Seven signs you’re dealing with a shonky property investment ‘guru’
Friday, November 30, 2018/
I played an interesting game over the weekend. It’s called ‘where are they now?’
I sat with a friend who’s been a real estate educator for almost as long as I have, and we pulled out copies of the now defunct Australian Property Investor Magazine dating back almost 20 years. Then we looked at all the so-called property gurus who offered advice, and wondered where they are now.
This came about because of a recent $18 million fine imposed by the courts on a property spruiker for misleading consumers by claiming people could buy a house for $1.
Now in the interest of full disclosure and transparency, I’m a property professional who’s written eight books and published more educational articles than anyone else in Australia. My Property Update blog was been voted the number one real estate website in the world in 2017 and 2018 and the Michael Yardney Podcast ranks among the top Australian investment podcasts on iTunes.
Clearly, I believe strongly in the value of education and mentoring to help increase the chance of success in property.
And there are many other very good professionals in this industry. But it hurts the industry when naïve investors fall for shonky real estate gurus.
And boy has there been a continual conveyer belt of ‘gurus’ that have come and gone, taking innocent investors’ money along the way, or misleading them to invest in the wrong properties with disastrous financial results.
So, here are seven signs the property ‘guru’ who keeps sending you emails could be shonky.
1. They brag about their achievements
Many of those failed gurus featured photos of themselves with their nice cars — often red sports cars.
Now I’ve owned nice cars for years — but you don’t know what kind of cars, do you?
The minute a spruiker starts mentioning how successful they are, how big their property portfolio is or shares the rags to extraordinary riches story, my alarm bells go off.
2. They claim their ‘secret’ will work for you
Of course, the secret is there isn’t one secret.
And how can they know if their formula will work for you without having taken an in-depth look at your personal circumstances?
There are simply too many variables involved in property success.
So avoid all those spruikers who claim they’ll ‘reveal their insider secrets’ to the select few who go on to buy their expensive courses.
3. They don’t warn you of the risks or the possibility of failure
All investments come with an element of risk.
So when you’re promised ‘guaranteed methods’ run in the other direction. And fast.
There is no sure thing, so a proper advisor will recommend risk mitigation strategies such as the right ownership structures, finance strategy and financial buffers, as well as insurance and correct asset selection.
4. They say you can get involved in property with little or no money
Even if you could buy property with no money down, the big problem is if you haven’t yet developed the money skills to save a deposit, you shouldn’t take on the financial commitment of property investment — and recommending you do so is irresponsible.
5. Their testimonials sound too good to be true
You know what they say: if it sounds too good to be true, it probably is.
Over the years, many so-called gurus have been taken to task by ASIC for making false claims about their students’ success.
6. They pretend to be mentors, when in fact, their aim is to sell you a property
I strongly believe in the benefits of mentors. I still have business coaches and mentors in many areas of my life. And I have mentored over 2,500 investors in the last 12 years.
Some of your mentors may be virtual — you’ll only read their books or blogs or listen to their podcasts. But in my mind, to get the best out of a mentor, you need to pay for their time so you can get personalised, individual advice.
But, be careful to avoid the shonky mentors who couch their property marketing activities as mentorship programs.
7. They suggest you can amass a large property portfolio in a short time
You’ve heard the claims: ‘seven properties in seven years’ or ’10 properties in 10 minutes’.
While this may sound tempting, for new investors, it’s just too hard to build a significant portfolio of investment grade properties quickly.
I’ve seen too many investors buy a number of secondary properties in cheap locations and then get stuck with an underperforming portfolio that sucks up their money. And worse still, they can’t sell up without making a significant loss.
The bottom line
There are some great professionals out there who provide real education for property investors.
Don’t get me wrong, I believe education is extremely important for investors. It’s a critical step in the investment journey that many failed investors leave out.
So my message is to be wary of smooth-talking real estate ‘gurus’ with promises that sound too good to be true.
Instead, do your research and be very careful who you take your advice from.