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While there are regulatory boards and local councils across Australia, property investment remains a widely open industry susceptible to different kinds of spruikers and scammers. So, how do you avoid dealing with the ‘sharks and cowboys’ of the real estate industry?
The Property Mentors’ Matthew Bateman and Luke Harris have invested in property for around two decades, building multimillion-dollar portfolios throughout the years.
According to the duo, one of the most important lessons that they've learned is the importance of constant vigilance.
While there’s a lot of good to be gained from the industry, investors must always be careful about the ‘sharks and cowboys' that lurk in every cycle.
Mr Harris said: "The sharks are circling around, looking for somebody that's got some money ready to invest and they'll get a bite when they feel it suits them to get a quick sale and a quick commission."
"Then, there's the cowboys who are blatantly going out there, flogging anything and everything.
"The sharks and cowboys are really out there and they come and go. In any property cycle, you'll see them come and go," he added.
The ‘bad guys’ of property investment continue to thrive in the industry because of budding investors who look for ways to get rich quick, according to Mr Harris.
Usually, these ‘sharks and cowboys’ hold events and seminars that promise to help you get big returns on your investments. While these events are not meant to be high-pressure, the hyped-up energy in the surroundings is likely to inspire rash purchasing decisions.
They can start showing you floor plans with theater rooms and swimming pools and then before you know it, there are already finance professionals convincing you to buy, a person with a clipboard waiting for you to sign and a credit card machine waiting for you to swipe.
Mr Harris said: “There will be people standing on chairs and patting each other on the back and jumping off. You will get excited about that stuff, thinking, ‘Wow, this is really cool,’ then you rush to the back of the room and sign up.”
Before making big investment decisions, the seasoned investor strongly encouraged everyone to take a step back and reflect on why they actually want to invest in property.
While there are people who get lucky and see significant growth within short periods, at the end of the day, property investment is a long-term journey that requires careful planning, with no foolproof shortcuts.
According to Mr Harris, these ‘sharks and cowboys’ can be avoided simply with the right mindset.
He said: “In the 21st century there are a lot of scams that you need to be careful of. Just Google it and find out.”
“At the end of the day, it’s about creating a long-term relationship. It’s not about getting in and making a quick buck and getting out,” the investor concluded.
Tune in to Matthew Bateman and Luke Harris’ episode on The Smart Property Investment Show to find out more about protecting yourself from bad investment decisions.