The 7 Tell-Tale Traits of a Shonky Real Estate Investment Guru

I played an interesting game over the weekend.

It’s called – “where are they now?”

You see... I sat with a friend who’s been a real estate educator almost as long as I have, and we pulled out copies of the now defunct Australian Property Investor Magazine dating back almost 20 years.

Then we looked at all the so-called property gurus who offered advice over the years and wondered where they are now.

This came about because of a recent $18 million fine imposed by the courts on a property spruiker for misleading consumers by claiming people could buy a house for $1 have been fined a record $18 million.

Now in the interest of full disclosure and transparency I’m a property professional who’s written 8 books, published more educational articles than anyone else in Australia, my Property Update blog has been voted the #1 real estate website in the world in 2017, 2018 and 2019 and the Michael Yardney Podcast ranks amongst the top Australian investment podcasts on iTunes.

Clearly I believe strongly in the value of education and mentoring to help increase the chance of success in property.

And there are many other very good professionals in this industry, so it hurts my industry when naïve investors fall for shonky real estate gurus.

And boy has there been a continual conveyer belt of “gurus” that have come and gone, along the way taken innocent investor’s money or misleading them to invest in the wrong properties with disastrous financial results.

So, here are 7 signs that your property "guru" who keeps sending you emails could be shonky.

1. They brag about their achievements and talk themselves up

Many of those failed gurus featured photos of themselves with their nice cars – often red sports cars.

Now I have owned nice cars for years – but you don’t know what they were – do you?

The minute a spruiker starts mentioning how successful he or she is, how big their property portfolio is or shares the rags to extraordinary riches story my alarm bells go off.

2. They claim that their “secret” will work for you

Of course, the secret is there is not “one secret.”

And how can they know if their formula will work for you without having taken an in depth look at your personal circumstances.

There are simply too many variables involved in property success.

So avoid all those spruikers' offers that appear in your inbox  claiming they'll pull back the curtain and reveal their insider secrets to the select few who go on to buy their expensive courses.

3. They don’t warn you of the risks or the possibility of failure

All investments come with an element of risk.

So when you’re told of “guaranteed methods” run in the other direction. And fast.

There is no “sure thing” so a true proper advisor will also recommend risk mitigation strategies such as the right ownership structures, the right finance strategy and financial buffers, insurance and correct asset selection.

4. They say you can get involved in property with little or no money

Even if you could buy property with “no money down” the big problem is that if you haven't yet developed the money skills to save a deposit, you shouldn't be take on the financial commitment of property investment and recommending you do so is irresponsible.

5. Their testimonials sound too good to be true

You know what they say… If it sounds too good to be true, it probably is

Over the years many of the so-called gurus have been taken to task by ASIC for making false claims about the students’ success.

6. They pretend to be mentors, when in fact their aim is to sell you a property

I strongly believe in the benefit of mentors.

I still have business coaches and mentors in many areas of my life today.

And I have mentored over 2,500 investors in the last 12 years through my Mentorship Program.

This is the point where many say “even Tiger Woods has coach” or “you can read a lot of books about flying a plane, you probably want to coach with you the first time you go up.”

Some of your mentors may be virtual – you'll only read their books or blogs or listen to their pod casts, but in my mind to get the best out of a mentor you need to pay for their time to give you personalised, individual advice.

But it’s the shonky mentors who couch their property marketing activities as mentorship programs are the ones I'm suggesting you avoid.

7. They suggest you can amass a large property portfolio in a short time

You’ve heard the claims…7 properties in 7 years or 10 properties in 10 minutes.

While this may sound tempting to beginning investors it’s just too hard to build a significant portfolio of investment grade properties quickly.

I’ve seen too many failed investors buy a number of secondary properties in cheap locations and then get stuck with an underperforming portfolio that sucks up the money.

And worse still they can’t sell up without making a significant loss.

Why do they get away with it?

It’s interesting… most of us think we’re rational, but we’re often irrational when it comes to money.

It seems we’re so desperate to find that “secret”, the magic bullet to financial success and we’re so keen to have our wishes granted by a financial genie, that we’re prepared to believe the unbelievable

American investment columnist Jason Zweig, explained that there “is a gigantic pool of people out there who want to believe in the unbelievable. They want to be told that they can beat the market.”

He went on to say there are three ways to get paid for your words:

1. Lie to people who want to be lied to, and you’ll get rich.
2. Tell the truth to those who want the truth, and you’ll make a living.
3. Tell the truth to those who want to be lied to and you’ll go broke.”

The bottom line

There are some great professionals out there who provide real education for property investors.

Don't get me wrong, I believe education is extremely important for investors. It's a critical step in the investment journey that many failed investors leave out.

So my message is be wary of smooth talking real estate gurus with promises that sound too good to be true.

Instead do your research and be very careful who you take your advice from.

WHAT CAN YOU DO TO STAY AHEAD?

As all the signs point to a turning point for Australian property over the coming months, independent professional advice and careful consideration will be as important as ever in navigating Australia’s varied market conditions.    

This will be the best time to buy counter cyclically in Melbourne and Sydney for well over a decade and a fantastic time to right the property wave in Brisbane, so if you’re looking for independent advice, no one can help you quite like the independent property investment strategists at Metropole.

Remember the multi award winning team of property investment strategists at Metropole have no properties to sell, so their advice is unbiased.

Whether you are a beginner or a seasoned property investor, we would love to help you formulate an investment strategy or do a review of your existing portfolio, and help you take your property investment to the next level.

Please click here to organise a time for a chat. Or call us on 1300 20 30 30.

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About Michael Yardney Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media.