If you’re thinking of investing in property, have you been tempted to sign up to a property investment club? You typically get a taster session free, but may then be sold an expensive course. Find out what to look for.
Property investment clubs – be sceptical about what you’re being offered
It’s important to say that not all property investment clubs work in the same way and some clubs have a number of happy clients. However, there are some things that I certainly would watch out for.
1. Listen to the language. The language is often about selling the dream rather than the realities of property investing. Those involved may talk about serious riches (see below) or say that you could make a good living just by working a few hours a week – something that makes them particularly attractive to mums who are trying to combine earning a living with bringing up their children.
SAVVY TIP: A contact of mine who has been a successful property investor for many years (and who doesn’t have a seminar/club to sell) recently went to a sign up session. He said that those taking the seminars talked about the fact they’d made so much money ‘they didn’t know whether to lease or buy a helicopter’. They didn’t actually say they could afford a helicopter, but it’s all implied.
2. Beware of any secrecy. You shouldn’t be put under any pressure to keep the club or the seminars quiet. If it’s all above board and good value, why wouldn’t you be encouraged to be open about it?
3. Don’t sign up if you’re being pressured to do so. You’re likely to be offered a free seminar and when you go, a special deal on the full price once if you sign up for it there and then.
SAVVY TIP: The ‘buy now while prices are low’ trick is an old one and used by just about every retailer in the land. However, it’s one thing buying a washing machine you’ve had your eye on for half price in the sale, it’s another signing up for a seminar if you don’t know what you’re getting for your money.
4. Ask about their track record. Ask how many properties they have got and whether they are investing their own money. Sometimes property ‘gurus’ can try and bamboozle you with figures that are hard to check.
5. Do your own checks. You may not necessarily be able to check out everything that’s claimed by the company, but find out what you can. If you do nothing else, Google them so you can find out what customers, past and present, have to say.
Are property investment seminars worth it?
What you actually get varies widely and this isn’t a guide to every single property investment seminar offered. Many property investment clubs push ‘no money down’ deals, where you can invest in a property with very little deposit.
Others say they can source property for you cheaper than you could buy it direct from the developer but in the current market when so few transactions are taking place, it may be hard to work out what the correct price should be. And some specialise in telling people how to buy property at auction.
How to make money from property
You can make money from property but it’s not necessarily easy. Here are some tips from Philip Stewardson from Stewardson properties, a successful property landlord who started investing in buy to let property 15 years ago.
1. Do your research. It sounds very boring and like it could be hard work but it’s what everyone I’ve spoken to who I respect in the property market has said.
2. Target your market. What type of property do you want to invest in and where? Who do you want to rent to?
3. Pay for professional advice if you need it. Talk to lettings agents and surveyors for background information and pay a surveyor to help you select a property if you’re not sure.
SAVVY TIP: Look at the number of ‘to let’ boards up in a certain area and pose as a tenant and ring letting agents to find out what they’re saying about properties in the area as well as asking for their opinion.
4. Don’t overexpose yourself with high borrowing. These days mortgage lenders are far more cautious and you can normally only borrow up to 80% of the property’s value with a buy to let mortgage.
SAVVY TIP: Philip Stewardson only ever borrowed around 75% of the property’s value – even during the boom times. He found it was a formula that worked for him and meant he could ride out the credit crunch.
Arla: the association of residential letting agents – represents thousands of letting agents.
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