Property investment can be very profitable over time and is seen as one of the safest forms of investment during times of crisis because of the fixed, tangible, long-term nature of bricks and mortar.
However, it’s not without its considerable downsides, risks, complications and pitfalls, and there are absolutely no guarantees that you’ll make good money from a property portfolio.
It’s also highly unlikely that you will get rich fast from property, or with no money or experience to your name, as some will promise. More realistically, it will take several years, lots of experience, good education, some luck, some skill and lots of hard work to start generating a good return from property.
Recently, there has been a rise in the number of people offering property investment training courses and mentoring, but this sector – currently unregulated, which means anyone can set up a business in this area – has been embroiled in numerous controversies and scandals of late, with many people coming forward with their negative experiences of such courses.
Some self-styled property gurus have got very rich from property training and mentoring, but how can you sort those who are genuinely trying to help from those looking to make a fast buck?
After extensive research into this area, PIT outlines its top tips to prevent investors – both new and experienced – from getting lured in by bogus operators or those charging tens of thousands of pounds for information and advice widely available on the internet for free.
Don’t be taken in by big promises
It’s human nature to be drawn in by the potential for big rewards for little effort. But the old cliché rings true here – ‘if it sounds too good to be true, it probably is’.
The language used by unscrupulous trainers will often be emotive and dazzling. “Person A now makes £4,000 a month through property” or “Person B became financially free in a day”. There will be promises of significant returns very quickly, and the idea that anyone can do it regardless of age, experience or financial circumstances.
Utilise Companies House
A great free resource that is often underutilised, it allows you to see the accounts, details and information of any company registered in the UK. In a few quick steps, you should be able to verify if the big promises made by a property training company or property mentor are backed up in cold, hard facts.
Check their business history – how many ventures are they a part of? Have they resigned from lots of companies in the past? Is their filing up to date? What do their recent accounts say? Are they overdue? Have they been a part of companies which have been struck off/dissolved and ceased trading?
You should be able to get a good idea of whether the person running the course or offering the mentoring practises what they preach. You can also check the details of those featured as testimonials or success stories in things like promotional YouTube videos. Have they really become financially free? Have they really become kings at property investment? Was it all down to the training they received?
In many cases, you will find that the reality doesn’t match up to the perception given. Individuals promoted as success stories are either not making any money from property, are no longer involved in property or have minimal profit/equity from their property investment companies, sourcing firms or joint venture partnerships.
Carrying out due diligence is vitally important when it comes to investing in property and the same should be the case before you part with any money for a property investment course or mentor.
If you’re unsure, or something doesn’t smell right, it’s best to err on the side of caution.
Weigh up whether it’s worth the price
Some property investment trainers and mentors will charge extortionate amounts for their courses – anywhere from £10,000 to £15,000. That is a huge sum of money that very few people will be able to muster easily. If you would have to take out a loan to cover these costs, or use all your savings, or take other financially risky decisions to afford this, you might want to consider whether it’s really worth it.
What can be so special about these courses that mean they are costing so much? What magic ingredient do they have?
Some will argue that the best property training and education doesn’t come cheap, and will be paid back many times over when the money starts rolling in from property deals. Some might argue that university costs £27,000 these days.
But that comparison doesn’t really stack up, when you consider it’s spread out over three years, only starts to be paid back when you’re earning a certain amount of money and is written off when you hit a certain age.
The £15,000 property investment course is highly unlikely to work on such terms, or to offer grants and other funding to help pay for it.
If you need to put yourself into debt or financial difficulty to afford a property investment course, it’s probably time to think again. The lure of financial freedom might be dangled before you, but what if you don’t make a success of property very quickly? You’ll still have the debt.
Check on their reputation
Before you decide to embark on a property training course or pay for some one-to-one mentoring, do your research. Google the company or individual offering the course or mentoring. What are their reviews like? Have they been involved in any major scandals? Have they been featured in the news – local or national – in a negative way?
This might make you think twice about their motives. If you find more bad stuff than good out there, this might be a further red flag.
Beware of ‘passive income’ promises
The big pledge from many property investment training courses and mentors is that people can become financially free – sometimes in a matter of days or weeks – by replacing their current income with passive income from property, and therefore never need to work again.
One of the main methods they promote as a way of achieving this is rent to rent, which is very much not passive income as it requires a lot of work on behalf of the investor, who effectively becomes the landlord of the property and responsible for tenant management, maintenance, tenant sourcing and a whole host of other things.
People may have moved from their normal job to rent to rents, but it still involves hard work – and in some cases more work than in their previous role.
Genuine passive income is hands-off income that comes in each month without you having to lift a finger, and that is very unlikely to be achieved fast when it comes to property investment.
The star factor
While many of those offering property investment training and mentoring are likely to be outgoing and extroverted by nature, alarm bells might ring if the person offering the training or mentoring is all about the brand, the cult of personality, and the likes and subscribes on their social media channels. Do they seem most interested in fame – good or bad – and self-advancement?
Is the trainer particularly boastful about their appearances on television or in the media, or famous people they know or have met? Do they have a history in the entertainment industry? Are they a frustrated actor or singer? Are they relentlessly self-promotional and giving you the hard sell on their courses or mentoring?
They are also likely to regularly remind you that they are highly successful – a millionaire or even a multi-millionaire – thanks to property, while implying that their training is the way you can achieve this too.
If you feel you are constantly being sold to in quite an aggressive way, you might ask why there is a strong whiff of desperation if the person is already a millionaire and insists they are doing the training out of the kindness of their heart to simply spread the wealth.
If a property investment trainer is making more money from their training courses than property itself, this should be a red flag that they are more interested in taking your money than using their ‘expertise’ to assist you in property investment.
There is plenty of free stuff out there for people to educate themselves on the basics, challenges, risks and potential rewards of property investment. Sites like Property Hub, for example, offer a huge range of educational resources, podcasts, videos, blogs and training materials at no cost, while well-populated forums like Property Tribes also provide a pragmatic, realistic introduction to property investment and its potential pratfalls.
We know that most investors will already be aware of the signs to look out for when it comes to questionable property investment training and mentoring, but for anyone getting into property investment for the first time, it’s vital that you do your research and due diligence beforehand.
Property investment is almost never a get-rich quick scheme, and won’t be something that everyone will be suited to. If someone is telling you otherwise, and insisting that you can become very rich very quickly through property in just a few simple steps, you may want to double check their credentials first.