A final blow!!!

The usual applies… text in bold and italics is from The Investors Club website.

The Investors Club provides a range of services to help ensure that investing is a simple and stress-free exercise.

These services are provided at no cost to the members and include:
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This comment, and some others, are probably best addressed by including the following snippets from the MIAA Advertising Guidelines…

The misleading conduct provisions require that a business must not in its business activities engage in any conduct that misleads or deceives or is likely to mislead or deceive consumers. As well as direct advertising, the requirement covers representations made during meetings with customers, over the phone, in brochures, on websites and so on.

Advertising can be innovative, exciting and competitive; but it must also be honest, balanced and accurate.

We know accuracy is a problem. Just look at the interest rates quoted on the website. Oooops! Honesty and a balanced presentation are still being discussed.

Risks to Avoid that are Specific to the Mortgage Industry Advertising which uses the following words needs to be carefully checked for accuracy and truthfulness:

“Independent’ ‘Impartial’ or ‘Unbiased’ Advice
Is the advice being given, independent, impartial or unbiased and not influenced by factors other
than the consumer’s best interest? If a broker receives commissions or other benefits from a lender there is potential for the broker to be influenced by factors other than the consumer’s best interest.

The Investors Club receives commissions from everywhere. You decide where their true interests lie.

The ‘best’ deal
It is impossible to demonstrate, at any point of time, in the large and competitive mortgage market
that a deal is the ‘best’ deal.

Advertising should avoid such terminology and similar expressions like ‘cheapest’ or ‘lowest
rates’.

‘Guaranteed’
You should not use the word ‘guaranteed’ unless you are making a contractually binding promise, and, if so, you must make the precise terms of that promise clear. Generally, as terms and conditions are too wordy for practical use, the term ‘guaranteed’ should be avoided.

‘Free’
Is the service you are providing really free or are there other costs the consumer might incur or benefits they might be giving up?

We know The Investors Club makes commissions. Not much is free in this day and age.

Use of Charts, graphs, images, on-line calculators
Charts, graphs, images or on-line calculators, either by themselves or in combination with each other or with words, may create a misleading impression. You need to ensure that the likely audience will not obtain a misleading impression from the material as a whole.

I am told that The Investors Club uses overhead projectors etc showing charts to support their ‘claims’ regarding their property investment ideas. Surely these graphs would show the decline in value of many off-the-plan properties in recent years so the attendees can make an informed decision. I look forward to attending a presentation.

If you are making comparisons, make sure you are comparing ‘apples with apples’. For instance, it is misleading to say that a line of credit or offset account product can be paid off more quickly than a standard product if this result can only be achieved by making larger or more frequent payments. If you suggest otherwise, you are not comparing ‘apples with apples’, and may find you have breached the misleading and deceptive conduct provisions.

This equates to comparing new properties and old properties. Demand for new properties is inflated as a result of the FIRB (Foreign Investment Review Board) requirement that overseas investors can only buy new properties. We have all heard the stories of the ‘spruikers’ ripping people off overseas. If given the choice, I do not believe any international investors would buy these off-the-plan properties.
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So what exactly is provided by The Investors Club????

Provision of a detailed property investment analysis and selection of properties, specifically chosen to provide members with high returns;

I would guess that these reports are provided by the developers at their own expense and any property providing The Investors Club with a good commission would be “specifically chosen” and included. You only need to look at their website to see the “specifically chosen” properties. Then walk down to your local real estate who sells off-the-plan properties and presto!!! They also “specifically chose” the same properties…WOW!!!

Assistance with all legal documentation and tax office compliance to make the process simple and efficient;

This prevents your independent solicitor trying to snap you out of buying a lemon if they have property knowledge. This sounds like a huge conflict of interest to me.

Managing the process of finding tenants and looking after investment properties so members don’t have to worry;

How nice of them to offer to do this. Surely they are not getting a slice of the management fees that goes along with property management??? How about a cut of the upfront commission the managing agent gets for finding a tenant – usually a week’s rent??? Such a nice bunch of people offering to manage your property for you and calling it FREE!

Regular networking opportunities so members can learn from others’ investment experiences;

And so they can sell you more of these fantastic investment opportunities. I like it when I hear people call a sales presentation a ‘networking’ opportunity. It always brings a smile to my face.

Regular updates, newsletters, seminars and meetings to ensure members always have the latest, most up-to-date information;

This also ensures regular contact with clients, good marketing contact and MORE SALES!

Valuation reports and value comparisons to ensure members can make their choices with all the available information;

I am still yet to determine if these are provided by truly ‘independent’ and ‘licensed’ valuers but no members or employees of The Investors Club will speak up in support of the organisation they so dilligently support. Maybe they have been told to keep quiet. Maybe I will be sued. I am quaking in my boots!!!

Provision of a detailed financial analysis so members can do their own independent research and checking;

Hopefully a prudent ‘member’ will take this information to their own accountant or solicitor who has not been referred to them by another member or ‘support member’ for proper checking. Also, it is hoped research is undertaken on a recommended property and the area. Every property I saw on the website, I would not touch with someone else’s money!

Monitoring population trends and growth rates to ensure doubling of values quickly;

“Ensure doubling of values quickly”… this is the answer to all investors concerns. How can anyone “ensure” when a property value will double, if ever? This is totally misleading and deceptive. Does anyone actually have an off-the-plan propert purchased through The Investors Club that has doubled in the time they were told and it was “ensured”??? Anyone??????

Assistance with information about Landlord Insurance against ‘nightmare’ tenants;

I would be guessing more commission is earned here. Why wouldn’t they help.

Maintaining a large portfolio of available properties in a diverse range of areas throughout Australia and New Zealand, providing more choice and greater investment opportunities; and

It is a numbers game. The more you have, the more you sell and the more money you make. I would change “greater investment opportunities” to ‘greater SALES opportunities’ and consider it more reflective of the reason behind offering so many properties.

Assistance with developing personal wealth creation plans to fast-track financial independence.

YES…more commission here when people invest. I am still wondering who holds all the licenses and certificates required to act as a real estate agent, a mortgage broker, a financial planner, a property manager, and so on. I know it is not the ‘support member’!

The Selection Criteria

Correct property selection is critical. To qualify, every property recommended by The Investors Club is tested against the following selection criteria:

* It should be new, or near new to qualify for full depreciation;
* Lowest vacancy area;
* Preference for brick and tile;
* Excellent transport facilities;
* Located close to schools;
* Spacious in area, inside and out;
* Approved by banks and insurance companies;
* Low maintenance building and grounds;
* High capital growth potential;
* Highest building standards;
* Close proximity to shopping centres;
* Highest gearing advantage;
* Reliable body corporate management;
* Near freeways that access waterways and beaches;
* Units/town houses should be within reasonable distance to the CBD or key population growth areas;
* High employment area;
* In high demand by tenants;
* Foreign Investment Review Board qualification;
* Pleasing landscaping and setting; and
* High standard of project security and maintenance.

If their properties were to meet with all these requirements, The Investors Club would have nothing to sell!!!

Robert Bou-Hamdan
Mortgage Adviser

http://www.mortgagepackaging.com.au

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