Scott
Reply: 1.1.1.1.1.1.1.1
From: Mike .
Re: Scott, where did you get this info???
From: Scott
Date: 6/20/00
Time: 7:16:53 PM
Darren
At least they are admitting to the amount of commission they take...they never used to! They used to lie and say that they receive the standard REIQ commission...
We were sucked into buying one of their properties a few years ago. I was so swept up in their 'system' and the potential profits that I became a Support Member. When I discovered how unethical they were and how much 'cream' they were skimming off the top I quit. It kills me to see so many unsuspecting people being sucked in by groups such as this.
Some of the other things to watch are:
- Undisclosed Up front and Trailling commissions received from the finance providers.
- They suggest that they will source the best loan for you...in reality they source he best loan for themelves...the one that pays the greatest commission (normally Westpac or the non-bank lenders, such as Qld State Home Loans)
- Their 'No Tenant, No Worries' scam is just that - a scam!. There is nothing that guarantees that they will pay your rent if the place is not tenanted. I know of two people who had their payments stopped after a number of months - It nearly bankrupt one of them. This particular Investor was going to persue Lisson Pty Ltd (trading as The Investor's Club) through the courts. I don't know the result of this action.
- They say that they negotiate a price with the developer by determining the annual rent and then dividing that figure by 6.5% (it used to be 7%, then 6.75%, now 6.5%). What they don't tell you is that their rents are usually exagerated....the properties DO NOT rent well.
- I currenly rent a property from an Investors Club 'Member'. I found a property that had been on the agent's rental lists for over 6 months and approached the owner (the developer still owned it). He indicated that the property was being marketed through the Investors Club. I offered him $40 less than the $280 that the Investors Club was telling Investors that it would rent for. He agreed. He handed me a cheque for $2080 ($40 x 52 weeks). My lease stated a weekly rent of $280, and I pay $280 per week. The developer insisted on it being done this way so that the Investors Club could market the property to members and state (incorrectly) that the property was rented at $280 per week for 12 months. This is one of their 'tricks'. Unfortuneately they were able to sell this property to a member...I managed to turn away at least 10 of them.
- They will tell you that Townhouses and Units are the best investments to buy because of their low maintenance, high depreciation levels, etc. This is not where the money is though...the real money is in buying something that can be turned into townhouses or units....why do you think they are doing it?
- When the lender (usually their selected lenders) send a valuer out to do the valuation they try to have someone from the Investor's Club there to oversee it. If the valuation comes in below the purchase price (which it often does!) they insist on another valuation. If that one comes in above the contract price they insist on another valuation...and so on, until they get a valuation they like. The poor Member never gets told about these 'revaluations'. I would imagine that if people knew that they were having trouble getting a valuation you would have second thoughts about the investment!
I think that the Investors Club and other organsiations like them are an easy way to get into IP's, but you don't learn anything...You pay a premium for their services....and many years profits are eaten up....why would you do that?
If you are not comfortable enough to go out and do the work yourself, then you are not ready for property investment. Go out and learn more....but don't get so caught up in learning that you never actually go out and buy!
I am not going to bag them anymore...I've got better things to do with my life. But one other piece of advice for you......DON'T BELIEVE ANYTHING THAT THEY, OR ANYONE ELSE (INCLUDING ME), TELLS YOU. USE THE INFORMATION THAT YOU GET AS A STARTING POINT FOR YOUR OWN RESEARCH.
If you need any more info feel free to email me.
[email protected].
Scott