
by Neil Jenman
READING TIME: 8 MINS
People in the bush know the first rule of snakes: Assume all snakes are deadly. They also know the second rule: Avoid all snakes.
Now, of course, everyone knows how to spot a snake. So, theoretically, if you follow the “stay away” rule, you will be in almost no danger from snakes.
But there’s another dangerous creature that preys on people. Property investment scammers.
Sadly, every year in Australia, thousands – yes, thousands – of people get hurt by investment scammers. They have their financial lives almost destroyed and, worse, their emotional lives wrecked. The stress of a property scam kills many people.
So, believe it: Property investment scams can be deadly.
Unfortunately, very few people know how to recognise investment scammers. They can spot a snake, but they can’t spot a scam.
First, let’s understand what is meant by a property investment scam. It’s a property presented to you as a great investment in a great growth area with high capital gain prospects and high rental returns.
At least that’s the appearance of the property. That’s the “sell”.
So good, you’d have to wonder why the people selling it – the builders, the developers, the agents, the financial planners, the accountants or whomever – aren’t keeping it for themselves. If it was this good, why sell it to you?
Because it’s a scam, that’s why. And you are the victim.
A SCAM INDUSTRY
This is a scam industry. Thousands of low-quality homes are built outside dozens of cities and regional centres (like Toowoomba) with one aim: to scam naïve investors.
The first part of the scam, therefore, is that the properties are not what they are cracked up to be: They are not great value, they are not well-built, they are not in high-growth areas, and they do not attract good rental returns.
As for good capital gains, forget it. At least for years. If ever.
You see, the second part of these scams is that the properties are not just horrendously over-priced, they are horrendously “profit-loaded”.
The scammers are making as much as two, sometimes three hundred thousand dollars per property. Some victims are paying, say, $700,000 for a property that, even at $400,000 would not be a good investment.
Garbage is never good at any price. These properties are garbage properties.
This is a scam industry.
HEDLEY THOMAS EXPOSED THIS YEARS AGO
Thanks to his acclaimed podcast, The Teacher’s Pet, many people have now heard of the brilliant journalist Hedley Thomas.
For years, Hedley has been exposing scams and identifying crooks.
Back in the late 1990s, he wrote a series of stories revealing how thousands of naïve investors get scammed by skilled deceivers – crooks, for want of a better word.
Hedley Thomas explained how everyone was “in on the scam” – from the developers to the builders, to the sales teams, to the financiers and, most disgracefully, the solicitors who were ‘in-the-pockets’ of the developers. He described the series of crooks and their crooked ways as “a gravy train of deceit”.
Nothing much has changed in 25 years, except that crooks are smarter. With the internet they build themselves slick websites that fool just about everyone – unless you know what to look for. They provide glowing testimonials from customers that are so convincing – except there’s one thing missing that most people never notice (see point 4 below).
And then, of course, investment experts (as they call themselves) tell naïve investors exactly what naïve investors want to hear. We will set you up for your retirement. We will help you pay off your existing home sooner. We will show you how to reduce tax.
Please, no matter how good it looks, these scammers are the slipperiest snakes of the real estate world. They will rip you off. That’s what they intend to do. That’s the industry.
Just as it was when Hedley Thomas exposed it 25 years ago.
THE EXAMPLE OF TOOWOOMBA.
Take Toowoomba, a beautiful city – one of the loveliest in Australia – but a place that’s attracting some of the worst scammers pushing some of the worst real estate at horrendously over-priced figures.
As one local agent explained this week:
HOW TO AVOID INVESTMENT SCAMS
Do you know what is the best real estate investment most people ever make? Their family home. And how did they find that? Not with an “expert financial planner”. No, they traipsed the streets going from house-to-house until they found the one they loved.
And guess what?
That home was the best investment of their lives.
Most wish they had bought a second one.
Well, that’s what you should do. Just repeat what you did when you bought your first family home. You don’t need to consult any experts.
Indeed, just haunt the auctions and you’ll soon realise how you can pick up some top-quality properties for bargain basement prices.
Stay away from the property experts, however. They are all dodgy.
*****************************
PS Neil Jenman’s latest book 88 REASONS WHY YOU MUST NEVER SELL YOUR HOME AT AUCTION, also includes instructions on how you can buy well at auction. At $14.95 plus postage, it’s one of the best real estate investments you’ll ever make. And it’s guaranteed. If you don’t like it, return it and we’ll give you a refund. Click here to order.
NB: The book, 88 REASONS, is free to nurses and paramedics. Thank you for all you do.