I share some savaging stories in my book, How to Jump into Property Without Being Eaten By Sharks about spruikers and marketeers. One particular story about a company headed up by a nice enough gentleman who seems very charitable, shows pictures of him in fancy houses playing with expensive toys and preaching a ‘ten houses in ten years’ philosophy (which I don’t always agree with by the way).
I saw his seminar in 2014, he presented a slideshow quoting the 17.4% growth experienced in Sydney for the previous 12-month period. He then decided to extrapolate that out to the opportunity he was offering… buying an investment property in Brisbane for $450,000. His slideshow showed what would happen to that $450,000 property if it also grew by 17.4%. You would make $78,000 in your first year. Then he said, “Imagine if you bought two properties in your first year? You would make $156,000 in year one.”
He then mapped out the same for year two, year three, four, five and six and bingo, you had 12 properties and had made $1 million, plus had a portfolio worth about $8 million. Sounds easy, doesn’t it? What a shyster! Really!
The problem here is many people fall for this and there are no consequences for the marketeers, just profits. If things go bad or the economy falls backwards and housing market drops, he has no consequences. He will simply say that this was market forces outside of his control. How dare he stand in front of a hundred people and use a single year of a Sydney growth boom to convince the audience that they could expect 17.4% growth every year for six years
It has never happened yet and unlikely to ever. It’s just not how it works. Property prices go in cycles.
Fortunately, while we have such significant population growth over the next 30 plus years, we can expect consistent property price growth and this it should outweigh standard inflation pressures. It actually averages around 8% per year so still pretty darn good but certainly nothing like 17% per annum.
There are many things to take in to consideration when buying an investment property.
We can spin the stories of several other we know either on the Gold Coast, Brisbane or Sydney. Some focus very heavily on apartments and townhouse market. We cover more of this in our book – How to Jump into Property Investing Without Being Eaten By Sharks (grab your free copy here).
Some of the guys out there doing off-the-plan apartments probably need to be locked up but we guess that is not fair because surely some are doing fair product at fair price – well, sort of.
There is a big firm in Sydney who mostly focus on the local Chinese buyers. We have seen their product. It is overpriced, but not terrible. They offer a professional service and neat as a pin programs. However, still far from a great wealth creation type product.
You could buy from them and still make money over time but just imagine if you bought great property for all the right reasons. How good would that be?
It would be remiss of us not to tell you that a certain business that died in 2016 and left owing the council over $1 million and many, many mum and dad investors in a lurch. They hit the papers for doing all sorts of shonky things like sending pictures of finished properties to their clients and their banks to prove partial completion when in the end they were actually pictures of DIFFERENT properties.
The guy heading it up lives on the same golf course as me so very close to home indeed.
How some of these people get away without doing prison time escapes us but often they do. He was selling properties in regional areas such as Darwin, Mackay and Warwick. All places that have their positives but in reality, not the smartest type of product to set up a strong wealth creating portfolio.
Our suggestion is to always do your research, make sure you’re comfortable and always go with your head AND your gut. If you’d like to discuss your personal situation feel free to contact us on firstname.lastname@example.org or read one of our more popular blogs below:
How to know which property type suits your strategy best.
What kind of property to buy and why?
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