By guest contributor Gerald Tay
There are many myths about doing property deals. Most contain a grain of truth – and a lot of misinformation. Several printed advertisements and mass emails in the past couple of years have been claiming that one can invest and own properties with no money down. One advertisement even claims you can make millions of dollars with no money down in just 24 months!
Essentially, the advertisers would run a free seminar to induce participants to sign up for their property courses that come with very hefty fees in the thousands of dollars to learn their “Secrets of the Experts” property strategies that any average investor could apply with success. These advertisers would also sell you overseas properties on a No-Money Down scheme and claim they come with high returns.
Legit Scheme or Scam?
The biggest question for a property investor is always about creative financing, i.e. how can I put a deal together with little or no money down? To be honest, in almost any property transaction, a decent amount of money would have to be put down, including stamp duties, legal fees, renovation costs and other upfront fees. Of course, for any property investor, the big dream is “No money Down”. Although in theory it sounds very attractive and might just be doable, the truth is most average Singapore buyers will never see the opportunity to do it in their lifetime.
These “property gurus” use the same tactics that lottery ticket sellers use – they promote the one or two people that succeeded and neglect telling you about the bad side of the deal and the near certainty of you not turning a profit. Maybe that’s why they should be termed “seminar gurus” rather than “property gurus” because they are more adept in making money from selling books, CDs, seminars and workshops to participants, rather than applying these theories on their own to make money from their actual investments.
Just because it’s possible doesn’t make it probable!
The term “No Money Down” simply means 100% financed, by other people’s money, i.e. the deal is financed by someone else’s money for the down payment. It requires tremendous leverage and a very high degree of investor knowledge and expertise to pull it off profitably.
My late multi-millionaire grandfather would be laughing out loud from his grave if he knew such self-proclaimed “property gurus” existed to promote such a questionable investment strategy to the average buyer in today’s highly volatile property market.
My family owned businesses and real estate developments, both overseas and Singapore. We owned several properties in the prime districts as well as commercial buildings in the central business district of Singapore. We were also property developers ourselves and have built terrace houses and apartments in sub-urban areas. All these were financed with the help of banks loans and cash from other businesses, which were all painstakingly built up by my late grandfather over four decades! Never had he ever mentioned that one can buy properties on a “No Money Down” scheme, certainly NOT for the average Singapore retail buyer.
Would you like to discover “Secrets of how to own properties with little or no money down?” or “How to own three properties with just one property?” The “gurus” will have you cough out thousands of dollars just to attend workshops or seminars that teach questionable investment techniques, claim you can own properties with no money down, pepper you with lots of crappy motivational talk, then sell you properties at the end of the workshop saying you must take action now and can soon be millionaires upon graduation.
Would you like to know WHO is really making the millions? Is it you or those seminar providers who charge hefty course fees? (e.g. $3,000 X 30 participants = $90,000 X 12 times a year, or just once a month = $1.08 million in revenue!)
In the next article, I will share some “No Money Down” techniques often marketed by self-proclaimed “gurus” and what risks they pose for the average Singaporean buyer. Till then, always invest with your head and not your heart!
By guest contributor Gerald Tay, CEO and Chief Trainer at CREi Academy Group.