through TIC either, so I'm not fully qualified to comment further.


Overlying everything, there is an assumption that people are adults and take full responsibility for reading and understanding documents thoroughly before they pick up a pen and sign said documents. As we all know, this rarely happens, even with quite a few experienced folk, so what we are really talking about is the vast majority of folks (including this hapless lady) handing their control and responsibility over to a paid adviser.....who accept the cash, but when you read their disclaimers, clearly accept none of the responsibility either.....and that's where you are left, standing atop a great chasm of responsibility where things fall down and everyone says it's not their fault and they truly believed, despite what was written down in black and white, that someone was looking after them....whatever that means.


All IMHO of course. I've been very very wrong before, and no doubt am probably wrong on this one as well.

I bought a new unit from the Investors Club in 2000 for $153,000. A similar unit in the complex recently sold for $375,000. I'm happy with my investment. It gets $330 rent a week. A family also bought a unit in the same complex. Last year, he had a contract on his unit for $395,000 but for various reasons it had to be taken off the market.

The biggest problem with the Investors Club is that their employees/personnel have changed so much over the years.

Hiya

I can only comment on a variety of my clients that have done one or a few transactions with TIC since its inception to even today !


In general they are happy.

If they analysed their purchases and their investments in finer detail they may or may not be .

We have to remember that one persons standards of performance of an investment are different to anothers..............and my reality is that many of these clients would not be as financially advanced as they are today had they not taken their initial steps with the organisation.

This should in no way be construed as an endorsement of TIC per se.....I just believe some people need their hand held initially, and YEP that will cost money !

ta
rolf

The real question is not whether somebody did well or badly via the Investor Club. The real question is did they do BETTER relative to somebody who didn't use the investor club?

If you are going to pay 6% then you want some incremental value to simply going it alone. I expect a sample of investors in the investor club and a sample of investors from the general public will have had similar results over the same time frame (and there will be losers in both populations). The IC is just skimming from the top. Same can be said for fund managers by the way - I manage my own shares. Active management of stocks is simply a fees engine with very little value add in my opinion.

It's a tough one with this lady - I feel empathetic of course but where do you cross the line between taking personal responsibility and protecting people from bad advice?

As a general rule anybody who says you can be rich with no risk should set off alarm bells ringing (I'm not sure if this was the line IC used though - I don't know the details).

Hiya Yield

I believe you have the wrong end of the stick here, its not how well one does on their own vs with TIC or similar.......its what people will or wont do at all, just my experience.

Most people that I know that have used services such as TIC would have a zero return had they not gone down that path initially, many of them being time or research poor for various reasons, which I refuse to judge.

Yes people should do their own research but most wont, thus a support system of some sort at moderate real cost isnt a bad thing.

A 200k


Ta

Rolf

I feel a great deal of empathy for the lady in question. By the same token without having any idea of the property in question or the suburb I am pretty confident that it was horribly horribly overpriced on purchase and market value is only just catching up to what she paid.

What would be good is for whoever runs TIC to be forced to disclose to the purchaser in full all commissions and amounts received - and for failure to disclose being a criminal offence. That could maybe have helped this lady from overpaying by 100% for her property.

Rixter said:

Hi Yerfdog,

Out of curiosity whats your IP experience prior to this current purchase?

Thanks for sharing.

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Hi Rixter,

I do not dare to say I know everything, but in the IP game since 2002, and constantly educate myself.

It is my personal choice to go through TIC, as long as I am happy with them, its all good.

I live in Perth and this is my first interstate IP, well, I have to start somewhere with someone who can provide the assistance for interstate buyers. I did tried to use a couple of Real Estate companies which sell interstate stocks but are very limited to outer suburbs in Vic and Qld only.

Yerfdog said:

Hi Rixter,

I do not dare to say I know everything, but in the IP game since 2002, and constantly educate myself.

It is my personal choice to go through TIC, as long as I am happy with them, its all good.

I live in Perth and this is my first interstate IP, well, I have to start somewhere with someone who can provide the assistance for interstate buyers. I did tried to use a couple of Real Estate companies which sell interstate stocks but are very limited to outer suburbs in Vic and Qld only.

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Carina Heights is a good area. I made an offer on a townhouse there (Cambridge St) last year whilst I was on a IP buying trip.

boomtown said:

I feel a great deal of empathy for the lady in question. By the same token without having any idea of the property in question or the suburb I am pretty confident that it was horribly horribly overpriced on purchase and market value is only just catching up to what she paid.

What would be good is for whoever runs TIC to be forced to disclose to the purchaser in full all commissions and amounts received - and for failure to disclose being a criminal offence. That could maybe have helped this lady from overpaying by 100% for her property.

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Hi Boomtown,

I do agree with you and I believe QLD form 27c does enforce 3rd party to disclose how much the 3rd party benefit from a transaction. I am not sure about other state especially in Christine's case in NSW. It is certainly not the case in WA, that agents are not require to disclose commissions to purchasers.

Yerfdog - that applies to the selling agent. I dont know whether TIC would have to fill out that form or whether they could get around it by using a 3rd party REA.

boomtown said:

Yerfdog - that applies to the selling agent. I dont know whether TIC would have to fill out that form or whether they could get around it by using a 3rd party REA.

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Hi Boomtown,

Yes, I did receive the 27c from TIC and clearly disclosed their commissions.

Cheers

Yerfdog said:

Hi Boomtown,

Yes, I did receive the 27c from TIC and clearly disclosed their commissions.

Cheers

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What percentage of the pruchase price did their commission work out to be, if you dont mind disclosing?

hmm this will be interesting... when i asked them how much comm they wanted from me to sell a $295k townhouse they said $20k+gst. presumably the bigger 50 lot subdivisions etc may be a bit cheaper.

Some of our clients used IC to sell properties in early 2006 when the market was slow.

They charged 6%+GST.

Fortunately there was enough margins in the development for the clients to walk away with a reasonable profit.

ozperp said:

Does Jenman believe that people have any responsibility for their own investment decisions?

How on Earth did Christine "have" to sell her $480K PPR to keep an IP costing her $7K per year to hold? Surely she could have refinanced her PPR and used the proceeds from that to pay for many years of holding the IP? :confused: Sounds to me like Christine regrets selling her PPR, and somehow she and Jenman see that as TIC's fault.

TIC have done more than one could reasonably expect to attempt to rectify Christine's poor decision-making.

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Neil's mindset is that the average punter, who has little fiancial education, should be protected from the "rogues". Commendable, but he's fighting a losing battle I guess.

On the chick herself; I suspect that her servicability wouldn't have been good enough to do a simple refinance and use the extra equity to fund the shortfall.

No, I think she overcommitted, and the combination of that and possibly being overcharged by the I.C resulted in another case of finacial stress.

Of course, Neil will always go into bat for the consumer against the supplier who should have done the right thing and charged her the right price to begin with.

They are both wrong, but to Neil she's less wrong than them. So who do you put your support behind? The ignorant chick, or the people selling her the property at the inflated price?