Property investment is not a get-rich-quick scheme: Margaret Lomas

In every book I have ever written, I’ve outlined the various schemes and scams which are on offer for property investors. Just as I think I’ve come to the last of them, new ones emerge and property investors must remain ever vigilant to ensure that they are not trapped.

A few months ago, Arthur emailed me to tell of his discontent with a service for which he had paid $15,000. He was somewhat sheepish in admitting that, while he sees himself as astute and careful, he had been swayed by the promises of this company, the head of which had written a book and so had acquired some credibility in the property industry.

In a nutshell, Arthur had been promised one-to-one mentoring that would significantly accelerate his investing success and, as these companies often promise, launch him into millionaire status in a short timeframe. Through a succession of workshops and telephone meetings, Arthur would be provided with the secrets he needed to realise his dreams of wealth.

Of course, as you have probably guessed, Arthur quickly discovered that there are no secrets, and after attending a number of unenlightening seminars and receiving a few rushed 15-minute mentoring calls, Arthur’s disillusionment was complete. He had discovered that his mentor was probably only a few steps ahead of him and had no secrets to tell at all, apart from the stunning revelation that he needed to find property with growth of more than 12% per annum!

Well, of course, that would be lovely, wouldn’t it? If only we could all just pluck areas that will return 12% per annum, every year, then we’d all be rich in a short period of time. But the truth was that this company, like so many others, was making millions from the mentor fees of investors just like Arthur, and its own property portfolio is likely the result of this windfall, rather than their own investing prowess.

You most likely read this and think that you would be less gullible than Arthur, but I know for a fact that Arthur is intelligent and enquiring. He’s just really busy, and the chance to have someone, whose  marketing is brilliant, do the hard work for him made him vulnerable to their promises and easily led in that instance. Luckily for Arthur, he was able to have his fees refunded, but not without a considerable battle in which all manner of legal action was threatened. In the end, it was quietly settled, meaning that this company lives to rip off more people like Arthur.

I am not for a moment suggesting that you should not seek a mentor, or even pay for good quality education. I am suggesting, however, that as there are no secrets to be revealed, such mentoring and education should represent value for money and be provided by people who truly have the runs on the board. I know of several experts who have vast experience and skills in the area of property investing, who also provide value-for-money courses and assistance, and who are genuinely in the business of helping others, rather than being in the business of amassing their own fortunes.

Margaret Lomas is a best-selling author and writes and hosts the popular Property Success With Margaret Lomas and heads up the panel on Your Money, Your Call, both on Sky News. This article is an excerpt from her latest book, Investing In the Right Property Now. For more information about the book, click here. Tomorrow Margaret will outline self-managed superannuation scams to avoid.