Can a property ‘masterclass’ really help you make a fortune?

Virtually every day now, for well over a year, my office mail has been swamped with letters galore from mystery groups kindly informing me of all the hassles of property management and asking if I would be interested in selling properties for a good price. Mixed in with these are other letters enquiring if I would like to remove the hassle of managing larger houses by someone else taking them over and paying a guaranteed rent.

The senders of these letters are people I have never heard of, who are usually neither from companies nor operating from office premises. The letters come in a great variety of forms – some attempt to appear handwritten and personal, others fall over themselves to quote knotty points of legislation and strive to appear professional. I have transferred literally hundreds of them to the paper recycling, always vaguely wondering who on earth these people are.

But the other day I happened to attend a property investment seminar and picked up a free copy of a popular guide to property investment. Turning its pages, all finally became clear. The great idea of the book was that an investor should seek out “motivated sellers” (an interesting euphemism for people so desperate to sell they will accept a cash sum well below market price). The buyer will then quickly leverage the property at full market price to enable more purchasing. By this cunning technique, the book proposed that anyone could build up a £1 million portfolio in next to no time at all.

The tricky thing, clearly, was finding these elusive “motivated sellers” in the first place. What caught my interest were the means proposed to find such veins of gold. Many of us may have spied the odd advert in a newsagent window proposing “properties bought for cash”, but the writer of the book suggested the hungry investor might need to lodge adverts in 500 shop windows to really be effective.

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Searching for ‘motivated sellers’

Databases of property owners should also be researched, the books suggested, and thousands of enticing letters sent out. Exhaustive online methods of searching for “motivated sellers” were also described. I even discovered that some people apparently do such trawling as their chief profession, selling their promising “leads” to investors who have the cash to invest but not the endless time to pan for gold.

Putting the book down, I finally understood why I was the recipient of so many hundreds of generic letters from disparate sources – it seemed all the senders had also read such books and believed they too could make their fortune by putting such speculative advances into action.

The book also intriguingly suggested you could make a property fortune without having any investment capital at all. The key, it enticingly argued, was to find people with large houses who would allow another person to lease the property in exchange for guaranteed rental income. Having gained control of the asset, the person leasing it would then rent it out to as many people as possible for a much higher total rent, pocketing the difference without tying up any capital of their own.

You might not be surprised to read that I am pretty dubious about some of the investment techniques encouraged in such books. For one thing, I can’t say I’m a fan of people investing in properties they know little about, rarely visiting them and entrusting its management to an agent. It’s often a recipe for the worst type of absentee landlords and property neglect.

Personally, I like to keep a more watchful eye over property, though I’m not disputing that some people may have made handsome profits here, there and everywhere by relieving “motivated sellers” of their assets.

Most suspicious

But what makes me most suspicious of such investment techniques is that invariably the people promoting them are attempting to sign up the reader for various expensive seminars and “property masterclasses”, that also attempt to sell various other property investment packages, including legal assistance and insurance. If the techniques are so successful, you might wonder, why does the guru just not get on with it himself, rather than wishing to spread the word far and wide?

At this point, a crafty sleight-of-hand is played in which the guru claims not to be motivated by money, but to have a passion for communicating and improving people’s lives with his wisdom. Just sign up for my 10-week course now. . .

I’m not entirely averse to the idea of property investment as a form of self-help. I think many people can feel more psychologically grounded and secure once they own property. Investing in property can also put people on a sound financial footing for the future, and sometimes transform people’s fortunes.

But there is sometimes a fine line between seeing something as a form of self-help and sliding into a quasi-religious form of belief. People who insist “the property market will always rise” or who think paying thousands of pounds for “tutelage” in spurious forms of property investment seem to have slid from the realm of self-help into the clutches of a self-advancing church run by false pastors determined to fleece them.

It’s not entirely clear to me whether the people sending me hundreds of speculative letters are crafty, sharp-as-a-tack hustlers or just the duped devotees of the world of “property masterclasses”. What I do know is that, as with any gold rush, the people making the real killing are the ones selling the shovels, while peddling dreams of gold to the prospectors in them thar hills.

Damian Flanagan is a property investor, writer and critic