These days we seem to be inundated with offers by wealth gurus, marketing companies and businesses who seek to gain a big slice of our hard earned money. Many of them are doing this using very deceptive and misleading techniques.
Unfortunately, because threads that identify the rogue companies and sprukiers are considered defamatory, they are often moderated. The result is that consumers who are new to investing are left with no warnings about who they should deal with and who they shouldn't or indeed what signs to look out for.
For this reason I decided to start this thread to give some of the newcomers to property investing some ideas about what they should be watching out for and what things present as 'warning flags' for the more experienced investors.
1) Beware of any company offering a 'one stop shop'. By this I mean, never use lawyers, valuers, mortgage brokers etc recommended by the marketing company or salesman. Seek independent advice before you sign anything.
2) Beware of companies who call themselves a 'club'. This is often a disguise to make you feel like they have your best interests at heart. Look closely at how these 'clubs are being paid. If they receive a commission from the developer or seller (often well above that of a normal real estate agent) be very careful. The whole concept is not dissimilar to a pyramid scheme.
3) Beware of companies or gurus who say that 'property doubles in value every 7 - 10 years' If their business philosophy is to borrow to the max, purchasing negatively geared property on interest only loans using the 'Property doubles every 7 -10 years' myth, this is a serious warning flag. It is very poor advice and advice that has huge potential to ruin you financially.
4) Know who the directors are of the company that you are dealing with. Do some research on them. What is their history? Don't take their word for the amount of experience and expertise they claim to have. Start by typing into google the name of the company or spruiker and include the word 'scam' in the search. This often leads you to the articles and forums that the spruiker is attempting to hide from.
5) Beware of dodgy testimonials. Many of the testimonials are fictitious or in some cases have been provided by people who are emotionally charged after attending a property boot camp or seminar. If the testimonial does not come with a full name and contact number ignore it.
6) Don't sign anything without getting independent legal advice and an independent valuation by a well known and respected valuation company in the state you propose to buy in. These are golden rules you must not break. Don't rely on the valuation given by the marketing company and don't believe them if they say that the bank won't borrow against the property if it is overpriced.
7) Beware of companies who pressure you into signing up with urgency. They may tell you that you will miss out if you don't get in quick. Decide at your own pace.
8) Beware of 'money back guarantees' being offered, especially for courses. Often they are not worth the paper they are written on and any claim on the guarantee will immediately be denied. Read the fine print.
9) Beware of gurus who claim to have written a book on the 'how to' of wealth creation. Their books (which they often claim as 'best sellers') are often full of other peoples ideas or plagiarised material. Also any company who markets using the word 'secrets' should be treated with caution. The reality is that there are no 'secrets' in property investing.
10) Beware of spruikers who publicly flaunt their philanthropy. Many of them consider this as nothing more than a marketing ploy to promote themselves. Many do not donate anywhere near the sums they claim to. Also beware of companies who use PR people or companies to promote themselves.
Some of you may be surprised at the level of deception that is involved in the property investment world. Don't be naive about the tactics used. Some gurus have very polished sales spiels and will even warn you about the scammers in the industry so they don't appear like one themselves.
Good luck with your investing. I have only covered some of the traps but I'm sure others will be able to add to this list.
Unfortunately, because threads that identify the rogue companies and sprukiers are considered defamatory, they are often moderated. The result is that consumers who are new to investing are left with no warnings about who they should deal with and who they shouldn't or indeed what signs to look out for.
For this reason I decided to start this thread to give some of the newcomers to property investing some ideas about what they should be watching out for and what things present as 'warning flags' for the more experienced investors.
1) Beware of any company offering a 'one stop shop'. By this I mean, never use lawyers, valuers, mortgage brokers etc recommended by the marketing company or salesman. Seek independent advice before you sign anything.
2) Beware of companies who call themselves a 'club'. This is often a disguise to make you feel like they have your best interests at heart. Look closely at how these 'clubs are being paid. If they receive a commission from the developer or seller (often well above that of a normal real estate agent) be very careful. The whole concept is not dissimilar to a pyramid scheme.
3) Beware of companies or gurus who say that 'property doubles in value every 7 - 10 years' If their business philosophy is to borrow to the max, purchasing negatively geared property on interest only loans using the 'Property doubles every 7 -10 years' myth, this is a serious warning flag. It is very poor advice and advice that has huge potential to ruin you financially.
4) Know who the directors are of the company that you are dealing with. Do some research on them. What is their history? Don't take their word for the amount of experience and expertise they claim to have. Start by typing into google the name of the company or spruiker and include the word 'scam' in the search. This often leads you to the articles and forums that the spruiker is attempting to hide from.
5) Beware of dodgy testimonials. Many of the testimonials are fictitious or in some cases have been provided by people who are emotionally charged after attending a property boot camp or seminar. If the testimonial does not come with a full name and contact number ignore it.
6) Don't sign anything without getting independent legal advice and an independent valuation by a well known and respected valuation company in the state you propose to buy in. These are golden rules you must not break. Don't rely on the valuation given by the marketing company and don't believe them if they say that the bank won't borrow against the property if it is overpriced.
7) Beware of companies who pressure you into signing up with urgency. They may tell you that you will miss out if you don't get in quick. Decide at your own pace.
8) Beware of 'money back guarantees' being offered, especially for courses. Often they are not worth the paper they are written on and any claim on the guarantee will immediately be denied. Read the fine print.
9) Beware of gurus who claim to have written a book on the 'how to' of wealth creation. Their books (which they often claim as 'best sellers') are often full of other peoples ideas or plagiarised material. Also any company who markets using the word 'secrets' should be treated with caution. The reality is that there are no 'secrets' in property investing.
10) Beware of spruikers who publicly flaunt their philanthropy. Many of them consider this as nothing more than a marketing ploy to promote themselves. Many do not donate anywhere near the sums they claim to. Also beware of companies who use PR people or companies to promote themselves.
Some of you may be surprised at the level of deception that is involved in the property investment world. Don't be naive about the tactics used. Some gurus have very polished sales spiels and will even warn you about the scammers in the industry so they don't appear like one themselves.
Good luck with your investing. I have only covered some of the traps but I'm sure others will be able to add to this list.
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