Recently, I received many messages from my blog followers asking me to comment on some social media ads promoting free property seminars and investment schemes.
When the market is dead quiet, it is not surprising to see frequent appearance of such ads.
Although Singapore’s real estate market is licensed by CEA and regulated by URA, cleaning up of the industry still has a long way to go. To the public, property is still very much a cowboy industry.
If developers and marketing agents can play tricks of exaggerating new sale numbers, cover up with returned units without being caught, we can’t avoid property agents mislead buyers with deceiving property deals and crowdfunding platforms.
Tis the season to be fooled again
These property tricks and gimmicks are nothing new. They have been in the market for the last ten to twenty years. Reuse the same catchy phrases and recycle similar sales tactics and here we go again.
Trick #1: Get-rich-quick
Secrets of owning multiple properties with no money down. Invest with other people’s money. Rare opportunity with x% return …
Investing the conventional and conservative way – with patience, discipline, hard work and due diligence – is damn boring. In our highly efficient world that promotes instant gratification, who doesn’t want to get what we want with the press of a shortcut key?
I have talked about these get-rich-quick schemes in my book No B.S. Guide to Property Investment. They tend to over-simplify the whole thing with hidden implications and issues that are not told.
Trick #2: Free seminar for sharing
Interested to make easy money or curious to know more? Come and attend a free seminar where profit secrets, smart strategies and success stories will be shared.
But there is no free lunch in this world. Under the right atmosphere, attendees are upsell to a thousand-dollar intensive seminar or a crowdfunding investment scheme.
Trick #3: Celebrity endorsement
Investment legend Warren Buffet and property tycoon Li Ka Shing build their wealth using the same strategy. Singapore and Malaysia’s richest men in the Forbes list use the same secret to build their wealth. Celebrities XYZ have retired early to focus on the same investment that is the next big thing.
The truth is: The rich and famous are conveniently enlisted as the spokespersons to endorse these property investment tricks, except they don’t even aware of it.
Trick #4: The next big thing
As what I said in my blog post “The best kept secret in this market”, many scammers make good use of hip words of future technologies to sell their financial products. They claim their ventures leverage fintech and blockchain platforms which everyone agrees is the next big thing.
Fintech and blockchain will definitely take over the world in the future. But they have absolutely nothing to do with whatever these people are selling.
MAS did issue “buyer beware” warnings to caution investors on suspicious fintech, proptech and blockchain platforms. But there are new ones coming up every day and old ones can easily return with a new name. We just can’t catch all of them.
How the tricks make the poor poorer
Sky-high property prices and restrictive buying rules present a favorable environment for the breeding of these shady investment schemes.
Who are the likely targets?
Of course they aren’t the pros of the property investment world. The resourceful buyers have ways to work around the property rules. The well-to-do have private bankers to help them finance their deals. The investors can spot the gems in the market and they laugh at these so-called “undervalued properties with x% return”.
Property investment is reserved only for those with the experiences and means. The rest can hardly afford to play the property game. They feel left out.
These property investment tricks come in handy to meet the need in the market. They immediately make the unaffordable affordable and upgrade the ineligible to be eligible. This is what marketers call expansion into new markets.
How difficult is it to engage an overseas developer, help them market an off-plan project to local buyers, and take a cut from the sale?
How difficult is it to find a commercial property, rent it to a partner above the market rate, and convince buyers to invest together to get a high return of x%?
After investors buy their share of ownership, the property agent earns the commission and is totally out of the picture. Then the “tenant” decides to move out, leaving investors frantically searching for a new tenant who is willing to pay the market rate.
With negative return, it is also impossible to offload their shares to other investors. The victims are left holding the hot potatoes.
What these ignorant investors fail to realize is: Investing with a group of average Joe doesn’t lower the risk. On the contrary, it complicates the investment and amplifies the risk.
As a minority owner, you are not owning multiple properties. You are multiplying the uncertainties of all these investments.
Another tick is the promise of extra high return which is out of this world.
If someone tells you that an investment scheme can pay you 10 or 20 times, ask yourself these questions: How do they do it? How do they do it continuously? How do they do it during market downturn?
There are many hidden implications and risks that are not shared openly with investors. Soon they will be unable to honor the promised payout. And you can be sure that they can only do it two ways: go bankrupt or run away.
– Property Soul, “Useful tips to unmask the wolves’ sheep clothing“
No matter how they package it, a trick is still a trick. When the magic trick is revealed, there is nothing impressive about it. And the magician plays the final trick of a vanishing act.
These schemes are all designed to make the poor poorer. We don’t have to wait till they are put under MAS alert to know the truth.
“Just because you don’t understand something doesn’t make it a good investment … the words ‘new venture’ sound to me like a loan that will never get paid back … They want your money, pure and simple, so they’ll have a chance to make money.”
– Donald Trump, Trump: Think Like a Billionaire
Why do they share the secret with you?
When smart scammers want to cheat your money, they like to pretend that they are doing you a favour. You are the lucky few to learn about the scheme. Only if you can make up your mind to take action now.
Fear of missing this “now or never” opportunity to strike it big, you will be easily hooked on and follow the herd obligingly.
Rather than helping you to make money, they are simply asking you to give them your money so that they can make money.
There are tons of online sponsored ads on get-rich-quick tricks, millionaire wealth secrets, stay-at-home earn passive income, etc. They are nothing but risky investment schemes and sheer gambling bets.
If the investment ideas are so brilliant, why are they not sold to institutional investors? Why would the marketers care to sell to retail investors like you and me?
– Property Soul, “Helping you make money with your money”
What these victims fail to see is: For all these rare gems and one-a-lifetime investment opportunities, it is not difficult to co-own and co-fund with family, relatives, close friends or business partners. Why do they take the hassle to go all out to disclose such secret deals with people they barely know?
Till this day I have yet to know anyone who really became a millionaire by joining any unproven get-rich-quick program or investing in any high-return overseas venture.
And I personally have not met any successful investor who lets slip of what new business opportunity he is currently exploring, except for the few partners he trusts.”
– Property Soul, No B.S. Guide to Property Investment
Like other savvy investors, investment opportunities and hidden gems are very personal and we exchanged notes with very close investor friends only.
Let me summarize three reasons why people won’t hold back their best kept secret and voice it in public.
Reason #1: When they are representing their company or their client, and receive their pay, reward and commission from them.
Reason #2: When they themselves are also following the herd, like parrots repeating what everyone is saying.
Reason #3: When they are being possessed, not by the bank after declared a bankrupt, but by some supernatural force or evil spirits.”
– Property Soul, “The best kept secret in this market”
The weakness is in us
If only the victims can look carefully, it is not difficult to see through these dirty tricks. The scammers are making use of our curiosity, ignorance, greed and fear.
All internet scams appeal to human nature’s four biggest weaknesses – our strong desire for wealth, health, sex and success. Subconsciously we are desperately longing for these things. So when marketers tell us they can make the impossible possible, we choose to believe them.
That explains why scams are all about high return investment, cure to chronic or incurable diseases, and solutions to weight-loss, rejuvenation, sexual stamina and accomplishment.
Let me emphasize again the seven important tips to avoid being scammed.
1. Be less trusting and more cynical. Be suspicious when approached by strangers, especially those who cold call.
2. Be ready to challenge any story you are told, especially if it sounds improbable. Look at the details and think about where there is a catch.
3. Be wary of seemingly free advice. Someone usually ends up paying so make sure that person isn’t you.
4. Be particularly wary of any scheme that offers guaranteed high returns. If it sounds too good to be true, don’t even think about it.
5. Be prepared to miss out rather than take a risk. Don’t let the scammer play on your vanity.
6. Don’t feel you have been left out when friends boast about great schemes they have joined.
7. Never rush into an investment. The more you feel pressurized, the more you should resist.
– Property Soul, “Useful tips to unmask the wolves’ sheep clothing“
We don’t need to attend useless thousand-dollar property seminars that teach nothing much but end up selling us an overseas property. But we can’t deny the fact that serious property investors always want to have proper and structured education in real estate investment. I am not the only one who is considering going back to college for a part-time course of the subject. But I am not sure whether I have the time and energy for assignments, group projects and exams.
Good news. Mr. Ku Swee Yong, who lectures on a part-time basis in the Singapore Management University and the Ngee Ann Polytechnic, has kindly agreed to customize a course for property investors like us on “Property Investment Finance and Profit-Risk Analysis”. The full-day workshop will brush up our skills in three areas:
1) How to analyse key data to make better property investment decisions across different sectors and countries;
2) How to evaluate profitability and risks of property investment options based on economic and financial models; and
3) How to value and finance properties using methods available in the market.