Real Estate Investments – Protect yourself!

They’re everywhere – ads in the newspapers, on billboards, radio commercials – I’m talking about real estate investment opportunities. “Up to 18% interest!”, “12% annually!”, “RRSP eligible!”

Flags to look for at real estate investment seminars

Real estate investment companies may invite potential investors to a “seminar” which will include a motivational speaker, an investment expert, or a self-made millionaire who may give advice on investing and will explain how investors can get involved.

The real estate investment/trust fund might be promoting above average returns with little or no risk. Remember, no investment is risk free – and that is especially true with real estate.  No one can forecast where prices will be in 1, 2, 5 years so how can they guarantee you an annual ROI?  They can’t, which is why there are fine print lines such as:  “actual results, performance or achievements could differ materially from those expressed by us.”   

“That’s a red flag,” says Mark Dickey, senior communications adviser for the Alberta Securities Commission. “It’s easy for them to say, ‘It didn’t work out the way we thought.’ If that happens, you could lose your money.” 

Another flag is claiming they have a “secret” or “exclusive technique” for investing in real estate.  The salespeople at seminars can make misleading claims that entice you to sign up right away, and may involve a “limited time offer” or a “limited number of investors.” 

Do Your Research!

Don’t let anyone pressure you into making any financial decisions without getting independent financial advice from a lawyer or registered financial adviser.

To begin with, you can check the websites below to see if any action has been taken against the companies or their promoters.   Remember that even if ASC or RECA have not taken any action to date, this does not mean the opportunity is suitable for your risk level.

  • Alberta Securities Commission(ASC)  This is a great website with a LOT of information on how to protect yourself, file a complaint, sign up for investor fraud alerts and more!  Here’s the link to show how you to do a background check on a company to get started.
     
  • Real Estate Council of Alberta(RECA) The Real Estate Council of Alberta (RECA) is responsible for ensuring that consumers who use the services of industry members are adequately protected.  Disciplinary  decisions are posted on that website.
     
  • Canadian Securities AdministratorsNational CTO Database
For an interesting read, check out this Order from ASC regarding a company with an office in Calgary:
 
Enforcement Order by the Alberta Securities Commission  which is talked about in the November MoneySense article:  click here to read
 
It’s your money – protect it.
   

5 responses to “Real Estate Investments – Protect yourself!

  1. Good call Mike,

    I’m also a big fan of the rule that education is education only; an educational seminar shouldn’t be trying to sell you real estate, and definetly not things that appear to be real estate but are actually something else (i.e. shares in a company or a time share). If you’re not able to sell it any time you want (i.e. you’re not on title), then it’s getting more and more sketchy.

  2. Rational Exuberance

    People who are investing in these schemes in November 2008, are going to lose lots of money. It could just potentially be the worst market timing for investing in RE, both commercial and residential, in the history of the world.

  3. They’re everywhere – ads in the newspapers, on billboards, radio commercials – I’m talking about real estate investment opportunities. “Up to 18% interest!”, “12% annually!”, “RRSP eligible!”

    These ads ought to be illegal and the ASC should be more active here. I don’t understand how the public interest is served by advertising an investment without discussing risk factors in that ad. Or announcing a rate of return without having the fine print in the ad.

    A lot of people who can’t afford it are going to be left out in the cold at the worst possible time.

  4. Pingback: New Home Woes; Real Estate Scams | Calgary Real Estate Review

  5. The Science Of Getting Rich Audio

    Your style is very unique compared to other folks I’ve read stuff from. Many thanks for posting when you’ve got the opportunity, Guess I will just book mark this page.


    Thanks for spamming…Link deleted 😛
    -Mike Fotiou

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