Get rich quick schemes – #1 of the top 7 Critical Mistakes (Ep.31)

We all love the idea of a get rich quick scheme. Just imagine planting some money, growing it in abundance and next week you’re off on holiday… indefinitely.

Most of us understand that in reality, that’s not how things work.

In fact, get rich quick schemes are commonly a great way to lose your money.

In episode 31, we discuss “Get rich quick schemes”- #1 of the top 7 Critical Mistakes.

Listen as David Johnston, Cate Bakos and Peter Koulizos take you through the schemes to look out for, why higher returns demand higher risk and why if it sounds too good to be true, it probably is.

Listen and subscribe

Apple        Android

Show notes

  • If you want to get rich quick, be prepared to get poor quick as well. With higher returns, comes higher risk.
  • Can you hear the alarm bells? Common get rich quick schemes we come across are: granny flats, flipping, subdividing, buying a bargain, hot spotting, mining towns, picking a boom town and the list continues.
  • Beware of the ‘free education’ seminar – it normally comes with a hard sales pitch to buy something off the plan. This should not be in your plan. On top of this, purchasing via an SMSF has been pedaled in more than one occasion.
  • Making poor property decisions is a huge risk, you often don’t know if you’ve purchased a lemon for many, many years after.
  • Shares may be a better choice if you want to make a quick buck. You can trade on a daily basis and it could only cost you $50 to buy and sell. When you purchase and sell a house, there is stamp duty and real estate agent fees to pay each time. Money down the drain quickly adds up to put you in a worse position than when you started.
  • Development – you can optimise your return if you sit on the land for a long period of time. You make the most money by putting as many dwellings as possible on as small a parcel of land. This is a massive process to manage and dealing with a simple renovation is stressful enough. If you want to start on the development journey, view your first development as a learning process.
  • Don’t go from 0 to developer – start with an investment property, buying and renovating to sell and build your way to development. Learn while you’re doing it. Make sure that you keep yourself educated and informed.
  • One size fits all – is not for you. If you are receiving property advice on a great way to make money, but the advice is given by someone who doesn’t understand your situation and circumstances, this is a sign to run away. Advice should be independent and targeted specifically to you.
    Where can you find independent advice – someone who is a ‘Qualified Property Investment Advisor’ is a great place to start. The property game is full of rogues.
  • It’s a conspiracy! Be equally as weary of government schemes, they often provide a benefit to purchase a certain type of property. This is for a reason, there is less demand for that property, probably because it doesn’t make a good investment.
  • Get rich quick with cash flow – brand new apartments have that shiny appeal and you’re being sold a cash flow dream. But what if your property is untenanted in a sea of identical apartments? What if rent does not increase as is pitched? These come with guaranteed rentals which are not reliable, tax benefits which may not stay as is and growth which performs at the same rate as established properties in the area.
  • Airbnb and other short-term rentals – on the radar for future regulation because of the negative impact on supply and rent.
  • The Property Professor’s hot tip – If you’re going to a seminar, leave your cheque book at home.

David Johnston – The Property Professor’s Golden nugget: let’s talk granny flats! If this is something you’re interested in building, ask yourself these critical questions. What is the quality of the tenant likely to be? What impact will the granny flat have on the type of tenant in the existing dwelling? What happens if they do not get along? What does it do in a negative way to the value of the property at the front? How much will it cost to build? How long will it take you to recoup that value from the extra cash flow? 

Cate Bakos– The Property Buyer’s Golden nugget: if it looks too good to be true, it probably is.  

Subscribe to “The Property Planner, Buyer and Professor” Newsletter

By |2020-02-05T13:30:54+11:00January 28th, 2020|
Stay Infront of the Property Market

Sign up to our newsletter