Get-rich-quick property seminars make a comeback
Soaring house prices have resulted in the return of promises to make you millions - at a price
Some companies sell seminars and courses for thousands of pounds Photo: Alamy
By Emma Lunn
Soaring house prices and new freedoms for savers to dip into pensions in retirement has set the perfect backdrop for the return of two notorious sales ploys: property investment clubs and "wealth creation" seminars.
"Ever wanted to get into property investing but didn't know where to start?" reads an advert in one newspaper, "then this seminar is for you."
A mailshot bleats: "How to get started in property with just £1,500 and 10 hours per week."
Other email marketing is more mysterious: "How to develop an entrepreneur's mindset," says one, while another has, "A candid, personal letter to you" in the subject line. Both lead you to people flogging property seminars, courses and mentoring.
Welcome to the world of property investment education. It's as if the recession never happened – anyone can be a property millionaire by this time next year, so the self-styled gurus say.
Some companies offering this kind of investment education purely teach. They sell seminars and courses, often for thousands of pounds. Many lure you in with a freebie or cheap course then "upsell" a more expensive programme.
Property investment clubs, meanwhile, persuade people to hand over their cash so it can be invested in bricks and mortar for them. They often make tempting promises of impressive yields and guaranteed returns. The trouble is, many fail to deliver on their promises or don't have the assets to back the guarantees.
"Property investment clubs often over-promise, underdeliver, go bust or disappear," said property expert Kate Faulkner, who runs propertychecklist.co.uk. "I'd recommend not touching most of them with a barge pole."
One thing property investment clubs and educators are good at is marketing. Watch for buzz words such as "financial freedom", "passive income", "armchair investing" and "below market value". Some talk about "no money down" deals and "creative finance".
If you think all this sounds familiar, it is. In 2007 buy-to-let seminar firm Inside Track ran property seminars selling supposedly discounted newbuild flats in association with sister company Instant Access Properties. Thousands joined up, paying four-figure sums for the presenter's expertise before ploughing more of their money into flats yet to be built.
Arguably many people did well out of their involvement with Inside Track and built profitable portfolios. But in 2008 both firms went bust leaving many investors nursing losses of anything from £50,000 to £500,000. In many cases the newbuild properties they bought were overpriced. Values fell further during the downturn. Other properties were left unfinished or with a rentable value well below promised levels.
There are some honest seminar presenters out there with the best of intentions; the problem is recognising them among the sharks. Property investment clubs and seminars are unregulated, so anyone can set one up or take part.
Take 121 Invest. It offers free seminars featuring various property experts telling tales of success. Salesmen then try to persuade delegates to invest in flats at developments around the country. Raj Shastri is one of the guest speakers. But Mr Shastri is also known as Raj Von Badlo and admitted to The Telegraph that he is currently bankrupt. "It's a long story, nothing to do with property," he said.
Mr Von Badlo also faces charges from the Financial Conduct Authority, the City regulator, for his part in an unauthorised Forex trading scheme.
Phil Martin runs a property investment training programme called Millionaires Together at £2,500 a head. It says it will show you how to "turn your love of property into cash and secure your financial future".
Mr Martin's previous company Rapid Property Buyers Ltd went bust in 2010 owing a substantial amount to investors. He also went into personal bankruptcy around the same time. The Telegraph tried to contact Mr Martin last week but he did not respond.
If you are tempted to join a property club or fork out for a course, start with a web search.
Vanessa Warwick, founder of property community Property Tribes, said: "Put the company or individual's name into Google, followed by 'scam' to see what comes up. You can also use DueDil.com to check a company's financial health and research its directors' track records. A history of failed companies or adverse credit warning should be a big red flag."
By law, firms buying or selling property for others, or introducing someone to a property deal, need to be registered with a property ombudsman scheme. So check that they are – this will give you a redress route if things go wrong.
"Don't pay large sums of money up front," Ms Warwick said. "Never pay for promises; only for results. Insist on the main bulk of any fees being paid on completion of the property deal the first time you work with a company."
Investors should also ensure the company has both client money protection and insurance in place. Avoid firms that can't prove so. Many so-called experts also talk of "secrets" they can reveal. But Ms Faulkner said this was marketing spiel.
"Making money from property is not complicated," she said. "You're better off speaking to auctioneers, finding a good Rics surveyor and watching the market. Look at which properties on which roads rise in price faster than others and wait for something to come up. My golden rule is never buy a property if you haven't seen it."
Think twice before remortgaging your home for further property investment or using companies that insist you use their in-house solicitor or mortgage broker, she said.
"I wouldn't go near a property investment club that doesn't insist you take independent financial advice and tax advice," she said. "If you are going to remortgage your house, make the decision with an IFA who will act in your best interests."
Savers in or approaching retirement should see property investing as a medium to long-term project that should have begun years ago. To live from property income in your 60s this must, in reality, be the case.
Landlords and property owners can also be tripped by disputes with tenants, voids, maintenance costs, interest rate rises and any future changes to the tax regime.