I’ve had enough and what I’m about to say is probably going to piss a lot of people off.
But I don’t care. I need to get this off my chest, and if you’re smart you’ll read every word of this because it could make you very wealthy OR very poor.
It’s that important.
Here goes:
Over the last few weeks I’ve come across more and more people who got burnt by property spruikers.
Good, honest people like you who could become really successful investors IF ONLY somebody spent the time getting the foundations right first.
But not these spruikers.
What do they do?
They look at the numbers and if they think they can’t get a quick sale they flick the client and move onto the next victim.
It’s a quick sale for these con artists or ‘see you later’.
Then there’s the ones who flog overpriced education courses so you can ‘learn’ how to invest. So even if you can’t get a deposit together they’ll still take 5 to 10 grand out of your credit card and you’re no closer to actually investing. Actually you’re 5-10 grand further away, that’s all.
80% of the people I speak to probably won’t buy a property in the next 3 – 6 months.
I talk to a lot of people. And you know what? Most of them aren’t ready to buy yet.
But we won’t flick you off because we know with some work and restructuring the odds are you can get ready to buy later on. And that’s the difference.
We’re in it with you for the long haul. And we know we’re building a relationship with investors which go on for life.
The other companies couldn’t give a stuff about people who can’t buy today.
Some have just started self-employment.
Some have had their finance screwed up because of some dim-witted finance broker that took the easiest path to get the client finance instead of structuring the loans correctly.
Some have bought one or more properties from some greedy (or dim-witted) investment company which went DOWN in value and has to be offloaded first. And that’s painful.
The spruikers don’t care though.
No sale = no commission.
So they go back for more Facebook ads and more seminars and let’s bring in a bunch of fresh new leads … take the good ones and burn the rest.
Listen, here’s a prime example of the shit fight coming up:
Right now the Inner Brisbane market (1 – 4km from the centre) is flooded with apartments and property spruikers are still flogging it to death. If you’re in Brisbane then jump in your car and go have a drive around and see all the cranes and building sites.
Why?
Because the spruikers are getting as much as 10% commissions from some developers to sell their crap first.
These developers know they’ve got a lemon so they need to offload them fast before buyers see what else is on offer. And the spruikers go chasing the big payoff like a hungry dog chasing a bone.
On a $500,000 apartment that’s a $50,000 pay day … per deal! No wonder these twits are driving around in new BMWs. Let’s just say it’s not from their property investments.
And this is where it gets ugly.
So what’s going to happen, is in 12 – 24 months all these apartments are going to hit the market …
…at the same damn time!
It’s going to trigger plummeting valuations because of massive oversupply.
Don’t take my word for it.
Here is a typical Brisbane deal right now
The property I just saw is a 2 bed 2 bath unit in a complex of 50 listed for $550,000.
Rents are estimated at $550 to $600pw and completion is late 2017.
Sweet deal right? The broker tells them they will get an 88% loan and with 5% costs and you only need 93.5k to complete! Which isn’t hard for someone with some equity.
But here’s the killer. There’s no buffer for changes in the market or your personal circumstances.
Now here is the crunch.
Fast forward to late 2017 and your apartment is now finished … along with 1,500 within a stone’s throw of it.
And because the suburb’s now drowning in stock the valuer is shitting bricks about a fire sale causing a mini-collapse if too many mortgage holders default.
And they drop the valuation to $500,000 at most.
And now the suburb’s in an economic black hole where the normal laws of supply and demand have ceased to function.
Next the bank gets anxious so their 88% LVR is now only 80%.
That means they’re going to lend you $400k, plus you’ve still got $27,500 in costs.
You were told you’d get 88% LVR on $550k. Now it’s 80% of $500k.
So in total you need $127.5k NOT the $93.5k you were promised.
That’s $44,000 you need to pull out of goodness knows where at a moment’s notice or you’re in default of your contract.
And if you can’t find it you get massive penalties from the contract and a massive black mark against your name.
A whopping $44k EXTRA – most people couldn’t pull another $44k out of their arse at a moment’s notice! So they’re basically screwed. Another victim burnt by the spruikers.
Growth?
Once upon a time when we had steady capital growth increases in the 1980’s – and 1990’s into the very early 2000’s , expecting an increase of 8% (44k as a % of the 550k purchase price) over the 12 – 18 months was very possible.
But property isn’t doubling in value every 7 years anymore.
Most of these property spruikers where brought up on the concept of 7% for 10 years compounding is doubling the prices, and investors could get 85 to 95% lending.
It ain’t happening anymore and you need to look at having a 30% LVR before starting. Plus getting used to property doubling in 10 – 16 years.
OK, I’m done. And it’s not the pretty picture everyone is painting. But if you’re careful, buy right and you’re patient you can still become wealthy.
I’ve just realised this is a long email. But you had to know what’s going on because there’s too many sharks out there. And I’m itching to name them but I won’t because I’ll be the one who gets sued.
Listen, if you want to know how to create wealth safely and reliably without being promised false expectations of the spruikers then click here to reserve an appointment with me.
I’m going to run a webinar in the next couple of weeks as well to show you how to create wealth in real estate from here on in. Not by rehashing what worked in the past.
So keep an eye out for it.
Cheers,
Duncan
PS Make sure you do some digging around on the spruikers out there.
There’s some big names in front of ASIC right now.
One had his passport taken off him. Others are under extreme pressure from the financial watchdog.
Plenty of others who rushed into the mining towns in WA are now bankrupt.
And others still decided the US market was where the money was … and have come back penniless.
You just have to read the stories in old copies of property investing magazines to see it in action. I know who these people are and half of them are now financially screwed because they got greedy and didn’t put the proper foundation in place.
And I don’t want you to be like them. So be careful out there and only work with someone who is going to protect you, not someone who promises riches beyond your wildest imagination tomorrow.