Scott Pape: Beware of real estate spruikers

IF you regret signing up at a real estate wealth-building seminar, be aware that the spruikers will often refund their “problem clients” if they make enough noise, writes Scott Pape.

Full length of young businessman screaming into megaphone over white background

DIANNE: My husband and I recently went to a real estate wealth-building seminar. At the seminar they showed us videos of poor people becoming rich — and my husband was sold. So he signed up to receive training and books which will cost us $12,000 over a two-year payment plan. I’ve tried to stop the payment but they have started calling my husband and threatening that they’ll give him a bad credit rating. How do we stop them? We’re just not wealthy enough to pay this type of money. What can we do?

 

BAREFOOT SAYS: What would I do? I’d tell your husband to fix it, that’s what I’d do. It’s been my personal experience that many of these seminar spruikers will often refund their “problem clients” if they make enough noise, and if they then promise to go away quietly. Whether you get back your money or not (or cancel your credit card, and take them on), the most important thing is that you don’t do any of their training. One of these companies charged $25,000 mentoring fees in 2012 and urged investors to splurge on properties in Moranbah and other Queensland mining towns. The average house price in Moranbah today is half what it was three years ago.

 

BEATING THE BANKS ISN’T HARD

DORIS: I am so very grateful that I came across your writings some time ago and please note — I’m listening. I have had a gutful of the Big 4. We are nearly at the end of the process of refinancing our mortgage to an interest rate much more viable — down 0.91 per cent — which, if we repay it in the planned 10 years would save us a whopping $23,660. Thank you for getting us focused so we could make the time and effort to actually make the change!

 

BAREFOOT SAYS: Great stuff! After my column last week — where I challenged people to switch instead of bitch — I’ve had a heap of emails from people who have used my script and bagged a better deal from their bank. For anyone else thinking about saving the equivalent of an all-expenses-paid European holiday, you should ask for a variable loan of 3.99 per cent. And don’t forget to send me an email when you win.

 

STEP BACK AND TAKE A BREATH

LINA: I’m a 52-year-old single mother of a teenager. After a recent serious illness, and questionable future work, I decided to sell my home. A huge $420k mortgage was just too much for me to handle. I sold my property within three weeks, but due to the current market in Mt Martha I could not consider buying back in. I have a small profit of $300k. That’s my only money now in the world, and I need to do something with it — property investment or bank shares?

BAREFOOT SAYS: You’ve just gone through a serious illness, you’ve sold your family home, you don’t have a steady job, and you’ve got a teenager to look after. It’s time to take a deep breath. You’ve bought yourself some time. So take it. If you were my mother, I’d encourage you to calculate what six months of living expenses was, and have you put that into an online savings (Mojo) account. Then I’d suggest you put the rest in a 12-month term deposit. Then, over the next 12 months I’d encourage you to do three things: first, and most importantly, get back on your feet health-wise. Second, re-skill and find a stable job that you can see yourself doing for the next 10 to 15 years. Finally, I’d read my column each week to get a feel for the lingo, and book in to see a financial adviser from your low-cost industry fund, and investigate what options you have for investing through your superannuation.

 

LET’S NOT FORGET ABOUT THE MEN!

MICK: I read your article about domestic violence and its effect on women financially and I’ve now seen so many questions about what women should do when financially abused. It’s not always the case though is it? I know a lot of women who have complete control over the household money and their husbands are forced to lie, hide, and even have a secret account just so they can buy themselves something! Let’s be fair.

BAREFOOT SAYS: You’re absolutely right. There are women who make their husbands’ lives a misery with money. However, I stand by my original comments: I’ve never seen a couple become closer by keeping their money separate. It almost always leads to trouble. I’m not Dr Phil, but here’s my thoughts: if you’re married to a crazy, all bets are off.

barefootinvestor.com

Originally published as Scott Pape: Beware of real estate spruikers