The Tribe's guide on how to avoid becoming property "shark bait" ....

[Vanessa]

As we are all aware from the Get Rich Quick thread, there are many sharks in these property waters.

I therefore ask the Tribe's assistance in compiling the ultimate guide on how to avoid becoming shark bait.

This thread was inspired by the increasing number of posts appearing on other forums of people describing how they have lost thousands of pounds to unscrupulous clubs, schemes, deal sourcers, etc.

If you yourself have been bitten by a shark i.e. lost some money, maybe you could let us know the psychological reasons why you parted with your hard-earned cash at the time. What was it about the marketing, presentation, or sales copy that disconnected you from your common sense?!

To get the ball rolling, here are my:

Top 10 Ways to know there is a shark in the water

1. BIG, BIG CLAIMS: "we've made hundreds of ordinary people millionaires, we're doing hundreds of deals, we're holding millions of pounds worth of property, we're doing 20 deals a week .....". Take it all with a gallon of salt.

2. PROMISES OF GET RICH QUICK/NO EFFORT INVOLVED: "it takes no effort, become a millionaire in one year, it's No Money Down with £25K cash back, we do it all for you, all you need to do is sign papers, Joe Bloggs started with £500.00 and now he has 600 properties ...."

3. A WEBSITE THAT LOOKS LIKE IT WAS KNOCKED UP AS PART OF A SCHOOL PROJECT: if the company is as wealthy and successful as they say, then surely they would have a professional website that reflected their brand?. Look for spelling and grammar mistakes as these are a major indicator of a non-professional organisation IMHO.

4. ARROGANCE: when asked to supply in-depth information, asked challenging questions, etc, these sharks tend to turn aggressive and try and bully you.

5. INCONSISTENCY IN THEIR STORY: Many of these sharks change their story to suit whatever they happen to be doing, or whoever they happen to be preying on. Do due diligence on line and check that their story is consistent.

6. PROMISES OF "SECRETS", "A SECRET SYSTEM" : there are no "secrets" in property investment. All the information is freely available on line. There is no secret system for creating wealth from property other than hard work and educating yourself how to do so.

7. SPECIAL OFFER TODAY/EXCLUSIVE PROGRAMME/ONLY A FEW PLACES LEFT: In the current economic conditions, no one can afford to turn down business. The above are just ploys to make you think that it is urgent to part with your money. Sharks often talk of you "missing out" if you don't book on, buy the deal NOW etc.

8. LARGE SUMS OF MONEY REQUIRED UPFRONT: You should never pay for promises. You should only pay for actual results. Be extremely wary of handing over large sums of money upfront. At the very least, the shark should get you vetted for lending purposes before taking your money. Once a shark has your money, it is very unlikely that you will ever see it again.

9. YOU HAVE TO USE THE SHARK'S BROKER AND SOLICITOR: By law, all property transactions have to be transparent and subject to full disclosure. On that basis, you should be able to use any broker or solicitor.

10. SHARKS ASSOCIATE WITH OTHER PEOPLE OF A BAD REPUTATION: With the transparency afforded by the Web, you can see who is "in bed" with who. Check out if the company is working with someone who has a bad/poor reputation. This reflects badly on them. See who's schemes they are an affiliate of, see who they promote or network with. These are all indications of the values of the company or person.

If you come across any of the above signs, my advice is swim like crazy!

I look forward to the Tribe adding their views to this thread.

[REI]

You can also consider things from a different perspective.

When checking out a deal Do Your Own Research (DYOR). That means testing any claims or statements by getting independent verification. Similar to when a journalist at a reputable publication is checking sources and verifying the facts. You need to know the information provided is accurate so you need to check with sources that are independent. Use common sense and make sure you have more than one way to verify info.

Build your team of advisors. The formal type and the informal type.

For formal advisors you need people like accountants, solicitors and others who work for you. Folks you have come to trust or who are recommended by someone who you trust. You are paying the advisors so pick good ones and make sure they are focused on your needs.

The informal advisors can be people you meet on a forum. Ask questions and then listen to the responses. Assuming you have enough people contributing to the discussion you should get a range of replies. Do focus on what people share publicly as some will want to discuss privately rather than share in an open fashion. In many situations the "contact me by email" is a lead to a sales pitch rather than unbiased sharing.

John Corey
www.ChelseaPrivateEquity.com/blog
Follow me on Twitter -> www.twitter.com/john_corey

PS. One last thing. To avoid being shark bait learn to exercise some self-control in terms of getting your credit card out of your wallet. I have less trouble with sales people making limited time offers from stage than I do with people in the audience who let greed cloud their judgement. When someone on stage tells you they bribe estate agents and fail to report cash income should that not be a sign that the speaker is a crook? Assume the speaker is also taking advantage of their student given their stated business ethics. Put another way, if the speaker thinks it is OK to act with criminal intent when dealing with the HMRC, fleecing some money from students is a piece of cake.

[Susanne]

if it sounds too good to be true - it will be - guaranteed

[nick tadd]

Sharks can strike from anywhere ...! LOL

N

[Vanessa]

What about promises of HIGH RETURN/NO RISK? There is no such investment!

[Richard Greenland]

What about googling their name or their company name? Or doing a search using their name on this site or on singingpig for instance? What sort of comments do these people attract? positive or negative?

Watch out for long promotional emails where you have to scroll down and down, with lots of BIG RED CAPITALS or large text highlighted in yellow, and in a slightly breathless style. Strange but for some reason many of them seem to emanate from the same hype factory. They also are very reliant on client endorsement, in place of hard facts, evidence or figures. If they do make quantifiable, verifiable claims, then check out the references!

I have also seen ‘comparables’ (other properties supposedly of a similar type and value) quoted to ‘prove’ that a particular property is (for instance) 30% below market value, when they are not true comparables at all! The props quoted are not even on the same street, or the prices quoted are ‘for sale’ prices rather than actual prices someone paid (not the same thing at all!)

Also I would say, ask yourself if you are really the kind of person who has the drive and courage to promptly and committedly use the information gained from seminars and courses. Most people who pay out for these courses never put what they have learned into practice, and all the knowledge in the world is as nothing if not used for good. It’s no use to think you will use it in a year or two’s time. If you don’t go into action almost immediately (say within a week or two), you probably never will. And anyway, in a world of rapidly changing financial regulation, the info soon becomes stale.

On a personal note, I have never spent more than a nominal sum (about £100) on any info, and I never will, unless I am convinced that the info cannot be gained free from public forums such as this. I have yet to find compelling evidence that such info (‘secrets’, ‘insider knowledge’ etc) exists. It’s all here! Just ask! (The only reason I paid the nominal sums was to expedite rapid acquisition if a particular subset of info quickly and all in one place – ie to save time.)

Offers of entry, or courses ‘Half-price – but only if you buy today, right now!’ is a very old high-pressure-sales gambit. Ignore it! Anyone who isn’t prepared to give you time to think about important financial decisions doesn’t want you to think. Walk away.

And do the sums, do the sums, do the sums! There are no such things as ‘passive investments!

Rich

[Marcus]

Richard Greenland said:

What about googling their name or their company name? Or doing a search using their name on this site or on singingpig for instance? What sort of comments do these people attract? positive or negative?

So true, I googled that Spencer Michael insect recently and found negative information on him going back several years. Problems is, what's obvious due dilligence to us, for some reason, is not to others. In my mind it's not a question of intelligence but more a question of street smarts. It's a mindset that I have difficulty understanding, why would anyone hand over several thousand pounds to a person with a Cheshire Cat grin and sweaty palms?

Watch out for long promotional emails where you have to scroll down and down, with lots of BIG RED CAPITALS or large text highlighted in yellow, and in a slightly breathless style.

There's a sales technique going on here that I just don't get. I must be wired differently because I find them patronising, obvious and I HATE them.

If you don’t go into action almost immediately (say within a week or two), you probably never will.

Jeez... that's a bit strong. My brain wouldn't be able to assimilate 'an industry' within a week or two let alone put it into practice. I'll change that to putting the information learned to good use by actively researching within a week or two. By that I mean moving away from just reading course materials to picking up the phone and 'interviewing' people. I did a course in September last year and gave myself until January before I would consider anything. The poxie financial markets, two close shaves with the dark side and two delayed promises later mean I'm yet to earn a penny - yes, I am looking at other angles. David taps into my thinking here.

The only reason I paid the nominal sums was to expedite rapid acquisition of a particular subset of info quickly and all in one place – ie to save time.)

Move over Shakesphere, there's a new gun in town, majestic.

Best wishes

PS: If any of this information has been useful to you then would you kindly forward a cheque to me for £101 :-)

[Richard Greenland]

Hah hah hah yes ok!

After I went to bed last night I realised that bit about ‘a week or two’ could be misinterpreted. Yes what you say is exactly what I mean – what Bruce is doing now over on his blog in fact. That’s what comes of drinking a bottle of wine while attempting to write intelligently!

Regarding doing expensive courses, I wouldn’t want to say they are always poor value, far from it. Altho they undoubtedly vary hugely in quality. IMHO it depends how relatively cash-rich and time-poor you are. A genuinely informative course could be a way of accessing a lot of info very quickly and avoiding unnecessary or irrelevant diversions. I know Rhett and Vanessa have both done such courses and benefitted hugely as a result. But that comes back to what I was saying before – namely – are you the kind of person to put the info to good use promptly? They both did, that’s why it was good value for them.

Rich

[REI]

Richard Greenland said:

Hah hah hah yes ok!

After I went to bed last night I realised that bit about ‘a week or two’ could be misinterpreted. Yes what you say is exactly what I mean – what Bruce is doing now over on his blog in fact. That’s what comes of drinking a bottle of wine while attempting to write intelligently!

Regarding doing expensive courses, I wouldn’t want to say they are always poor value, far from it. Altho they undoubtedly vary hugely in quality. IMHO it depends how relatively cash-rich and time-poor you are. A genuinely informative course could be a way of accessing a lot of info very quickly and avoiding unnecessary or irrelevant diversions. I know Rhett and Vanessa have both done such courses and benefitted hugely as a result. But that comes back to what I was saying before – namely – are you the kind of person to put the info to good use promptly? They both did, that’s why it was good value for them.

Rich

Richard,

We are of similar minds when it comes to courses. Here is what I have learned over 25 years.

Unless the course is complete junk it has value. The problem is the student. The student is the only one that can unlock the value. If the student wants to go home after a seminar and drop back into the day to day route then the seminar was largely a waste of time. It could be free or it could be expensive in terms of cash value. It really does not matter what someone has paid.

Given the size of the typical real estate deal, it is entirely possible that one deal could cover the cost of even an expensive course. Hence a seminar that provides one idea that is then applied could be entirely self-funding if the student pulls their finger out, gets off the couch (couch potato) or what ever phrase you like.

The biggest block in any real estate investing career is the investor's attitude.

As Dolf reminders the audience last Monday, your altitude is limited by your attitude.

John Corey
www.ChelseaPrivateEquity.com/blog
Follow me on Twitter -> www.twitter.com/john_corey

[Marcus]

Rich said: A genuinely informative course could be a way of accessing a lot of info very quickly and avoiding unnecessary or irrelevant diversions.

Absolutely agree, well put.

John quoted Dolf: Your altitude is limited by your attitude.

Genius!

[Vanessa]

Sharks only tell you the positives, never the negatives, the potential pitfalls etc. This is crossing over alot with John's sharkbait thread!

[Mary Waring]

Vanessa
I loved your piece, and agreed with all of it. I’m particularly cross with anything that suggests you can become a property millionaire by doing very little work and then, hey hoy, overnight you’re worth a million!
The normal adage applies. If it looks to good to be true it probably is.

It is possible to increase your wealth by investing in property. But only after doing your research and then putting in the hard work. Basically, owning a property portfolio is the same as running a business. You wouldn’t start a busienss just having been on one course & then expect it to make you a millionaire overnight. So why do people think it’s possible with property?

Courses can be very useful to get you started and give you the information that you may spend hours & hours searching for otherwise. But if any course suggests you can be seriously rich overnight from investing in property the only people getting rich are those charging you a fortune to tell you this.

Mary Waring
www.marywaring.co.uk

[Adrian Standing]

Talking of fish, someone posted a rainbow trout through the letterbox of one of my properties today!