There are plenty of different types of property scams, some of which you will have come across in markets and on street corners.
The three-card monte, flipping cups, and finding the coin under one of three cups are all examples of how con artists steal your money.
If you’ve ever been the victim of one of these games, you’ll have walked away with lighter pockets and feeling a little dumber.
That’s bad enough, of course, but small change when compared with how much the big scams can cost you. Property investment scams can quite literally cost you your home.
The thing about property scammers and the scams they perpetrate is that both are believable.
Anyone who has ever been caught out by a property scammer is a person who never knew the scam existed, or could be said to have acted ‘naively’ by placing all their trust – and often all their money – in the hands of the scammer. They were attracted by the promise of huge returns, and the ‘evidence’ of massive profits being made by investors.
If you know what the different types of scam are and the signs that should set the warning bells ringing, then you’ll avoid becoming another property scam statistic.
- Rule One, of course, is that if something appears too good to be true, then it probably is.
- Rule Two, is to become cynical, and investigate every opportunity before investing.
No-one can guarantee you won’t be exposed to a property investment scam, ponzi or bad business model, but after meeting 100's of people and them telling me about the investment that went sour, I see three things emerge:
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- It was an ethical investment that just didn’t work out…this does happen.
- The clients knew it was too good to be true but they really hoped this was the one… it never is.
- It was a masterful scam, intentionally fraudulent and they got duped, even with a great deal of due diligence and research they probably would still have been duped.
- We cannot do much about
- We definitely can and this is 80-90% of the scams I think, and
- We just have to learn from it and move on
The problem with property scammers is that they are hard to prosecute and even harder, if not impossible to get the money back.
Property Fraud Fact Box
How to Avoid Property Fraud, a Ponzi Scheme or Bad Business Model by Brett Alegre-Wood
This book is not about the negative and I don’t want to scare you off investing, the majority (over 99%) of investments don’t fit into the category of a scam, Ponzi or bad business model. It’s just that the scams make the headlines.
So read this with the thought of adding in the little checks and balances into your process. I believe the key is to research upfront, before you invest, it seldom works afterwards.
Part of becoming a great investor is creating a systematic process for investment that covers the possibility of scams, Ponzi's and bad business models in property or any investment.
And I still feel the best advice is: if it seems to good to be true, it probably is, no matter who is promoting, celebrities or sportsmen, no matter how many guarantees they are offering.