Yahoo Finance 7 signs you’re dealing with a shonky real estate guru
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 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 over the years 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 million.
In the interest of full disclosure and transparency, I’m a property professional and 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. So it hurts when naïve investors fall for shonky real estate gurus.
There has been a continual conveyer belt of “gurus” which have come and gone, and along the way taken innocent investor’s money or mislead them to invest in the wrong properties with disastrous financial results.
Here are 7 signs that 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 – and they don’t hesitate to let you know.
The minute a spruiker starts mentioning how successful he or she is, how big their property portfolio is or shares the rags to extraordinary riches story my alarm bells go off.
2. They claim that their “secret” will work for you
Of course, the secret is there is not “one secret”.
How can they know what ‘formula’ will work for you without taking 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 told of “guaranteed methods” run in the other direction. And fast.
There is no “sure thing” so a true proper advisor will also recommend risk mitigation strategies such as the right ownership structures, the right finance strategy and financial buffers, 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 that if you haven’t yet developed the money skills to save a deposit, you shouldn’t be 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 of the so-called gurus have been taken to task by ASIC for making false claims about the students’ success.
6. They pretend to be mentors, when in fact their aim is to sell you a property
I strongly believe in the benefit of mentors. I still have business coaches and mentors in many areas of my life today.
Some of your mentors may be virtual – you’ll only read their books or blogs or listen to their pod casts, but in my mind to get the best out of a mentor you need to pay for their time to give you personalised, individual advice.
But it’s the shonky mentors who couch their property marketing activities as mentorship programs are the ones I’m suggesting you avoid.
7. They suggest you can amass a large property portfolio in a short time
You’ve heard the claims… 7 properties in 7 years or 10 properties in 10 minutes.
While this may sound tempting to beginning investors it’s just too hard to build a significant portfolio of investment grade properties quickly.
I’ve seen too many failed investors buy a number of secondary properties in cheap locations and then get stuck with an underperforming portfolio that sucks up the 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 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.
Michael Yardney is a director of Metropole Property Strategists, which creates wealth for its clients through independent, unbiased property advice and advocacy. He is a best-selling author, one of Australia’s leading experts in wealth creation through property and writes the Property Update blog.
