Beware of “Do It All For You” Investment Companies

I received an email from a listener to the Real Estate Show and I thought I would share it with you….

“I have been introduced by a friend to a company that will do all the work for me with my next investment property (I already have 2). They will find it for me and even guarantee the income in the first 5 years. It looks too good to be true. Any advice?” Sten Mitchell, Caboolture

My response:

While there is nothing wrong with most of these companies, you must remember that if someone is doing all the work for you: giving advice, finding a property, getting finance, securing a tenant and then likely managing the property as well; then it is reasonable to assume you will be paying for these services.

I don’t like giving total control to anyone. I always like to make up my own mind about where my money will be invested. Sure, listen to advice but then you decide on where, what, how and when you will invest.

If you are going to engage with one of the ‘do it all for you companies’ then here are some questions you should ask first.
1. Do you sell your own stock? – Potential conflict!
2. How do you source the property you recommend? May not be as well researched to achieve the best result!
3. Can you show me a breakdown of the costs involved (upfront and ongoing) – including any commissions to you? Sometimes if it looks too good – it usually is!
4. Do you have a financial interest by way of partnership with the builder, developer, sales agent or property manager? More potential conflict – you need to make sure they have YOUR best interest at heart!
5. Do you guarantee the return? Big danger that you could be paying too much. Returns are underwritten for a period (1 to 2 years) to make the investment look good!
6. Is the guarantee underwritten by you or anyone associated with the transaction? Refer previous point!

I also suggest a good check of their ‘on line’ presence – their website. Make sure you can see who is behind the company. Who are the owners and what are their credentials. If you can’t find the person or company heading it up, then there might be a very good reason why they are not identified.

Be careful, stay involved and make your own decisions.

Kevin Turner | RealEstateTalk Host
Property Academy CEO Selling your home without an agent
[email protected] | Twitter: @Realestatetalk