Cautionary Tale for Property Investors: Don’t Follow the Wrong Pied Piper

There's an old adage that suggests if something appears too good to be true, it probably is.

This maxim seems to be increasingly relevant in today's world of social media and instant access to information, where quick fixes and silver bullet solutions are routinely promised to those searching for financial success.

Recent headlines emerging from Australia have served as a stark reminder that, when it comes to property investment, choosing the right guide for your journey is just as important as the journey itself.

In the news recently was the story that Sasha Hopkins and The A Team Property Group were targeted by the Australian Securities and Investments Commission (ASIC) for allegedly operating unlicensed and unregistered investment schemes.

Describing itself as “the fastest growing property mentoring company in Australia”, the firm marketed property investment opportunities online by offering clients the chance to invest personally or through their self-managed superannuation fund (SMSF) in a “joint venture” development program for purchasing and developing real estate.

Promising guaranteed returns between 25% to 50% over the lifetime of property development, these schemes attracted a considerable amount of investor money.

Yet, when the dust settled, it was discovered that not only were the investment schemes unregistered, but Hopkins and his company were also operating without the required Australian Financial Services licence (AFSL).

What followed was a misuse of investor funds, conversion into crypto assets, and now a flurry of legal repercussions including freezing orders, winding up of companies, disqualification proceedings, and claims from more than 100 investors for a total of more than $23.5 million in loans and interest.

The above story underscores the importance of due diligence when selecting a property investment advisor.

Unfortunately, the victims here were ordinary people, "mum and dad" investors, who placed their trust in an entity that proved to be unworthy of it.

How can property investors protect themselves from such unscrupulous activities

1. Choose wisely

Before you entrust your hard-earned savings to anyone, make sure they are properly licensed to provide financial services.

In Australia, this means checking they hold an AFSL.

Regulated by ASIC, the AFSL ensures that businesses or individuals who offer financial services are competent, fair, and transparent in their dealings.

2. Transparency is key

Don't just look at what your advisor is promising, look at what they are doing.

Demand transparency.

You have a right to know where your money is going and how it's being used.

3. If it's too good to be true

Returns of 25% to 50% over 18 to 24 months sound like a dream come true.

But, it's essential to remember that property investment is generally a long-term strategy.

Realistically, such returns are incredibly rare and come with high risks.

Be suspicious of any scheme promising otherwise.

Remember, there are no shortcuts to building wealth through property investment.

As ASIC's recent action against Mr. Hopkins and The A Team Property Group shows, even those who claim to be industry experts can lead investors down the wrong path.

Therefore, as you navigate the world of property investment, be sure to follow the right guides.

Choose advisors who are transparent, licensed, and realistic about the potential returns and associated risks.

By doing so, you'll be taking the right steps toward a successful property investment journey.

About Brett Warren Brett Warren is National Director of Metropole Properties and uses his two decades of property investment experience to advise clients how to grow, protect and pass on their wealth through strategic property advice.