Beware: Property Scams and ‘Wealth’ Creation Seminars

Nigel is one of those blokes that you meet, shake hands with, and forget his name as soon as you let go.

He is totally forgettable.

When I met Nigel a few weeks ago, one of his clients agreed: “I’ve spent all day with him but I keep losing him – then I realise he’s standing right next to me.”

But being totally forgettable is a wonderful trait in Nigel’s game.

He’s a former policeman who left the force a decade ago and became a private investigator. Now he chases financial crooks on behalf of lawyers, journalists, and angry consumers who’ve been ripped off.

His specialty is exposing dodgy property promoters. Business is booming.

“Today I’m working on behalf of a couple that’s been ripped off by a property spruiker,” Nigel tells me.

“The spruiker tipped them into a dud development, then backed away from it when it all went pear shaped.

“The only way the spruiker could get themselves off the hook was by unloading their share of the deal onto their loyal seminar attendees. Many of those who’ve taken their advice will be ruined. Some will end up losing their family homes.

“I swear these wealth-creation gurus do more damage than any of the crooks I locked up when I was a copper. They’re smiling, slimy scumbags, the lot of them.”

Nigel tells me that he must have dealt with hundreds of slick spruikers – and they all share a number of characteristics that should sound warning bells to would-be investors.

Here’s how to smell a rat:

A Hunger For Credibility

The currency that many seminar hucksters crave is credibility. After all, they’re asking strangers to trust them with their life savings.

That’s why many will resort to publicly associating themselves with a charity – often they’ll use it in their advertising material.

Another way that wealth gurus gain our trust is by spouting about how wealthy they are – often accompanied with visual aids like a red Ferrari. Says Nigel: “Red Ferraris are made for short, fat, bald Italian men – and property seminar spruikers – and these vehicles are usually leased.”

He then tells me of a couple of guys who took it to another level:

“A few years ago I was investigating a couple of get-rich-quick promoters, and they’d conjured up the ultimate credibility puller: they worked out that any Australian could be nominated for Australian of the Year – so they did just that”.

One-Stop Scam Shop

Probably the biggest sign of a scam is when you’re in a property deal where the mortgage broker and the conveyancer are supplied by the salesperson. It’s a one-stop financial shop designed to speed up the signing of the contracts.

Nigel told me about an elderly husband and wife who were stung by this method:

“They bought an investment property on the Gold Coast for $680,000, and were told that if they hurried they’d be entitled to a $50,000 discount – which involved having all the paperwork prepared by their guys.

“Two years later, that same property was independently valued at $385,000. The broker and the conveyencer were paid about $30,000 each – which they got by jacking up the price of the property.”

Mind Games

Hyped-up wealth-creation seminars are so clichéd it’s amazing that thousands of people still flock to them.

Nigel reckons that during the biggest asset bubble in our country’s history literally tens of thousands of people have been suckered into buying inflated properties, or getting involved in other dodgy deals.

“The scary thing is that there are a lot of people who’ve been stitched up on these deals but haven’t worked it out yet – the penny only drops when they have to sell. And with the state of the market right now, people are starting to come unstuck right, left and centre.

“And when they work out they’ve been scammed, really their only recourse is to fight the spruikers through the courts. But that’s the problem. The spruikers who ripped them off understand that all they have to do is drag out the legal proceedings – after all, they know the person is going broke.”

Don’t Get Scammed

Nigel tells me there seems to be a new property spruiker hitting the scene every other week. But thankfully they’re easy to spot. They aren’t that smart, and tend to follow the playbook that Nigel has outlined. But just in case, here’s how to protect yourself:

Beware of anyone throwing around figures of how rich they are. In contrast to these shonks, Paul Clitheroe is a very wealthy man – but you’d never hear him talk about it. He didn’t become Australia’s most trusted financial advisor because he’s a multimillionaire, but because of his integrity.

I’ve never met a reputable financial advisor that offers a one-stop investment shop – from sales to contracts. Never.  That’s why it’s important that you always seek truly independent advice, together with an independent valuation. And if anyone talks to you about an investment strategy that takes the equity out of your home, run.

If you find yourself at property seminar, at least take along a card and play some bulldust bingo. Watch out for anything with the word ‘secret’, ‘OPM’ (other people’s money), ‘renting your shares’, ‘it’s only for a limited time’, ‘have the taxman pay off your property’, ‘the BRW rich list got there by investing in property’, ‘multiple streams of income’ or ‘property doubles every seven to ten years’.

And finally:  it sounds simple, but in this technological age sometimes your strongest ally is Google. After all, most of these sharks have had something written about them – and a large amount of the research has been done by our mate, erm, what’s-his-name-again?

Skip the scam and manage your money using my straightforward and independent advice here.

Tread Your Own Path!