If you have attended an evening property networking meeting it might be that you have run into some dodgy promoters. If you use the various property forums and Facebook groups focused on property investing, you will definitely have heard their names mentioned. Maybe you have even met one or two directly.
Normally, they are just ordinary people who started out with dreams for wild success. At some point along the way, they found out it was hard work and decided to cut a few corners. The more short cuts taken, the more they required dodgy practices to continue.
Some of this you will recognise as none of this is new. Rogues will fail to accurately and truthfully disclose the facts requested by the lender (mortgage fraud). They suggest you can get HMO proper-ties with BTL loans. They offer eye-watering returns to private Joint Venture partners (illegal fi-nancial promotions). And they sell-on sourced deals which are packaged for hands-off investors. The numbers will rarely hold up if you do your own thorough due diligence.
Property investing does attract more than its share of the rogues because the potential profits are large enough to attract the ‘bottom feeders’. These people want to do the least amount of work for the most money before they move on to their next scam.
The centre of the universe for scams has to be portfolio building. There is almost a perfect mismatch between the ‘supplier’ of the Portfolio Building Service (PBS) and the newbie investor with cash. Constructing a portfolio which runs well is difficult. Investors who have successfully created their own portfolio normally took a fair bit of time to get to a self-sustaining level of success. They have the scars to verify that the path to success is not often smooth or predictable. The newbie with cash generally wants to avoid all the hard work, the delays and the time commitment. They think they can outsource the hard part. The supplier of the PBS sells the dream with an upfront cash commitment being the only requirement. Payment before delivery. Many who get into the portfolio building business really do believe their own BS. It perhaps worked for them at some level so now they think they can ramp up and offer the service as a hands-off package to armchair investors.
