By Cam McLellan
If you choose wisely, you can expect your property value to increase at around 8% a year, so property investment is a pretty safe bet. Smart investors get rich slowly. Yet during a bull market, you’ll find seminars full of people lapping up advice from so-called ‘experts’.
But when the market cools, these guys vanish faster than you can say ‘economic downturn’.
I believe in education. But not if a weekend course is the extent of your learning. No-one becomes a pro golfer in two days. If you really want to wise up, don’t go to one investment seminar. Go to them all!
In the early 2000s I thought I was a savvy investor. Back then there was a slick operator promoting property investment opportunities. I was in a band at the time. One night, our drummer told me he’d paid this operator $8k for a property course (huge money back then) and was about to hand over another $15k.
He’d signed up to buy three apartments off the plan with the aim of selling them at a higher price before settlement. This (not very reliable) tactic is called ‘flipping’. He told me he was going to be a multi-millionaire.
Intrigued, I went to one of the slick operator’s introductory seminars to see if I was missing something. What I heard shocked me. All the advice assumed prices would continue to rise, as if the bull market would never end!
Can you guess what happened?
Around 3500 Australians lost a total of $50m – their lives devastated. They’d been convinced they could get rich quick by buying multiple apartments for just $400 each (the cost of a deposit bond) and flipping them.
They weren’t the first to be fooled. Nor will they be the last. There are plenty of con artists who take advantage of the uninitiated. Often they’re paid massive commissions to promote poor investment options, or they own a development and simply want to move stock. These ‘sharks’ don’t care about ruining lives.
The moral? Always do your homework and question ‘expert’ advice.