We all know that money doesn’t grow on trees; and the last thing we need is to be conned out of our hard earned cash. With the growing number of scams out there, you need to be wary and vigilant to avoid becoming a victim. Strangely enough, those who are often most at risk of such scams are people who are financially savvy, as this target group is more likely to be open to the idea of investing in the first place.
Property investment can be a great way to gain long-term financial success. However, not every opportunity is profitable, or even legitimate. Unfortunately there are a number of people who make a living from clever property investment scams that serve to con the public out of their cash.
The first step in avoiding becoming a victim of a scam is learning how to recognise one…
Tip #1: Common sense:
The old saying still rings true that “If it sounds too good to be true, it is too good to be true”. Always remain slightly sceptical when it comes to any promises of high returns on your investment in little or no time. Scam or not, high returns always mean high risk.
Tip #2: Research:
When an investment scheme sparks your interest, be sure to do all your homework and research every detail of the proposal:
- Which company is making the offer?
- What is that company’s history?
- What is the company’s record or background?
- Who are the directors?
- What are their backgrounds?
Just as the internet makes it easy to scam people, it also makes it easier to spot a scammer, as a simple Google search can help you with your research into the offer. Be wary of company websites that have only been running for a few years, even thought the investment company claims to have been in the business for “decades”.
You can also speak to people you know who are frequent property investors to see if they have any affiliation or experience with the proposed investment scheme or company.
Tip #3: Be wary of email offers:
People who promote property investment scams often use the vehicle of email to entice investors, so be wary of anything that arrives in your inbox. Also be wary of telemarketers, as they are cheap to use for property scammers. Remember that reputable investment opportunities will never use telemarketing to promote their product.
Tip #4: Dig deep:
You need to look deeper into the property investment scheme to determine how exactly you will make money out of it. If the deal is very complicated, this is all the more reason to do so.
Tip #5: Going offshore:
If the investment scheme is offshore, investigate tax laws in that country and make sure that the investment is legal. Offshore investments can be a red light in a property investment scam, so be very wary of offers of this nature.
Tip #6: Take your time:
Remember that you have no obligation to invest your money. Property investment scammers often apply pressure to the investor and try to get them to sign in a hurry. This means that the investor won’t be able to do the necessary research and investigation. If the investment backers seem to be in a great hurry, your best bet may be to run quickly in the opposite direction.
Tip #7: Careful who you trust:
An “affinity fraud” is the name given to backers who use your race or religion to create some kind of affinity with you, and they pretend to have similar beliefs and culture. They get you to trust them, before hooking you into a scam.
Some con artists will actually pay you out some money at first, gaining your trust and gaining new investors. As they have enough victims, payouts will soon dry up and they will make off with their ill-gotten gains.
Tip #8: Professional assistance:
Before you sign anything, enlist the help of a financial advisor or accountant to go over the paperwork and have a lawyer read the terms and conditions and other relevant documentation.
When in doubt, visit a financial advisor at a recognised financial services provider. If anything, they will be able to provide you with alternative, legitimate investment schemes that won’t leave you high and dry.