So, I'll try on this one. Property Spruikers!!
Do you see ads on Facebook that is talking about how you buy a property per year for the next 10 years. Or retire in 10 years through property etc etc. and you can go along to a free seminar?
Whatever you do, don't do it. It's ridiculous. I can't believe how this is happening and so many people are getting sucked in and it isn't being shut down.
Let's look at some history of bad financial products/investments:
- Agricultural investment schemes (trees etc) - Huge commissions were paid, huge returns were promised, almost all collapsed
- Westpoint - Huge commissions were paid, huge returns were promised, collapsed.
- Structured/leveraged hedge funds (leading into GFC) - Huge commissions were paid, huge returns were promised, all collapsed.
- What storm financial was doing - Huge commissions (they technically were a fee, but it was a big % based on how much they invested so they were paid more if they invested more), the investments collapsed.
What I've written above about 'collapsing', they all mean a different thing. Storm financial investments didn't collapse, but the strategy failed and a lot of clients lost everything. The structured leveraged products didn't lose anything, but clients had to pay the interest on the loans for 6,7,8 years (whatever it was) just to get their money back.
Semantics aside, can you see the common theme amongst those poor investments.
Now, onto these property spruikers. Are they promising huge returns, are they getting paid huge commissions?
The answer is yes.
Do I think the property market is going to collapse and these investors lose everything? No, not really. I don't know what is going to happen. But I do know 1 thing, and that is, when there is a slick sales pitch and huge commissions involved, stay away.
Still think property is a good investment though?
Fine, but you can do a lot better than listening to these spruikers.
Don't listen to how they know what suburb is about to have the biggest growth (if you know anything of these spruikers, it's always suburbs with new developments because that is where they can sell newly built houses or off the plan houses for huge commission - they never tip some area where there is existing houses and you just go off and buy your own. They'll tell you the reason for buying new is because a new house is better because you can claim more in depreciation or for off the plan you can lock in the price now and don't have to actually buy it until its built - that's a good one, anyway, I digress), just go out, find a solid standing house on a good block of land (it's the land the appreciates, houses depreciate), get a low interest loan, get good tenants and a good agent to manage it, and leave it there for as long as you can, ideally 20 years +. Pretty much the same advice for any investment strategy.
